In Greater Phoenix, REO (Real Estate ‘bank' Owned) Auctions are quickly becoming today's ‘get rich quick' opportunity being touted by, well banks, and those who run the auctions.
REO Auctions are being advertised as your chance to win the Real Estate Auction sweepstakes.
However, be careful, do your homework and know the rules. 
REO (lender owned) real estate auctions are offered by banks that have repossessed the property after they have gone through an unsuccessful (Arizona) trustee sale/foreclosure.
Typically, at the Trustee sale Auction, the property is offered at the amount owed (plus expenses).
However, if no buyer, and there are plenty of bargain hunters (if you don't believe me go to the Maricopa County Courthouse steps at 2pm any day of the week)) bids the minimum required by the lender, then the property is taken back by the bank.
The bank then lists the property for sale and/or offers it as a lot in one of the many real estate auctions in Phoenix operated by a multitude of (very profitable) Auction houses.
Most, auctions require registration and a $5,000 cashier's check in order to bid. Properties are sold "as-is" and buyer's typically pay up to 5% fee on top of the winning bid.
However, I urge you to do your research by obtaining a list of the properties for sale at the Auction.
Drive by the homes; even attempt to preview the home you are planning to bid upon. This is not a collectible on ebay. This is a big investment. Don't over-bid for the sake of winning.
Finally, some advice.
Yes, there are bargains to be had for prudent investors.
Phoenix, Scottsdale, Glendale, Peoria, Mesa, Tempe are beautiful communities over-run with foreclosures. There are plenty of success stories of homeowners who realized their American Dream at a dream price at these Phoenix area REO Auctions.
However, in most cases, if the property was so valuable it would have sold at the Trustee sale Auction and never made it to the REO auction.
Likely there is a reason that no one wanted to buy the home.
That reason is usually because it is not worth more than what you are paying!!
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Copyright © James Wexler, *Win at REO Auctions*
Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale area Real Estate needs
James great explanation of the auction process in Arizona!
James - this is a very informative post here, and I appreciate it. So many of the general public assume if it is a foreclosure - it will be a good deal. Thanks for explaining this!
Bill - thanks for the comment. By the way, congratulations on your success on the re-blog post. 200+ comments is amazing. and well spirited converstation to boot.
Sharon - Thanks. I just wanted to point out the fact there are dangers.
I hear more success stories then horror stories. Though, it seems the horror stories are the ones everyone seems to remember.
I want to give some good advice to consumers. Get the help of an attorney or realtor. Period!
If you are going to be spending in the hundreds of thousands of dollars, make the additional few thousand dollar investment into protecting yourself.
Jason - great advice. I have to agree.
If you are going to spend $100K or what may be a whole lot more, you better pay the 1-3% and get the help of an experienced professional to protect your interests.
wexler -I have heard more horror stories than stories of people feeling like they got the deal of a lifetime. If the deals where so good, they would be selling previously on the open market.
Be careful, especially, if you are first-time homeowner
Scott - that is the nature of things.
We will always hear the stories that are tragic and make the front page news headlines.
of course, That doesnt mean you should skip having an attorney or real estate agent represent your interests as a buyer.
Scott - I know of many great deals bought at these auctions. Though, they are rarely, if ever, as good as they seem or as pitched as... thats for sure
Barbara - good advice. The seller is looking out for theirs and rightly so. You need to have someone protecting your best interest.
wexzilla - most experiences that I have heard about involve a lot of latent defects in the homes.
most (experienced) buyers are aware of this potential pitfall and make offers at prices accordingly with a percentage more figured into the math to fix problems and make repairs
James Ladarski -
you use a important term "experienced investors". This type of buyer has the knowledge and money to make the repairs and take any potential losses.
First time homebuyers , generally , do not have the tools, literally and figuratively, to deal with big problems
James, this is a great post. You provided a wealth of information. I love it when I come across articles or blogs that provide information that can actually benefit AR readers. Keep up the good job. I'm looking forward to reading your future blogs.
Tracy - thanks a lot for the nice complement. Please feel free to use any of the content anytime.
If you prefer not to re-blog, just cut and paste and give me a small outgoing link from your blog to my website wexzilla.com
mostly at REO home, the bank representative are upping the bids. Theses reps are not identified. Isn't that kind of unfair to allow the bank to participate in their own auction. Can someone explain..thanks for very lucid illustration of auction process above.
<a href="http://www.redtagrealestate.com">Foreclosure</a>
one more thing...how do you determine what is over or under bid in REO auction process. Thanks
foreclosure