REDC Auctions
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becki sanders
Feb 16, 2009, 3:48:51 PM2/16/09
to BARE Professionals in Training
If anyone would like to discuss the Oakland/SF Area REDC auction which
took this past weekend (2/14/09-2/15/09), I'd be interested to hear
your opinions or questions.
took this past weekend (2/14/09-2/15/09), I'd be interested to hear
your opinions or questions.
becki sanders
Feb 18, 2009, 10:50:39 PM2/18/09
to BARE Professionals in Training
I have talked to various people about the REDC Foreclosure auctions
and would like to give my response to some of their comments/
concerns. Feel free to add to this or ask more questions:
Q. I heard that REDC opens it's bidding with an artificially low price
(ex. $500-$1000) that REDC or the seller have no intention to actually
accept. Then the auctioneer accelerates from the initial bid in
increments of about $10,000. Is this right?
A. Yes, I found this to be true. At first glance, the auction seems
to suggest that these houses are going to be sold at or near the
beginning bid. Does it actually state or imply this? Absolutely NOT.
I think this is wishful thinking on our part and the auction house
taking advantage of this way of thinking. I think the beginning bid
is more of an indication of the current condition of the house, not
relative to what it should or will be bid up to. Also, the auctioneer
is allowed to bid the price up the the unannounced "reserve" price
which is really just what is still owed on the house. If the price
does not hit the reserve, the bank will keep the house and perhaps try
other methods of selling it later.
Q. Several times the same properties are re-bid again in the space of
an hour or two. Why did this happen so often? Did the winning
bidders withdraw, realizing they made a mistake along the way, or were
no winning bidders in the first place?
A. I did see this happen a lot and it was pretty frustrating since it
made the auction last forever. I think your speculation is valid;
however, I think it could have happened for a number of reasons.
Perhaps they just withdrew, but they would lose their $5000 deposit so
I think that perhaps many people were not qualifying for the loans. I
think people are still figuring out that they just don't qualify for
nearly as much as they used to. Someone who could have qualified for
a loan of $300k two years ago maybe not qualify for half that now AND
be making more money.
Q. REDC takes a hefty commission of 5% and gives only 1% for the
buyer's broker. Doesn't this make it difficult to find an agent
willing to venture into many of these uninhabitable structures and
inspect the properties carefully?
A. Well, the fact that REDC takes a commission of 5% is one thing. I
guess this is debatable since they are a business and they do have to
make money, however I have a feeling they make plenty on all the
people who back out and lose their $5000k. As for the broker getting
only 1%, well let's consider what work they are actually doing. You
already found a house so really you just need them to open it for you,
register with REDC and show up at the auction. On an $80k home, that's
$800, not too bad in my opinion. Agents and brokers generally have
little or nothing to do with advising you on home "inspections" since
you should really have someone qualified to do that work like a
General Contractor.
Q. What really put me off about the auction was that the seller/bank
can choose not to sell the house to you after you have won the
bidding. Is it true that the seller can back out of the deal up to 3
weeks after the auction ends?
A. Yes, in the Terms and Conditions it states that if your bid amount
is not immediately confirmed, the seller has up to 15 business days
(about three weeks) to refuse the offer, at which time your deposit
would be refunded in full. So yes, basically that's not very cool.
They get to keep your $5000 while you sit around waiting for a
decision.
and would like to give my response to some of their comments/
concerns. Feel free to add to this or ask more questions:
Q. I heard that REDC opens it's bidding with an artificially low price
(ex. $500-$1000) that REDC or the seller have no intention to actually
accept. Then the auctioneer accelerates from the initial bid in
increments of about $10,000. Is this right?
A. Yes, I found this to be true. At first glance, the auction seems
to suggest that these houses are going to be sold at or near the
beginning bid. Does it actually state or imply this? Absolutely NOT.
I think this is wishful thinking on our part and the auction house
taking advantage of this way of thinking. I think the beginning bid
is more of an indication of the current condition of the house, not
relative to what it should or will be bid up to. Also, the auctioneer
is allowed to bid the price up the the unannounced "reserve" price
which is really just what is still owed on the house. If the price
does not hit the reserve, the bank will keep the house and perhaps try
other methods of selling it later.
