Not too long ago, I was at a silent auction to raise money for our neighborhood school. I had been looking forward to it. Not only was it a good cause, but there were some pretty cool items listed. I was all set to be a shark and get what I wanted at killer prices.
Needless to say, that’s not what happened.
There were too many choices, and too much to pay attention to. Every time I bid on an item, I felt myself watching it like a hawk. I was trying to keep track of a ton of bids, remembering my prices, and trying to gameplan out how high I would go. It wasn’t really fun—couldn’t even enjoy the passed apps, which were really good. If I’m distracted away from bacon-wrapped dates, you know something is wrong.
I was thinking about that when a friend asked me about a Pittsburgh real estate auction, and whether or not they were a good idea. She wanted to invest in distressed properties and thought auctions might be the best way to find them.
I had to tell her that I didn’t think so. While we all love the idea of auctions, they can be a real time sink. While you can sometimes get a diamond in the rough for a reasonable price, real estate auctions are just not worth the risks to me. There are better ways to find the right property to buy, rehab, and sell.
The Problem With Pittsburgh Real Estate Auctions
There are a few reasons why I tend to stay away from real estate auctions in Pittsburgh, but they all revolve around my main mission statement: Don’t Waste Time, Don’t Waste Money.
In Pittsburgh, the auctions are run by the Real Estate Division of the city’s Department of Finance. If that sounds like bureaucracy to you…you’re absolutely right. While these offices are staffed with fine people, it is impersonal and rules-based.
As a buyer, I like to meet and get to know the people I’m buying from. It helps everyone know that they are making the right decision. And, you learn a lot about a house from the people who live there. You don’t learn a lot from a Department of Finance.
Lack of Information
I prefer to make informed decisions—especially when my money is on the line. But, with an auction property, that’s really hard. Sure, you might see some pictures online, all of the outside. Sometimes all you get is just a picture of the street, which, while important for understanding whether it’s an up and coming Pittsburgh neighborhood, doesn’t really give you a ton of information.
There are reports, of course, but they vary in terms of detail and quality. At no time can you actually inspect the inside of the house. This amounts to bidding blind.
There is a lot of competition when it comes to online auctions. There can potentially be hundreds of individual Pittsburgh real estate investors such as yourself. There can also be large investment groups or the bank itself. To quote our friends at the Department of Finance (Real Estate Division), “You do not have to be a resident of the City of Pittsburg to be eligible to purchase city-owned property.” That means anyone can bid, from anywhere. That means two things.
1. You’ll spend a lot of time looking at property that you ultimately won’t buy because some huge firm hoovered it up.
2. You’ll overspend.
That brings us to our next issue.
At my silent auction, I really wanted baseball tickets. Right along the dugout, they were the crown jewel of the auction (in my mind). A few other people really wanted them too, and I admit the competition got to me. Every time someone raised, I did too. I justified it by saying it was just another $10, and that’s nothing, right?
Well, I won—and paid double what I could have if I just bought the tickets online. Now, it was for a good cause, so I was fine, but that’s the auction mentality. It drives your competitive instincts, and you might grossly overpay for a property that’ll never make you your money back.
In all, Pittsburgh real estate auction deals are just an avenue in which you spend a lot of time, often come up with nothing, and potentially overpay for a property that might never give you a decent ROI.
That’s why I avoid real estate auctions online. I don’t like wasting time, and I hate wasting money.
Buy Directly From Distressed Homeowners With Qualified Leads
You know what’s better than getting a house at an auction? Buying directly from distressed homeowners before their property even goes to an auction. There are a lot of people in over their heads due to job loss, divorce, illness or death. It’s sad, but you can help them out.
Approaching a homeowner facing foreclosure isn’t easy, but with a blend of expertise, empathy, real estate investment resources, and training, it can be done. And it comes with a lot of benefits, including:
- A personal connection with the owner, from which you can learn a lot about the house (auctions rarely mention which floorboard is creaky or the weird thing the pipes do in the winter)
- The time to really do your due diligence
- A much better chance at your time spent paying off with an actual sale
I prefer it that way, and that’s why I’m an independently owned and operated HomeVestors® franchisee. I’m sure you’ve seen the national “We Buy Ugly Houses®” ads. Everyone has, including homeowners who need a helping hand and have to sell fast. It’s how I get qualified leads—people trust us because of the way that my fellow HomeVestors® franchisees have been doing this since 1996.
Each deal I make is done the way I like it: with proper care, with respect for the homeowner and their property, and with regard for my time and money.
If that’s you, and you feel that Pittsburgh real estate auctions just aren’t worth it, contact HomeVestors today. You might not get bacon-wrapped dates, but you’ll get the qualified leads you need to build your professional real estate investing business.
Each franchise office is independently owned and operated.