Big Auction

[lindismith]

My Mom has been trying to talk me into a house for ages. She recently sent me this link:

http://www.ushomeauction.com/auction_details.php?auctionID=H-001&chkVenue%5B%5D=16&search=1

Check it out! 4 pages of homes up for auction in SD on 5/12!!!

[lindismith]

Hmmmm…. Scripps Ranch single family home: starting bid of $349,000. 3 bed, 2.5 bath.

11178 IVY HILL DRIVE SAN DIEGO CA 92131 (Bottom of page 3.)

I’m sure at the height of the market, homes similar to it sold for twice as much. I know they won’t get twice as much now. I wonder what this will do to the surrounding comps?

[(former)FormerSanDiegan]

The numbers are starting bids, so don’t put too much weight on them. They are meant to stir interest. The sellers have an unpublished reserve price.

Here is a quote from the web site :

Reserve Price. All Properties have a Reserve Price, meaning the Seller of each Property has established an unpublished, minimum selling price.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. In order to become the Winning Bidder for a Property, a Bidder must meet or exceed the Reserve Price and have the highest bid. The Auctioneer may open bidding on any Property by placing a bid on behalf of the Seller. The Auctioneer 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. If no bidders meet the Reserve Price, the Seller is under no obligation to sell the Property. The Seller may withdraw a Property at any time prior to the announcement of the completion of the sale by the Auctioneer. Auctioneer is not acting as an agent for any Bidder in any capacity, and is acting exclusively as the Seller’s agent.

So a potential buyer gets to bid against other buyers AND maybe even the auctioneer himself until it reaches the unknown reserve price.

Also, the buyer gets to pay a 5% premium above the auction price (this sounds like a real estate commission to me).
How much below market will these homes sell for at this auction ? My guess … not much if at all. I’m also guessing that the majority go unsold.

[lniles]

Suspicious. I randomly selected 5 of the homes from that auction page and looked them up on zillow. They all turned up as “recently sold” within the past couple of months. I think this is yet another flipper scheme to run up some hype amongst dumb bunny buyers. This is pure speculation, but I’ll be it works like this:

1. Buy up some cheap homes, probably with the false-comp cash-back scheme discussed in another thread which makes zillow’s (and the assessor’s) sales history show falsely inflated prices.
2. Advertise some auction where the so-called starting bid is really low (lower than what it lists in the sales history).
3. Have an accomplice go to the auction and bid to make sure nobody really gets the place for a low price. Buyer dummies who show up at the auction might fall for these “planted bidders” and make bids of their own. Suckers!
4. The flippers make money from buyer dumb bunny.

Is there a way someone can look to see if any of these “foreclosure auction” homes are actually in foreclosure?

[IONEGARM]

Check this house out read the title report (note the lien for 24 million!) and then read article.

Great, for bidding at an auction you get the chance to get in the middle of a $68 million ponzi scheme (rather ironic though). I realize they are supposed to provide clear title, but its a big risk. Nice street though, I was just on that very street last October for a Pasadena Heritage event.

[sdrealtor]

Uuhhhh….why did they all turn out to be just sold?

Uuhhhh…. Could it be that they are all foreclosure and were sold back to the bank?

Uuuhhhhhh….maybe.

Uhhhh….Pass the cheese doodles Beavis.

Uuuhhh….hehhehehe…you said cheese doodles

Uuuhhhh…shut up Butt Head

Many of these properties were previously listed in the MLS with REO agents and they didn’t sell. It looks like the lenders are trying to clear out some inventory quickly. Perhaps so they have room to restock their shelves.

[sdduuuude]

sdr – you are my hero.

[an]

I don’t see why there are so much skepticism. Went and checked out one of the property in Mira Mesa on that list. The house is vacant and it’s obviously hasn’t been lived in for awhile. So what sdr said really made sense. Also, if you’re a savvy buyer, why not do your homework, come into the auction w/ your max price in mind, and if they have someone faking the bid and it goes higher than your max then no harm no foul to you, since it free to register and bid. If you get it under your max bid, then great, you got yourself a great deal. That is if you did not set your max price too high.

