On 5/4/2011 6:04 AM, Ignoramus15919 wrote:
I did not get the house. The auction conditions were that I am
completely obligated to follow through with the sale if the seller
(bank) agree. But the bank, has an option of rejecting my bid.

Being used to honest industrial auctions, I paid no heed, and bid $70k
for that house that I talked about.

After I won the bid, I wasted a lot of time and even bought some
cleaning supplies (nothing major) in anticipation.

Anyway, after two weeks or so, I got this email from the auction
company:

``The seller has notified us that they are needing something closer
to $107,000.00 for this property. Is there any way you can come up to
this amount? Please let me know how you wish to proceed. Thanks!''

Well, my answer to this, politely phrased, was that no, I am not going
to come up to that sort of a price, the house is crappy in many ways,
in a flood zone etc. Payin $107k leaves no room for profit and no room
for risk. I am not going to play that sort of a game. And so, the
seller rejected my bid.

I am now wondering if, perhaps, the whole "real estate auction"
concept, as practiced by this auction company, is just a clever "new
age marketing technique"?

What if what they want is to either get a sucker bid, or if the bid is
not a sucker bid, to just get the bidder excited about the property,
and ask for more money later?

In other words, this is a cleverly planned psychological ripoff, and
not an honest "let's just get rid of it quickly at an auction"
approach, like I see in industrial sales.

Any comments?

i


The auctions are legitimate. But. They all depend on the language of the
contract you are obliged to follow. In many auctions the contract will
say whatever the high bid is that's what the house goes for. But the
stipulation is you must pay the entire price in cash and on the spot.

From what you described the contract you were bound by gave the seller
rights to deny bids it deems unacceptable. Obviously the seller wanted
more than 70K for the property you bid on. In this case, you are in a
negotiation with a financial institution not an industrial one or a
private one. That makes a big difference. Financial institutions do some
really goofy and stupid things. But they have lots of money so that's
their right. In your case, they are negotiating with you to try to get
more for the property. You would think they would take the 70K and be
glad it's not less but that's what I mean by financials doing weird
things. They are trying to get a higher bid. If you don't think the
property is worth more than 70K then you decline and see if they counter
offer. Don't be surprised if they don't though and just lose even more
money on it.

In general auctions are a great way to buy real estate at bargain
prices. But since you have to pay up front in cash that means most
people can't get in on it. You just are dealing with a financial
business and that changes things. If I were you I'd keep looking, and
making low bids on property you think you can make a profit on until you
get a deal that succeeds.

Hawke