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Going Once, Going Twice SOLD to the HIGHEST bidder who now has overpaid on a piece of the American Dream!
If you havent heard, on June 23rd at Cal Expo there will be 107 Sacramento area bank-owned houses put on the auctioning block that have been repossessed.
Some folks unfortunately, will get caught up in this and over pay during the frenzy of the moment. Thats what the Banks are counting on and there will be those that wont let the Banks down.
Now, you ask, is this a good thing? Absolutely not! In my opinion, the Banks have not made an attempt to renegotiate the bad loans that they disseminated nor have they accepted Short Sale offers on homes for sale during the Short Sale process because of their greed.
So, what we have here is an attempt by the Banks to give the public what they perceive as a good deal, an auction. Knowing full well, that there is a greater chance that the public who automatically thinks theyll get the deal of the century will help line the pockets of the Banks and at the same time, line the pockets of the Auction company.
Such a deal! Foreclosure and Auction are words that the public considers to be of benefit and lower prices. By using these words and holding the auction on foreclosed houses, the public perceives that they will come out ahead. WRONG!
I have been watching these banks in the short sales where they have been given the Value of the property and they simply ignore or turn their noses in the air. So, basically, these 107 Sacramento area foreclosed houses going on the auction block at Cal Expo will be auctioned off for more than what the houses are actually worth. Once again, the new home buyer will get duped.
If you read New Your Times article, entitled Get Your Red-Hot Foreclosures Here and just specifically read the line where it states that the Auction company had been dormant for a decade lenders contacted the companys officers and asked if they could get back into the business of auctioning properties. Hey, this isnt rocket science who do you think is profiting? Not you!
Hope you are smart enough not to be taken by this and realize that this is not just a wild guess of mine but is substantiated by the Short Sale process and by reading what has already occurred in Southern California with the auctioning of recent foreclosed properties. Heres what one couple had to say about their experience at the Southern CA auction:
Jim and Betty Botley of Chino were looking to spend what Ms. Botley defined as ˜$300,000, and thats it. The house they wanted went for an auction price of $550,000. The Botleys thought that it would have needed $50,000 to $100,000 for renovation. After the repairs, auction fee and closing costs, they couldnt see how anyone got a deal.
Usually, when purchasing a foreclosed house, the bidder must have all cash but in this instance, the auction company has arranged for a lender to finance the deals along with the winning bidder to pay the auction company 5% of the sales price of the first home and 15% of the sales price on additional houses. Now, thats what I call one hefty commission wouldnt you say? Not to mention the type of loan these lenders will be offering. Looks like another disaster waiting to happen. Shame on you Banks for not taking responsibility.
Home Buyers beware dont be taken in and pay more than what the property is worth. Dont be a sucker.
Banks, I have one thing to say to you wake up and start accepting some of the responsibility here. Dont take advantage of more victims. Start negotiating with the homeowners that currently have one of your poorly executed loans, start replying and accepting Short Sales and stop trying to recoup your losses by endangering more home buyers and investors with tantalization tactics!
Watch out, this auction company is scheduled in several of the surrounding areas including the Bay Area. Seems a bit like ambulance chasing, to me
Related Articles:
Sacramento Short Sales and Foreclosures
Are Short Sales and Foreclosures A Good Deal?
Foreclosures, Buy or Dont Buy?
Do You Understand Foreclosure?
Pingback: Money Sacramento Foreclosure Auction Looking for Suckers!
As always Gena, great job. Stopping by from the AR blog tour, kinda silly since I’ve been reading you in my feed reader, but what the heck!
Yes, I saw that happen this weekend in Sacramento, and it does beg the answer about whether the auction company is violating RESPA rules by somehow profiting from its on-hand lender. Call me silly, but I do suspect there could be kickbacks in some shape, form or manner. Otherwise, why would they bother?
But the goofiest people are those who didn’t realize that the lender couldn’t get the amount owed at a trustee’s sale, what makes them think the lender will get it now? Stupidity, I guess.
But hey, everybody LOVES an auction, right?
Jay, thanks for the drop-in, anyway and for feeding yourself.
Elizabeth, I think it’s very sad that these same Lenders who gave these loans are giving loans again on the same house. Since I am not prevy to the loan, I can only assume and what I’m assuming is that we may see more of the same again. Hope I’m wrong.
Hello Gina,
I am one of you neighboring brokers up in El Dorado County.
I may be wrong, but it has always been my understanding that federally chartered banks are not supposed to hold property for more that 5 years. I would need to look that up to verify that.
I personally think this is a last ditch effort for the banks to dump inventory before the public catches on and demands lower prices. Eventually they will have to start negotiating during the short sales and dropping there opening bids at the trustee’s sale. Essentially, they will start taking losses regardless of how much profit they ramp up from these auctions. That may not necessarily be a good thing.
Don’t get me wrong, the whole reason why we are here is because of the deplorable underwriting practices of the lending industry. From a personal stand point, I think they deserve every bit that is coming to them.
However, with that said, too much financial loss on the part of the banks could hurt the financial sector of our economy as a whole. In turn, that could effect the rest of the economy, which could potentially hurt us all.
