Investor · Shakopee, MN · Member since 2014 · 219 posts · 88 votes
I am bidding on a 2 bedroom Single Family Home to make into a rental. With finished basement it would be a 3 bedroom 2 bath.
It's in a small town and comps are usualyl around $90k - $150k although hard to say for sure.
House has some damage and needs about 20k of repair which includes getting the basement up to snuff. It has some mold due to some water issues. Seems like the wet spring caused water to come into the basement.
Hard to get rental comps. Best I can find is a 2 bedroom apartment fro $575.
Anyway, I bid $25k and was the only bidder at the point the auction ended.
They countered at $32k plus fees.
Not sure what to do. That $7k would buy the new roof that it needs.
If I recall correctly, you don;t have an option to counter the counter-offer, so you can only decide to accept or reject their number.
I agree with @Troy Fisher - if the numbers don;t work for you then let it go. Chances are they'll bring it back with a new action and maybe next time they'll take the 25k
I was willing to bid higher. My rough numbers were thinking about $25k in repairs. All in with the new price, I'd be at about $60k, but at that point rents would likely be at $1,000-$1100.
@Andrew S. is correct, you can only accept or reject the counter offer.
If you reject they will probably re-post it starting at or $1K above your last bid, and just repeat the process.
They will keep lowering the price steadily if no one is buying or bidding, so you could wait it out, but the risk is someone else jumping in once it gets to the low point you're looking for.
If $25K is what you think makes sense, wait it out. Even if someone else comes a long and wins the bid, or uses the "Buy it now" button that they sometimes make available, then just stick in $25K as a "Back-up bid". I've heard from many people that most of the houses they got on Hubzu they got as a back-up bid once the original buyer backed out after reading their ridiculous contract.
@Dan D. I've been watching a place, and monitoring a few others just to understand more about their process and behavior.
So far it seems the starting bid means nothing, they will drop the starting bid every week dramatically to try and stir up interest, but they have a very set minimum or reserve for the property, at least for a few weeks, then they'll drop that reserve as well.
The one I've been watching has had starting bids from $176 all the way down to $121, and for the first month or so the counter was always $232. Then it was about $218. Now after a few months, the most recent counter I got last week, was $193 (starting bid $156).
In between that time it was "Under Contract" (I question if it was for real or not), and they eventually offered it to me as a back-up bid. I already moved on to another one I made an offer on so I cancelled the bid.
That other one fell through, now I'm back on it, and looking for it to be about $183, so I'm almost there!
@Matt Overbee Thanks for the information. I think I'm going to pass and watch it again in the next week / weeks. Anxious to see what happens. This is basically my first newly acquired rental so I'm anxious to get started, but don't want to start off on the wrong foot either.
They relisted with a starting bid of $1,000 over what I bid last time. I bid at the starting bid amount. No other bids.
"Auction" ended. Reserve not met.
They countered with an offer to bid $35k plus tech fees, etc., which would put me around $37k so I'm declining that.
So since they raised the starting bid by $1,000 they feel they can counter about $2,000 higher.
I expect it to be relisted again this time starting $1,000 higher and this time I won't bid at all to see if the next time it get's relisted at a lower amount or not.
@Dan D. Nice. That's pretty consistent with what I've seen, that they would relist $1K above the last bid. If no one bids they'll reduce at least the starting bid, potentially not the reserve price though. It seems like they reduce the reserve after about a month with no contract.
Hubzu is a scam. There are stories her on BP where Hubzu actually bids along with the actual buyers to raise the price. Then if no one goes above them they just tell the 2nd highest bidder that the highest bidder bowed out or couldn't close or something.
Total Scam, I wish these banks would quit using them. If you call it an "auction" then treat it like an auction and be consistent.
@Dan D. I agree on your thinking about not bidding and hopefully they realize there is not much interest and you get it at a much lower price. Just wait them out and don't give in.
I don't think it's a scam from my limited experience.
I think it's a true auction with a true reserve.
What is odd however is the countering of the bids.
Both times I bid below the reserve as a starting bid, and they have countered upon completion of the auction.
I think it's odd that they raise the "counter offer" to the same winning bidder who turned it down just a week ago. All that changed was they raised the starting bid by $1,000.
