Are "Real Estate Auctions" just a clever marketing technique?

Sounds bogus. Most auctions I've seen are either absolute or if there is a reserve it is stated right there and then if it was reached or not, not 2 weeks later.

That's what I am used to, as well, in industrial world.

On May 4, 9:04=A0am, Ignoramus15919

It could be the auction company or it could be the bank. I usually give the benefit of the doubt in cases like this. So my guess is that they expected to get higher bids. And decided to not have a published reserve but to have it so the bank could refuse if the price was too low.

If you know which bank owns the house, you might take the time to talk to them. In a couple of months they might decide they really do need to sell the house and contact you with a realistic price.

Dan

(...)

The magic phrase appears to be 'Absolute auction' wherein the seller can get into legal trouble when they 'bait and switch' as in a 'Reserve auction':

Better luck next time, Iggy.

--Winston

Sounds like reserve price auction.

Have you considered looking into a short sale ? If you have a banker friend you can probobaly get a good deal. Your lawyer can explain how it works as a buyer.

Best Regards Tom.

The bid was a good deal. The money they want, is not a good deal.

It is some kind of a weird entity, porobably a holdover of the bubble, it was called "special purpose vehicle" and its name ends in "III".

I am going to just give up on it.

Well i wasn't going to say anything to jinx your deal, but someone just recently told me of several foreclosure auctions near me that ended very similar.

I'm surprised they came down as far as they did. Banks are really tenaciously hanging on to billions of dollars in houses that are not getting any more valuable.

The housing market is on the brink of a precipice. You were going to get a deal at 25% what the market value was a few years ago. If they start to let that happen the whole market may collapse. This is what happened in Japan. During the 90's market value of houses fell to 15% of their previous value. In the US today (thanks to the FED) the banks don't need the cash. They can hang on for a while.

-jim

What? Didn't you originally say the property was NOT in a flood zone?

Welcome to Chicago, Illinois politics? (Your friends Barry and Michelle studied there!)

Check with another real estate company or two. Tell them what happened, show them your contract, etc. The auction company may have been trying to weasel extra money out of you illegally (trying to pad their commission) and you may have had some legal claims as to the house before you dropped it. Illinois RE laws regulate it, I believe. Check into those. If there was no minimum or reserve on the auction, you may have (had) legal rights. That contract giving the bank the sole option may have stepped over the line.

But check into it. Next time you'll know.

-- Science may have found a cure for most evils; but it has found no remedy for the worst of them all--the apathy of human beings. -- Helen Keller

I agree 100% with the sentiment expressed in the URL above:

``I just bid for and won my third Williams and Williams house auction. The latest one was last month for 3159 Sarah Ann in Lafayette IN. The sellers rejected my winning bid all three times. The first two homes were owned by Fannie Mae and the third was owned by a relocation company.

Williams & Williams used to brag about how 90-95% of their sellers accepted the high bids even though they have the right to refuse it. I see that they have removed this from their sales literature. Good thing because in my experience it is a joke.

Williams and Williams are a bunch of clowns whose sellers will reject the high bid. I will not be wasting my time in the future bidding at any Williams & Williams auctions.''

Great finds Winston.

With a reserve auction, you know the outcome right away.

I don;t know, have not decided yet.

Thanks!''

In the real estate auctions I have attended, the opening bids were real low. A representative of the owner (bank) just sits there and casually raises the bid $10,000 at a time until it hits their real selling price (as long as there are other bidders). Then he sits back and sees if there are further bids. There were *none* at the two auctions I have been at. No houses sold and the auctioneer announces, "Property remains with the seller" or some such.

What you are describing is, "getting the buyer emotionally invested in the process." Lots of salesmen and lots of businesses use this practice. It may also be a bait and switch, although if the upfront terms allowed for the rejection of any bid then it may not be the latter.

Sounds like fraudulent business practices to me. If you want the house, I'd file a complaint with the attorney general's office.

If they simply rejected your bid, that might be legit. But, to come back and ask for more money, that is clear fraud in my opinion (not a LEGAL opinion, for sure.)

Jon

At the Sheriff's auction or one of the other Judicial sales auction houses, the first bid is from the bank. Usually for the remaining amount due. If you are the high bidder at one of these, the homeowner still has some legal wrangling he can do, and you may or may not ever get a deed. Otherwise the bank as the high bidder wins the auction

Once the bank takes possession of the deed, they try to sell it because they don't want to be in the real estate business. They don't want to lose money either. So unless the property is distressed or the previous owner had paid down the mortgage to a low number, you probably won't get a steal.

Move on and bid on another one, you might get lucky.

Paul K. Dickman

I'd at least check with the state to see if what they're doing is legal. It certainly sounds like bait and switch to me -- but they spelled that out up front, and the protections against that are often limited to consumers, not (presumed) business people.

It seems like they could just have an up-front reserve auction, and start the bidding at that, instead of a fake auction. Sending them a nice polite letter indicating your intent to never do business with them again, and copying it to your local paper, may be a worthwhile thing to do.

I would not call it above board, myself, but at the same time, it is not illegal and is in accordance with the auction terms. It is a shady practice, however.

I would write back and explain that you bid with the intention of exchanging your money for the property as is. If you had been disappointed with the property after the bank had your money, then you would have just been stuck. Tell them that you will either take delivery as offered or they can pound salt and the only reason you will go to any more of there auctions is to inform bidders that they are a bunch of welshing hornswaglers.

Roger Shoaf

Well, I am not a lawyer, but to advertise for bids, and then reject the bid and ask for more, may, in fact, be illegal. The bid is a "contract". They have this out written into the contract, but I think it would be considered a deceptive marketing practice to reject the contract and then ask for more. You might call the BBB and see what they say about it.

Jon

Rejecting your bid outright, for any reason or no reason, would be in line with the terms you stated. Asking for more money is bait and switch, not covered by the terms you stated, at least unethical and quite possibly illegal.

Drop a note to any newspapers or websites they advertised this fake "auction" in revealing details and naming names. Bank, auction house, whoever is involved that you can run down names for. They handed you a brush full of tar, the least you can do is smear them with it.

If they want to fart around with a reserve price, the minimally correct response at the time of auction is to say that the reserve has not been met and there is no sale. The actual correct procedure is to start bidding at the reserve price and if nobody bids, it don't sell. When they care to admit that the place is not worth the price they want, then it might get to selling - otherwise the town/city will soon have it since they probably are not paying taxes on it, and the town/city will auction the thing in a real auction.