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Now, this is no joke
Tuesday, April 01, 2008
Being less than a hundred miles away from ground-zero in the California foreclosure mess, the local TV stations have been swamped with ads for the following:
The spots by the Real Estate Disposition Corporation sound like those fast-paced commercials within infomercials where they break away from the half-hour advertisement to give you the 30-second version.
This isn't the first time that the list of upcoming auctions has been surprisingly long and it probably won't be the last.
You can download an Excel file for each individual auction if you're inclined to play with the data. I'm thinking of grabbing my camera and driving down the hill to one of the many upcoming events in Northern California, just to have a look around.
4 comments:
REDC auctions are all undisclosed reserve auctions. This is a huge ripoff. Save your money and wait for absolute auctions.
READ TERMS AND CONDITIONS, found here:
http://www.mylandhome.com/uploaded_files/29-pav-terms.pdf
Below are some snips from the Terms and Conditions:
"All Properties have a Reserve Price, meaning the Seller of each Property has established an unpublished, minimum selling price. The starting bid is not the Reserve Price."
My comment: Why attend an auction where you don't know the minimum price? Reserve auctions are OK, assuming the reserve is disclosed. Absolute (i.e. no reserve) auctions are best. With an unpublished reserve, you are shooting in the dark.
"the Auctioneer may open bidding on any Property by placing a bid on behalf of the Seller and may further bid on behalf of the Seller, up to the amount of the Reserve Price, by placing successive or consecutive bids for a Property, or by placing bids in response to other bidders."
My comment: The auction house bids against you? So not only are you up against other bidders, but you are bidding against an auction house, up to a price you don't know.
"Winning Bidder’s purchase is subject to, and contingent upon, the REO management of Seller approving the purchase, which shall be given or denied at their sole and absolute discretion within fifteen (15) business days"
My comment:
So even if you manage to outbid everyone else, and the auction house, the bank has 2 weeks to reject your offer.
"Auctioneer is not acting as an agent for any Bidder in any capacity, and is acting exclusively as the Seller’s agent."
"The total purchase price will include a buyer’s premium equal to five percent (5%) of the winning bid amount"
"The buyer's premium is the fee the Auctioneer charges the bidders to bring the Property"
My comment:
5% is a steep fee to pay as a buyer. Normally a the seller takes the hit for the 6% agent commission.
Folks, there is no way you'll get a bargain here. Hold out for absolute auctions. There is a tidal wave of foreclosures about to hit the market, and you'll get a much better deal.
During an auction, you can never tell if the bidding against you is from a shill or not.
And, IMHO, auctions with a reserve aren't auctions.
db
el pato:
Thanks for reading that carefully. I think I will attend one of these and may ask around a bit about the fine print.
I went to one of these auctions in San Mateo, CA a few weeks ago for
about one and half hours. I don't have my notes with me, but here's my
memories. There were several thousand people at the auction, vast
majority without bidding cards. The seating was spread across half a
dozen rooms in a convention center.
Each auction had only a few people bidding. There were auction staff
dressed in tuxedo's bouncing around to drum up excitement. Many
properties (around 20%) were reauctioned a within 15 minutes after
the first auction closed, then between 5-10% were reauctioned twice!
Most reauctioned houses sold for slightly less than the original
auction.
The auctioneer's voice is positively blasted into the halls (very loud),
and even when there is no interest in the property he rapidly drones
out two numbers (last bid and amount of next allowed bid). It is
surprisingly hard to understand what he's saying... given that the whole
point is to hear him.
Some houses were for sale in "cash-only" status, which means the inside
lender had inspected the property and was unwilling to issue a loan
to any buyer for any amount. These houses seemed to sell for much
closer to the normal houses than I expected.
Given the format, high sales fee (5%), high "re-auction" rate, etc...
I would not recommend buying anything from this auction
company... something seemed very wrong.
I do intend to go back to a followup auction, to see how many of the
"sold" houses from the first auction are back on the block and to
inspect some of the local properties before the auction to understand
what condition the "cash only" homes are in.
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