Bid assignment for cash. Illegal?

6 Replies

I have a high bid at an auction in NC. I was approached with a deal to assign my bid to them for a price of $xx,xxx. After reading up on this, it feels like fraud and illegal The proposer said that assigning the bid for cash was not illegal, but offering cash to not upset the bid was the only illegal issue. 

Either way I am not taking the offer, just need a little clarification from someone who has been in this position before. One day I might would rather have the cash than the house.

Updated almost 2 years ago

It is illegal during the auction/upset bidding process.

Originally posted by @Steven Yow :

I have a high bid at an auction in NC. I was approached with a deal to assign my bid to them for a price of $xx,xxx. After reading up on this, it feels like fraud and illegal The proposer said that assigning the bid for cash was not illegal, but offering cash to not upset the bid was the only illegal issue. 

Either way I am not taking the offer, just need a little clarification from someone who has been in this position before. One day I might would rather have the cash than the house.

 Unless the purchase contract you signed when you won the bid at auction specifically states that the contract is not assignable, then it is assignable. 

So yes, you can assign a contract (that does not say it's not assignable) to buy real estate in exchange for cash from someone else. They can take over your position as buyer. Or, the other way to do it, is do a double close. You buy the property, close on it and then they buy it from you and close on it. The downside is you pay double the closing costs.

If you really like the property and they're not offering enough cash to make it worth your while, then don't sell or assign it.

Thanks Michael Ealy,

The nuance is that the bidding process is still open under upset bidding. 10 day period in NC. I talked with a law firm and it is ILLEGAL while bidding is ongoing. But after the auction closes it will be legal to assign the bid.

Originally posted by @Michael Ealy :
Originally posted by @Steven Yow:

I have a high bid at an auction in NC. I was approached with a deal to assign my bid to them for a price of $xx,xxx. After reading up on this, it feels like fraud and illegal The proposer said that assigning the bid for cash was not illegal, but offering cash to not upset the bid was the only illegal issue. 

Either way I am not taking the offer, just need a little clarification from someone who has been in this position before. One day I might would rather have the cash than the house.

 Unless the purchase contract you signed when you won the bid at auction specifically states that the contract is not assignable, then it is assignable. 

So yes, you can assign a contract (that does not say it's not assignable) to buy real estate in exchange for cash from someone else. They can take over your position as buyer. Or, the other way to do it, is do a double close. You buy the property, close on it and then they buy it from you and close on it. The downside is you pay double the closing costs.

If you really like the property and they're not offering enough cash to make it worth your while, then don't sell or assign it.

Mike this is NC were they have upset bids AFTER the auction.. one must be careful in that state the Feds did a raid a few years back for bid rigging and some guys got some huge fines in the tune of 750k plus.. good ole boy network.

while it can be done to assign your bid position it can be pretty tough in some markets like OHIO it a major pain. and since there are no closing costs at auctions you don't have to worry about double closing costs.. just close on the deal if you want to sell it sell it.. that keeps you at arms length for any thoughts of bid rigging

to buy off a bidder to preclude them from bidding for sure is a crime. 

 

Originally posted by @Steven Yow :

Thanks Michael Ealy,

The nuance is that the bidding process is still open under upset bidding. 10 day period in NC. I talked with a law firm and it is ILLEGAL while bidding is ongoing. But after the auction closes it will be legal to assign the bid.

 Yes that is what I mean. You have to win the bid first because you really have nothing to assign until then.

Originally posted by @Jay Hinrichs :
Originally posted by @Michael Ealy:
Originally posted by @Steven Yow:

I have a high bid at an auction in NC. I was approached with a deal to assign my bid to them for a price of $xx,xxx. After reading up on this, it feels like fraud and illegal The proposer said that assigning the bid for cash was not illegal, but offering cash to not upset the bid was the only illegal issue. 

Either way I am not taking the offer, just need a little clarification from someone who has been in this position before. One day I might would rather have the cash than the house.

 Unless the purchase contract you signed when you won the bid at auction specifically states that the contract is not assignable, then it is assignable. 

So yes, you can assign a contract (that does not say it's not assignable) to buy real estate in exchange for cash from someone else. They can take over your position as buyer. Or, the other way to do it, is do a double close. You buy the property, close on it and then they buy it from you and close on it. The downside is you pay double the closing costs.

If you really like the property and they're not offering enough cash to make it worth your while, then don't sell or assign it.

Mike this is NC were they have upset bids AFTER the auction.. one must be careful in that state the Feds did a raid a few years back for bid rigging and some guys got some huge fines in the tune of 750k plus.. good ole boy network.

while it can be done to assign your bid position it can be pretty tough in some markets like OHIO it a major pain. and since there are no closing costs at auctions you don't have to worry about double closing costs.. just close on the deal if you want to sell it sell it.. that keeps you at arms length for any thoughts of bid rigging

to buy off a bidder to preclude them from bidding for sure is a crime. 

 

Ok, thanks for letting me know. I can imagine why that is illegal and what I am saying is you can assign your contract if you secure the bid already. Which the OPs lawyer said is completely legal.