November Auction Winners Still Aren't In Homes
Nearly a quarter of 300 winning bidders from a November auction still have not taken title to the properties auctioned, despite representations from the auctioneer that the deals would close within 21 days, the Boston Globe reported March 22, 2008.
"The rules were simple: The high bidder on each property paid a $5,000 deposit, signed a purchase agreement, and arranged a mortgage. The company, Real Estate Disposition Corp., told bidders they would close within 21 days of the auction. But some sales have been delayed for months because the auction company accepted properties from mortgage companies before those companies completed the process of foreclosing on the prior owners. In other cases, bidders say they have received no explanation for the long wait."
For those of us helping clients purchase bank-owned and short sale properties, nothing is a surprise. On most occasions, banks are neither operating in good faith with buyers nor making rational decisions about the sale of properties. It's no wonder so many lenders are faced with a mountain of bad loans.
"In one instance, three friends made the winning bid of $130,000 on a house in Lee. The mortgage company delayed the closing, then sent a letter in February offering to return the deposit. Before the friends responded, the company put the house back on the market for $179,000, then quickly agreed to sell it to someone else."
Real Estate Disposition Corp. apparently holds auctions to sell foreclosed homes that mortgage companies can't sell on the open market, often because the properties are in poor condition.
The article pointed out something that most people don't realize about these multi-property auctions. Most properties being auctioned have a reserve, which means if the highest bid does not reach the reserve price the seller does not have to sell the property.
The company auctioned about 300 properties over two days at the Hynes Veterans Memorial Convention Center. According to an article in the Globe at the time, some people bid on properties they never saw. My guess is that the vast majority of those people had no idea what they were getting into.
Real Estate Disposition Corp. plans to auction roughly 170 more properties at the Hynes next Saturday. That ought to be interesting. I think many of these "wanna be" investors don't seek professional advice because they don't want to hear anything that contradicts their dreams of striking it rich.
Below I have attached a brochure I give potential clients that includes basic information about foreclosures.
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