Q. Several times the same properties are re-bid again in the space of
an hour or two. Why did this happen so often? Did the winning
bidders withdraw, realizing they made a mistake along the way, or were
no winning bidders in the first place?
A. I did see this happen a lot and it was pretty frustrating since it
made the auction last forever. I think your speculation is valid;
however, I think it could have happened for a number of reasons.
Perhaps they just withdrew, but they would lose their $5000 deposit so
I think that perhaps many people were not qualifying for the loans. I
think people are still figuring out that they just don't qualify for
nearly as much as they used to. Someone who could have qualified for
a loan of $300k two years ago maybe not qualify for half that now AND
be making more money.
Q. REDC takes a hefty commission of 5% and gives only 1% for the
buyer's broker. Doesn't this make it difficult to find an agent
willing to venture into many of these uninhabitable structures and
inspect the properties carefully?
A. Well, the fact that REDC takes a commission of 5% is one thing. I
guess this is debatable since they are a business and they do have to
make money, however I have a feeling they make plenty on all the
people who back out and lose their $5000k. As for the broker getting
only 1%, well let's consider what work they are actually doing. You
already found a house so really you just need them to open it for you,
register with REDC and show up at the auction. On an $80k home, that's
$800, not too bad in my opinion. Agents and brokers generally have
little or nothing to do with advising you on home "inspections" since
you should really have someone qualified to do that work like a
General Contractor.
Q. What really put me off about the auction was that the seller/bank
can choose not to sell the house to you after you have won the
bidding. Is it true that the seller can back out of the deal up to 3
weeks after the auction ends?
A. Yes, in the Terms and Conditions it states that if your bid amount
is not immediately confirmed, the seller has up to 15 business days
(about three weeks) to refuse the offer, at which time your deposit
would be refunded in full. So yes, basically that's not very cool.
They get to keep your $5000 while you sit around waiting for a
decision.
Message has been deleted
becki sanders
Feb 21, 2009, 6:26:04 PM2/21/09
to BARE Professionals in Training
So there is another REDC auction coming up on March 1st with a few of
the same houses that sold last week. Two houses which some of us
looked at and that were bid up, in my opinion, way too high for their
condition:
This one had the entire roof burnt out. They did not mention this at
the auction I don't think. If I remember right, it sold for over
$120k with full sky view and soggy walls and floors from recent
rain.
http://www.ushomeauction.com/property.php?auctionID=H-060PA&itemID=93...
Address: 2651 109th Ave Oakland, CA 94605
Property Type: Duplex
Year Built: 1942
Square Footage: 3233
No. of Bedrooms: 6
No. of Bathrooms: 6
Total Rooms: 12
Lot Size: 0.13
Starting Bid: $1,000
Previously Valued To: $760,000
Occupancy Status: Vacant
Financing Available: Not available. Cash purchase only.
The second house that shocked me was the one on 72nd which I went to 4
times and it was never open to the public on the days of open house.
Today was an open house again and, surprise, it wasn't open! It sold
last
weekend for $125k. I was expecting it to sell around $40k assuming
that it was never opened to anyone to see inside and by the looks of
the floor, there was some major water damage.
http://www.ushomeauction.com/property.php?auctionID=H-060PA&itemID=93557&venueId=529&start=0
Address: 3564 72nd Ave Oakland, CA 94605
Property Type: SFR
Year Built: 1939
Square Footage: 1002
No. of Bedrooms: 2
No. of Bathrooms: 2
Total Rooms: 6
Lot Size: 0.06
Starting Bid: $1,000
Previously Valued To: $252,000
Occupancy Status: Vacant
Financing Available: Yes
So what the heck!? Are people just bidding blindly on these homes? I
really don't think they could have even gone in them to bid that much,
it's nuts. I looked at a house today in Oakland that was $60K on the
market right now that is in better condition. It makes me really
frustrated with the bidders at the auction for bidding ignorantly,
then backing out and just letting it go back on the market once they
realize the house is actually not worth it.
the same houses that sold last week. Two houses which some of us
looked at and that were bid up, in my opinion, way too high for their
condition:
This one had the entire roof burnt out. They did not mention this at
the auction I don't think. If I remember right, it sold for over
$120k with full sky view and soggy walls and floors from recent
rain.
http://www.ushomeauction.com/property.php?auctionID=H-060PA&itemID=93...
