As Saturday’s auction of bank-owned properties in Anaheim approaches, I can reveal that a second, similar auction is planned for the following weekend.
First, a reminder that Irvine’s Real Estate Disposition Corp. has organized an auction of more than 200 foreclosed homes for this Saturday, Feb. 2, at the Anaheim Convention Center. (You can read about it here, here and here.)
Now comes word that Dallas-based Hudson & Marshall is staging an auction of about 250 Southern California foreclosed properties on Feb. 9 and 10 at Anaheim’s Sheraton Park Hotel.
Both events are “reserve auctions,” which means sellers don’t have to accept the winning bid. Banks can choose to take their properties off the table if they don’t like the high bid.
Both require winning bidders to put down 5 percent of the sale price on the day of the auction. The sale price is determined by adding 5 percent to the winning bid price — the additional 5 percent is the auctioneer’s cut.
To view some of the homes up for sale at Hudson & Marshall’s auction, click here. You can bid online before the auction. Hudson & Marshall says that nearly 20 percent of properties are sold online before a typical auction. Here are the auction terms and conditions.
It is very unclear to me how these so called “real estate auctions” have a reserve price that is undoubtedly higher than the starting bid. If my memory serves correct, the last couple of auctions I read about had a low percentage of auction properties actually sell since the reserves were not met. So does this mean that the banks/lenders are unwilling to take a hit and will still hold on to as high a price as they can? Don’t the banks/lenders still come back to the high bidders not makking the reserve and say “you did not meet the reserve, but if you want to pay X, then you can win/buy the property…” I guess I just don’t understand why go through the drill of an auction if bidders have no idea what the reserve truly is… If the property could not sell on the market with a slightly discounted rate, do the banks think they can sell at an auction at a slightly discounted rate? In this time of the economy and status of the RE industries, I would think that it would be prudent to cut your losses and unload the property as soon as possible. The longer they hold on to it, the more cash they lose each day- and with no guarantee that prices will recoup in the near future.
Some of these properties are pretty scary looking.
I toured one of the condos in HB with a starting bid of $99,000. I don’t remember seeing anything about a reserve price on the REDC website or brochure. Guess I won’t be wasting my time at the auction.
Many of these properties are already listed for sale by the lenders, so you could probably subtract 10-15% from their list price to figure out a ballpark estimate of the reserve.
These are not really auctions.
These are a place for stupid people to try and find some even stupider people.
Hidden reserve auction = waste of time
I guess they just want to use the auction to test the market.
true, banks are just trying to create a frenzy, hoping for some knife catchers.
Yep - a legal scamming of the uneducated public. As a bidder you agree to secret reserves, shill bidding, and buyer’s premiums - a nice fair playing field.
And yet, these are still getting standing room only audiences. Give it a year or two - you’ll be seeing news stories about real estate auctions where no one shows up to bid.