So if I'm correct in my assumption, they will list the starting bid at what I left it off at previously. Then they will counter another $2500 higher if reserve isn't met.
OR
They won't get bids, and they'll maybe drop the starting bid again with an unknown counter offer.
I don't believe it's a scam either... If it is I'll find out soon. :)
I did end up accepting their last counter to me last week for the property I was watching and we have an executed contract, planning to close mid-October.
It's just a horrible system for selling a property. It is an auction similar to ebay with a reserve, but there is just no sense in their strategy. If you go weeks with no bidders then get one finally that doesn't accept your counter. Why would you start the next auction at that price, obviously no one was interested at that price point for weeks!
I think it's just very robotic and scripted, I don't think there's anyone behind the scenes that even realizes you're the same bidder. Once you win they hand it to a processor in India that will also be very robotic scripted, like your standard customer service line these days.
The silver lining is that their one-sided contract and policies generally scare off the normal consumer and most realtors don't want to deal with them, so they eventually have to make the price appealing to investors. :)
They relisted again at a starting bid of $1,000 over what I bid last time with a "buy it now" of $38,000.
I didn't watch it because I wasn't going to bid on it this time. Some other person or persons bid it to $33,000 which did not meet their reserve for this time.
I am assuming they countered at around $35,000 or $36,000. Today I got an email that it is now under contract so it won't be listed again.
Obviously, now I'm kicking myself for not accepting the first counter since I'm not finding any other homes in that area for comparable prices.
Don't give up on it @Dan D. . Make sure to throw in a Back-up Bid, it should give you that option still.
The one I'm currently under contract for with them was also previously "Under Contract", and fell through and offered to me as the back-up. And if you read about a few others' experiences with them, it seems like MOST of the properties they got they were offered as the back-up bid on the site, when the original bidder bails.
Seems like a lot of people bail out. They probably don't realize how one sided the contract is going to be and get cold feet.
I wanted to clear up a few items from your post as it includes some misconceptions about how Hubzu operates. It is very understandable given the growing popularity of the online transaction and the numerous ways auction companies operate.
Hubzu believes in the transparency and integrity of auction and wishes to protect the public trust and further the goals of the auction profession. Therefore, we join the National Auctioneers Association (NAA) in condemning any practice of "shill" bidding to artificially inflate bids or circumvent the declared intention to sell the property to the highest good faith bidder.
Shill bidding (also referred to as "by-bidding", "ghost bidding" and "puffing") or any other schemes to inflate bids are not permitted under the NAA Code of Ethics and under many state laws. While the NAA Code of Ethics establishes obligations which may go beyond those mandated by law, we also believe that many state laws address shill bidding. Beyond these ethical considerations, in virtually every jurisdiction an auctioneer (or auction platform) is prohibited by law from knowingly receiving a bid on the seller's behalf or permitting the seller to make or procure such a bid unless notice has been given that liberty for such bidding has been reserved. In many jurisdictions, bidding by the auctioneer or seller is prohibited even where notice is given of the right to do so. At a minimum, if the seller or auction company chooses to employ shill bidding, it should alert the other bidders each time a shill bid is entered, so the auction process remains transparent and the auctioneer protects the integrity of the process.
While most auctioneers and companies maintain the same anti-shill bidding goals and policies as Hubzu, we understand that some companies engage in shill bidding and use veiled disclosures in their terms and conditions to attempt to exonerate the auction company's shill bidding. Hubzu does not condone or permit shill bidding, and further, we do not allow our sellers to dictate and mandate shill bidding. We do not allow shill bidding in our auction short sales or any other auction sales (REO, non-distressed, retail, foreclosure, etc.). We believe that the use of a reserve price is sufficient to protect the seller's interest, and that shill bidding simply creates mistrust and confusion in the auction process and its use denigrates the entire industry.
I hope this helps add clarity around how we operate. Additionally I want to assure you that Hubzu is not a "scam." In fact, we have successfully sold over 100k homes since 2009 and are a subsidiary of a large, multi-billion publicly traded company. Forbes has honored us as one of the fastest growing companies in the US for the second consecutive year.
I sincerely hope that you might reconsider using our platform for a future purchase.