Guidant Financial Group Blog

Thanks to the slow economy and the upside-down housing market, more homeowners are looking to auctioneers to unload properties fast.

Mind you, these are not foreclosures. These are homes that in a regular market would sell for the asking price, or at least close-to it, in a matter of days or weeks. But … we are not in a regular market.

According to the Associated Press, revenues from residential real estate auctions have increased 5% in the last year and nearly 47% since 2003 (see Home Auctions Surge 47 Percent Since 2003).

For a self-directed IRA investor, this increase in homes sold at auction can be great news. Residential homes sold in this manner tend to sell at 35-40% less than fair market value. Sometimes more. Additionally, as opposed to homes in foreclosure, properties sold by the owner at auction are typically in better condition.

For homeowners looking to sell fast, auctions offer a mixed bag of advantages and disadvantages. While the homes are sold quickly – in as little as 30 days – many sellers end up with less than what they originally paid for the home.

For self-directed IRA investors considering purchasing homes at auction, be aware that buyers are responsible for an auctioneer’s fee (between 6-10% of sale price), so you will want to calculate this in when determining your potential return on investment (ROI).