The Evolution of an REDC Auction Deal
I couldn’t get the song out my head. Leroy Van Dyke sang it. My Dad would play this tune in the aftermarket cassette deck of our 1976 Chevy Caprice wood paneled station wagon over and over again.
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As I entered the grand ballroom of the Hyatt Regency Downtown Phoenix that early Saturday morning in June the lyrics from ‘The Auctioneer’ came flooding back to me.
He’d stand and listen carefully then pretty soon he began to see how the auctioneer could talk so rapidly. He said,“Oh, my, it’s do or die I’ve got to learn that auction cry, gotta make my mark and be an auctioneer.”
The well dressed man standing at the podium announced the auction would begin in 5 minutes. I was nervous. More than 400 homes would be sold off that day. I had whittled down my list of biddable properties to 13. Luckily, the first home I planned to bid on was 26th on the list so I had plenty of time to work the butterflies out of my stomach.
According to their website, the Real Estate Disposition Company (REDC), also known as auction.com, has sold in excess of $7.5 Billion of real estate assets and conducted over 900 auctions featuring 105,000 properties since 2007. What they don’t say on their website is that they do it with style.
When the well dressed man standing at the podium opened up the bidding on the first home the ballroom became electrified. Bidder cards shot up in the air. Barkers barked. Hep! Hep! Hep! It was intense.
By the time the auctioneer came to one of the 13 homes my partner and I planned to bid on we were ready. Many of the properties we targeted could only be sold to cash buyers like us because of their condition (i.e. occupied, unfinished, falling down, burned down or to put it nicely – uninhabitable.) The one and only house we won that day happened to be occupied (it turns out it really wasn’t – good news for us!)
Now at this point you are probably are wondering why I titled this post The Evolution of an REDC Auction Deal right? If you’re anything like me you thought we win the bid, pay the cash and start rehab on Monday morning. Not so fast! After my partner and I were led to a closing table to sign the contract documents we were asked if we would like a quick closing. We emphatically said yes and it was noted in their file.
51 days later, after signing multiple addendums, amendments and exchanging countless phone calls with an out of state title company rep we finally closed on this home. Can you imagine if we said no when they asked if we wanted a quick closing? This deal didn’t progress, it evolved.
Don’t get me wrong. The REDC does an excellent job of facilitating these auctions. It’s a first class operation. Just remember that these are bank owned homes and the REDC works for the banks. If you plan to purchase an investment property at one of these auctions you may face some of the same frustrations (aloof asset managers, poor communication, closing extensions) you would when buying an REO property on the MLS.
The best part of this story is that my investors were pleased with the end result. We flipped the home in 61 days for a net profit of $18,300. The worst part? That damn song is still ringing in my ears.
Fifty dollar bid it now, fifty-five, will you gimmie fifty-five, to make it fifty-five, to bid it a fifty-five, sold that horse for a fifty-five dollar bill.