Address: 2651 109th Ave Oakland, CA 94605
Property Type: Duplex
Year Built: 1942
Square Footage: 3233
No. of Bedrooms: 6
No. of Bathrooms: 6
Total Rooms: 12
Lot Size: 0.13
Starting Bid: $1,000
Previously Valued To: $760,000
Occupancy Status: Vacant
Financing Available: Not available. Cash purchase only.
The second house that shocked me was the one on 72nd which I went to 4
times and it was never open to the public on the days of open house.
Today was an open house again and, surprise, it wasn't open! It sold
last
weekend for $125k. I was expecting it to sell around $40k assuming
that it was never opened to anyone to see inside and by the looks of
the floor, there was some major water damage.
http://www.ushomeauction.com/property.php?auctionID=H-060PA&itemID=93557&venueId=529&start=0
Address: 3564 72nd Ave Oakland, CA 94605
Property Type: SFR
Year Built: 1939
Square Footage: 1002
No. of Bedrooms: 2
No. of Bathrooms: 2
Total Rooms: 6
Lot Size: 0.06
Starting Bid: $1,000
Previously Valued To: $252,000
Occupancy Status: Vacant
Financing Available: Yes
So what the heck!? Are people just bidding blindly on these homes? I
really don't think they could have even gone in them to bid that much,
it's nuts. I looked at a house today in Oakland that was $60K on the
market right now that is in better condition. It makes me really
frustrated with the bidders at the auction for bidding ignorantly,
then backing out and just letting it go back on the market once they
realize the house is actually not worth it.
Aditya Angrish
Feb 21, 2009, 7:44:10 PM2/21/09
to BAREprof...@googlegroups.com
Becki,
I don't think people are bidding aimlessly. After going over several REDC 'Scam' blogs it appears one of two things probably happened.
1. The 'winning' bidder was one of REDC's own shills running up the bid
2. The bank chose not to accept the bid.
The bank is in on the 72nd Ave house for $189,900 so it is possible that they felt 125K was too low for the house.
For the other property (109th) The bank repo'd it for over $500K. Current value is probably around 120-140K (in the burnt state).
I seriously doubt anyone is going to back out of either of these properties (and lose at least $6000 deposit or approx 20K if they were investors as they had to put down 15% on the day of the auction) for the prices they supposedly went for. Mainly because one can make these prices work for investment purposes (not great, but you can can still flow cash at the above prices).
Aditya
I don't think people are bidding aimlessly. After going over several REDC 'Scam' blogs it appears one of two things probably happened.
1. The 'winning' bidder was one of REDC's own shills running up the bid
2. The bank chose not to accept the bid.
The bank is in on the 72nd Ave house for $189,900 so it is possible that they felt 125K was too low for the house.
For the other property (109th) The bank repo'd it for over $500K. Current value is probably around 120-140K (in the burnt state).
I seriously doubt anyone is going to back out of either of these properties (and lose at least $6000 deposit or approx 20K if they were investors as they had to put down 15% on the day of the auction) for the prices they supposedly went for. Mainly because one can make these prices work for investment purposes (not great, but you can can still flow cash at the above prices).
Aditya
really don't think they could have even gone in them to bid that much,
So what the heck!? Are people just bidding blindly on these homes? I
it's nuts. I looked at a house today in Oakland that was $60K on the
market right now that is in better condition. It makes me really
frustrated with the bidders at the auction for bidding ignorantly,
then backing out and just letting it go back on the market once they
realize the house is actually not worth it.
...
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