I was the highest bidder on a house on Auction.com today, however I have a bad feeling about how the bidding went down.
I should preface by saying that this house is not intended to be a flip. My husband works out of state 50% of the time and we were looking for an inexpensive second home to get him out of company housing & have a place for the baby and I to stay when we visit. We were hoping to still make a good investment while we were at it though.
The starting bid on the house was $55k, but we had researched and knew the outstanding loan balance is $120k. As soon as we began bidding it became evident that there was one person bidding against us. We quickly reached what we said was our max price of $85k. At that point we reassessed & decided that we were ok with not making a profit on the house if/when we decide to sell since we would be getting use out of it for at least a few years; we would just want to be able to break even.
This is where I feel it gets fishy. We continued to bid & so did the other person...just until the reserve was met. As soon as the reserve was met, the other person stopped bidding and we won the auction for $118,500, just barely under the outstanding loan balance. It all just feels very suspicious, but how would we prove anything? Even if we could prove it was the bank bidding against us on their own property, is that illegal? We’re having serious buyers remorse now & feeling like we really screwed up in not sticking to our original budget. I’m even wondering if it would be better to just lose the $2,500 deposit than overpay for the house :-( Anyone have any insight?
This is the last bulletpoint in the list on auction.com
Until the seller's reserve price is met, Auction.com may counter bid on behalf of the seller. Counter bidding gives buyers and sellers more flexibility to find a mutually agreeable price. Counter bids do not occur after the seller's reserve price is met.
So it isn't fishy, it is auction.com doing its job for the seller. I'm sorry that you are feeling pain about the decision now.
Caveat: I've acquired a small number of properties through auctions, and none on auction.com (yet?).
Although its total hindsight for you at this point, my personal rule for all auctions is to pick my absolute 'happy' max and bid that. If bidding goes $1 above that price, let it go. Don't try to win the property or beat the other bidder(s). If you leave the auction not-unhappy, you 'won'.
I have heard that some properties on auction.com can go under reserve, not get the sale only to later have the seller contact you (and offer you @ their reserve). I consider what you experienced as a shortcut to this conclusion.
So basically we’re just idiots who didn’t read carefully enough. Guess it’s true lessons are always learned the hard way.
In my (limited) experience, they dont accept any offers under the reserve anyway. They just try auctioning it over and over again. If you really wanted that house, that's probably what you would pay regardless, so dont feel too bad.
What's the ARV? Are there liens?
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