[SD Realtor]

Good post sdr…

We are agreeing on way to many things lately. I knew Ivy Hill looked familiar. The listing expired on 3/18/07. Cal Western is the new owner as of 3/27/07….This home was originally purchased in 2002 for 375k. Fast forward through a refi and Heloc and the owners have managed to loose the home.

I will be astounded if it sells anywhere near the opening bid.

[SD Realtor]

FSD –

I went and read further about the auction. My first impression was to run away as fast as possible. I would encourage anyone interested in attending to very carefully read about the entire process, including your due diligence period, financing requirements, and contingencies.

sdr totally pegged this. I looked up many of the auction properties. Indeed EVERY ONE OF THEM is an REO.

Funny that these same lenders at the auction are there to provide financing to the auction winners right there on the spot. You can use an outside lender but you get no financing contingency. Imagine that!

I find it hilarious that some of these properties are still active on the MLS but of course the starting bid is substantially cheaper.

So if the property is on the MLS for 600k and the starting bid is 350k, why wouldn’t the lender try to sell the property for say 500k on the MLS?

Hmmmmm….

SD Realtor

[(former)FormerSanDiegan]

SD Realtor -I agree, all issues with respect to contingencies, financing, disclosures, etc are strongly tilted towards the seller. Why subject yourself to this as a buyer, when in the current and foreseeable market these items are strongly in your favor. It would have to end up being a tremendous bargain to jump in now. I doubt the reserve prices in this auction will be low enough to make it worth attending this time. We’ll see. It bears watching, though. Maybe I’ll go to one of these in 2008.

[no_such_reality]

Buying foreclosures is chic right now. It’s what the smart money is doing, haven’t you guys seen the infomercials?

I want to go, just to see the process and get a feel for what the “investors” are bidding. Then again, maybe I’ll just wait for OC county to start having decent auctions and show up there.

Then again, maybe I’ll just cold call and introduce myself to the people at Countrywide that handle the REOs for the cities I like. Their backlog grows steadily and even though they don’t have many in the areas I want, they have plenty across the State and I’m confident they’re all starting to feel the volume.

[SD Realtor]

NSR and ANautica –

I think it actually is a very good idea to go see how the process follows through. I am particularly interested to see what happens when there is lowball bidding but the bidding does not hit the reserve price. I assume that the property will not be sold but maybe the lender will suck it up and let the property go. The starting bids for many of these homes are definitely more in line with the Piggington posters estimates for what the housing market should be after or later in the depreciated cycle.

If anyone is looking to actually purchase one of the properties for real, then definitely do your homework, visit the open houses on the specific dates that the auction specifies, get your due diligence done, (inspections etc) and make sure all your ducks in a row before making the bid.

SD Realtor

[an]

SD R, I totally agree, you have to do your due diligence before even consider buying an auctioned house since things will be moving very fast at that moment. I actually visited the house in Mira Mesa thats on that list, the house is vacant and unlocked. So I just decided to walk through it to get a feel of it. It’s definitely run down and potential mold issue. But the starting bid is low enough that if you add in the cost of restoration, it would still be a decent deal.

I’m planning to go and see the whole process. I bet if the reserve is not met, the house won’t be sold, but if the lender suck it up and sell it at that price, then it would definitely be a decent deal. Bottom line, do your home work and set your max bid before the bidding start so you won’t get caught up in a bidding war. I’m planning to bid the starting bid on the house in MM. If it doesn’t meet reserve or get outbid, no harm no foul and I get to see the whole process. I’m sure there will be more to come in the next several years.

[Bugs]

I can’t really see auctions being that effective in moving these properties at reasonable prices. In areas where homes are $200k and less I can see it working, but once the prices exceed that the buyers who can perform are going to want too large a discount (dollar wise) to make it worth the lender’s while. A 30% discount on a $100k home is only $30,000 – a lender can take that kind of loss. They can’t take a 30% loss on a $500k home.

[Author]

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