Max Spann Jr. calls auctions "a little stock market of real estate." I watched one of his company's little stock markets in action over the weekend.
You can read about it here, but the upshot was 19 Dewey Beach condos with original asking prices of $399,000 to $850,000 selling for $240,000 to $585,000.
The New Jersey-based Max Spann Real Estate & Auction Co. ran the event differently than auctions I've seen before, where something goes on the auction block and people bid specifically on that something. In this case, the format was "bidder's choice" -- the condos were offered up in batches and the winning bidder picked the one he or she wanted. Then people bid on the remaining condos in the batch, and the next winner opted for his or her favorite of the ones left over, and so on.
As it happened, the condo with the most expensive asking price in the Marina View complex in Dewey Beach was not the one that got the highest bid.
That unit -- the one picked first -- was a two-bedroom with an original asking price of $775,000. "Very interesting, seeing the order and people's preferences," said Brendan Garfield Crotty, a Bethany Beach real estate agent who attended the auction.
"I think some of these people got good deals," he added. But "some of them paid almost market value."
Buyers might end up getting better deals with short sales or foreclosures, he said, plus they usually also have more time for things like inspections.
I chatted with local real estate agent Michael Hamby about auctions in general because he used to run an auction company on the side. Hamby, with Champion Realty in Annapolis, suggests people do plenty of due diligence before showing up with certified checks blazing.
He says you should understand how much you'll pay the auctioneers if you're the winning bidder -- the Max Spann buyer's premium is 10 percent of the bid -- and make sure you know who's covering the closing costs, whether you get to do a home inspection, etc. He also recommends going to the auction with someone who knows real estate.
"Let the buyer beware," Hamby said.
Beware, for instance, the pseudo-auctions. He said he saw one listing that read: "Bid deadline is this Friday at 2 p.m. Absolutely will be sold."
It said that for many, many Fridays.
"This house was on the market for 232 days," he noted dryly.