I’ve been percolating on this. I suspect they’ve lost a lot a skin.
The massive media campaign, the auction set-up, rumors that some of the homes were touched up, my guess is that was all paid up front from the lenders.
They’ve already done the foreclosure process, so that’s sunk money, now they get the net of the bid (the 5% buyer’s premium goes to the auctioneer). Subtract commissions, overhead of the media campaign and other up front costs and I’d guess they lost another 10% maybe more.
Look at sdr’s condo example and with a bid of $240, they may only be bringing $210 home. For a place that isn’t trashed, that’s a step discount from $310. If they’d have blown it straight out, at $250K, they’d have brought $242k home themselves.
