It seems to me that only insiders will know about this auction, and it is likely the house will sell to someone for much less than true market value.
I think it’s unlikely that *only* insiders are likely to find out about it. I gathered you found out about it by seeing a for sale sign on the lawn and calling on it. I did a quick search of the city web site and found:
1. The city council authorized the auction at its public meeting on May 16th.
2. The Real Estate Assets department published the sale on May 26.
3. The city was bequeathed the house by a woman who directed that the sale proceeds go to the Library Department. [side note – Thank you, Jane Cameron! Libraries are a cause worth supporting.]
4. There’s a 3 page document with the terms of sale available for download. I would imagine that this is the only document that the City will provide on the property.
5. The property will be open for inspection 3 times before the final auction on June 29 to be held at the property.
Like you, I don’t know if a million-three is reasonable. I have followed results of other public agency real estate auctions and it seems like the final bid amount is generally pretty near, or even higher than, market value. It doesn’t look to me like the City is failing to protect the public’s interest by selling the property in this manner. Just on a quick glance, I didn’t see the part about the City selling the property for less if the minimum bid isn’t acheived, but I don’t see any problem with it. If it can’t sell at open auction for what they think the market value is, they obviously overestimated the market value and they’ll need to go to plan B, which in this case is a private sale. I don’t know the details of how they conduct a private sale, but it seems to me that they would need to advertise the property and negotiate with a buyer. In short, just like any property selling his house on the MLS.
