Tongue in cheek, I know, but this one ranks right up there with the discussion we had going earlier this week about the right wines to eat with canned goods. Pretty funny.

On a more serious note, I wonder if handing out fliers at the door warning of the various “tricks” the auctioneers use to hype the crowd might mitigate some of the irrationality.

I think the sobering fact that will bring sense to the REO auctions now onward is the simple lack of money. First, it will be 20% down, which even for a 300K house, is 60K – that should keep out any riff raff. I can’t think of anyone who can write a check for 60K will be so airheaded as to fall for the auction tricks. Next thing is, they can’t most likely get a jumbo. That limits the bids to a bit above 500K. And soon, with most of the mortgage bankers out of business, more ARM resets and resulting defaults, the rates will rise. Put all the three and your fear of festive auctions is shortlived. By mid 2008, you should be able to sense the coldness of death as many houses are auctioned at or below 40% of peak prices.

I think the sobering fact that will bring sense to the REO auctions now onward is the simple lack of money. First, it will be 20% down, which even for a 300K house, is 60K – that should keep out any riff raff. I can’t think of anyone who can write a check for 60K will be so airheaded as to fall for the auction tricks. Next thing is, they can’t most likely get a jumbo. That limits the bids to a bit above 500K. And soon, with most of the mortgage bankers out of business, more ARM resets and resulting defaults, the rates will rise. Put all the three and your fear of festive auctions is shortlived. By mid 2008, you should be able to sense the coldness of death as many houses are auctioned at or below 40% of peak prices.