In case you haven't heard the news, Houston's housing market is blowing up. The single-family home median price have reached historic highs at more than $172,000. Rumors swirl about properties being bought up above asking price before they're even listed.
So how do the little guys get in? For some, it may be worth it to gamble for the chance to win a house on the cheap from locally-based home auction company, Penny Mansion.
The company will apply techniques of the popular and controversial "penny auction" to a no-reserve online sale of a three-year-old, four-bedroom, move-in-ready home at 14511 Royal Mountain Dr. near Kuykendahl Road and Ella Boulevard. Purchased in 2012 for $131,000, the home is expected to sell for less than $2,000.
"We are keeping it fair for everyone."
The bidding is done online in penny increments (every time someone bids, the price of the house goes up one penny) under a 20-minute clock. The last bidder when the clock expires is the winner and must purchase the house for the final bid price within seven days.
Interested parties can register online for a chance to bid. For additional bids, users can purchase home reports — a total of seven, which range from $19.99 to $49.99 — and refer friends to register. For the first auction, bidders who go all-in can expect to pay approximately $242 in fees before ever bidding. These sites make their money off what they charge people to bid (read an AARP article on the penny auction craze and its drawbacks).
"We are keeping it fair for everyone," Penny Mansion president Tommy Allen insists, noting the sale's structure. "There's no such thing as a power buyer."
The company will gauge interest and determine its target audience with this first auction, and hopes to purchase a second home within the next three weeks.
"I'd like to think that a well-deserving family will move into the house and love it," Allen says.
Allen says the total going price of the home will be donated to the American Red Cross. The auction begins on Sunday at 5 p.m.