So I leave you with these two question: Is it better thwart the efforts of the banks to generate enough profit to sustain them when the losses come? Or, should we just let the banks proceed and do what they can to stop the inevitable bleeding, so that when we get back a more normal market and it will be business as usually for everyone?
Side Note: Those of us who have been around the industry for a while should remember the early 1980′s. There is nothing new under the sun…
Gena,
Just stopped over from seeing the link at AR.
Hopefully buyers will follow your warning and call you for true real estate guidance!
Take care,
Lucky
Lucky, hi there stanger…glad you made it over. I too, hope that it helped those last Saturday and will help those with an upcoming Auction in Sacramento. Having good advice from a professional is extremely necessary before bidding on these homes and not getting caught up in the moment. The value that the auction companies place on these homes is outdated and it also is predatory that the Lenders are present giving loans to the winning bid as well as making them pay 5% on top of their bid to the Auction Co.
Your “sucker” comments seem to be a bit harsh. I know of two properties at the Sacramento auction that sold 15% below the estimated bpo figures. One property sold for 197000. The same property sold for 315000 2 years ago. Another sold for 155000 and similar fixed up homes sold in the same area for 230000. Bottom line is there are some deals out there if you have a sharp eye and don’t get caught up in all the hype.
Rick, yes there are deals but only if the Buyer does their homework. Getting caught up in the hype which is what a lot of Buyers do when they attend an auction was the reason for my blog. It is those individuals who do not use a professional to help them that end up as I put it, “suckers.”
I thank you for your opinion and it is obvious that you did your homework.
Anyone who overpays at an auction deserves it. That is why you do your homework, make phone calls, view the property, talk to realtors…no one got suckered here. Buying an investment is a “left brain” decision, not an emotional one. Buyer beware!!!
These are just disgruntled idiots who “think” they know anything about real estate investing. Stick to your day job people!
Edde, the blood is dripping…the banks will survive. I have all the faith in the world that this will hurt them. We will return to a more normal market for sure and all of this has hurt each and everyone of us. I’m a person who admires individuals and business who accept responsibility. Since I don’t see the banks admitting the sour loans that they propelled and the devastated ruins they injected…I felt the need to let the public know. I don’t want see anyone go out of business or subject each of us to more of this bleeding…just some accountability…would be nice.
Thank you for insight and taking the time to comment. We shall look back at this just as we have 80′s and 90′s.
Christian, it’s important to help those that may not realize the importance of good,sound professional help. We, as a nation don’t need any more home owners and/or investors traveling down the wrong path.
Sometimes, folks are looking for the golden egg and the easy way…there is not easy way…hard work, committment and goals…that’s where it’s at.
Thanks for dropping by Christian and sharing your thoughts.
Recently went to a couple of Hudson and Marshall REO auctions could not believe how low the houses were selling for .. The fever got me and I was the high bidder, $216,000 total(with title insurance and escrow. I valued this house at about 300,000. After filling out all the papers and waiting a couple of weeks I was informed that the bank refused my bid. I was also told the Wells Fargo refused about five hundred bids at recent auctions. I have driven by the house a couple of times since and it still has the “Bank Owned For Sale Sign” on it.
Welrdeir, yes I heard about the one that happened in West Sac and the bank changed their mind…in fact I wrote a blog about it.
The banks need to wake-up. They are banking on the fact that the bids will go higher and that the consumer will get caught up and pay more…when it doesn’t happen they simply don’t accept the offer that the highest bidder offered.
In your case, they are now hoping that someone will come in and offer a better price than you did but in the meantime, this property is costing them money every day…wake up banks!
i agree i think a lot of the forclosures could be prevented, and its like the banks want everyone to fail. thats really what a adjustable rate loan is, its a set up for failure.. in my experiance with mine. the bank wouldnt allow any partial payments, only paymemnt in full late charges and all, and after trying to refinance with 20 banks but being turned down because the market price wasnt there anymore. i contacted the bank and told them of my efferts, and trouble. i told them if they could rewrite the loan to keep the payment the way it was before it adjusted up. i could keep the house. even if it meant adding a balloon payment to the end or whatever. the bank would not work with me AT ALL!! so i say to them good luck on getting your $250,000. back on a house worth half that now. i offered, and begged to have them work with me, so i hope they choke on it!
Troy,
I hear horror stories like that every day. All this talk about re-negotiating loans is hogwash. It seems to me to be a ploy for the banks to get yet more money from the tax payers.
Until Congress starts putting stipulations on that money, I don’t think we will see any REAL help coming to those who want to work out their loans with the banks.
Sorry to hear that you were one of many who has had to endure the stupidity of the bank.
“Good luck on getting $250K back on a house worth half that, now.” That pretty much says it all…
The reason the congress won’t stipulate rules for the bank is that they are whores to the financial sector. Servants of the oligarchy. No democracy involved in this country anymore. (Well, it was a best a pluralist elite.)
Indy,
Sounds as though you have a definite opinion.
Are these auctions still going on in your area?
Whenever, a bank can’t seem to sell a property, they hire an auction company to try and sell.