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Someone asked me this question last week. I thought it would be good to put the answer here so others can learn. You should not do a Highest Bidder Sale if:
1. The seller is not motivated to either sell at a big discount or with seller financing. If they want retail and all cash — you should pass UNLESS they agree to pay you a flat fee for consulting to help them to a highest bidder sale
2. If it is a high crime area do not do a HBS. Even if you can get the price way way below market, you will have a hard time getting buyers interested. Plus it is not safe for you to be in the area. It’s not worth the risks. We ran in to this problem with a property last month. You can get crime statistics online or through the local police department usually.
3. The property is way out in the middle of no place. If they property is too far away from a major metro area, you will have a hard time getting enough bidders to the house to make the price go up up UP. Even if you get the property for 1/2 price, you will probably have a hard time getting the price up. Running ads on craigslist will give you an indication about the interest in the area.
4. Gated HOA neighborhoods sometimes make it difficult to do a HBS. Get approval from the Board, if you can, to do 3 days of signs and leave the gate open or have someone stationed at the gate to open it for potential buyers. The Board will usually not allow it.
Anyone else run in to situations where it was difficult to do a HBS?
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