Winning Bidder at Hubzu, but reserve not met--- Advise??

Question

I was the highest  bidder at an auction, however the reserve was not met. Right away I received the offer below:

Even though your bid didn't meet the seller's reserve price, the seller is still offering you an exclusive chance to purchase the property. The seller is proposing a price for which they'd be willing to sell the property to you. The details of this proposal are below:

Bid Price ($)        :54,000.00

Technology Fee ($):299.00

Buyer's Premium($):2,430.00

Purchase Price ($):56,729.00

The bid started at $40K, and I am  reading above their reserve price was $54K. My bid was $48K.

Based on this information (and not in how much the property is worth or ARV calculations) What strategy would you recommend to get my offer accepted closest to my original $48K (plus fees will be around $50k)??

Account Closed · Answer

Hubzu will play a lot of games, and I found out if you buy with no contingency of financing and wave the inspection period they will accept your offer. Remember the longer you wait trying to get a better deal the Chinese people will pay fair market value. How did you arrive at $48K?

Elizabeth E. · Answer

@Andrew Stephens  .. interesting looks like the property you included the link for has the reserve met w/ auction ended - might be under contract soon.

I've been watching a property as well listed for what is now the fourth auction with every auction increasing in minimum bid amount based upon the highest amount from the previous auction.  Reserve is not met and I am starting to give up on the property, how much longer can Hubzu keep this going?

Andrew Stephens · Answer

I purchased a house on Hubzu in 2015.  My bid was below the reserve price and Hubzu accepted it.  Then I wrote them and asked for an early closing date.  No response.  1 week later they wrote and offered me $1,000 discount if I closed early. I said yes.

I looked at several houses on Hubzu this year but I've noticed that the auction cycle has changed -- several houses I followed were listed in auctions, but when the auctions did not bid up, Hubzu closed the auction and started over again in a new auction for the property.  They can repeat this cycle 3 or 4 times or more.

Meanwhile, similar investment-type houses on the MLS will sell in 3 or 4 days at several thousand dollars over asking price.  One house I toured in Northern Prince George's County MD had 7 junk cars in the yard.  It was a short sale listed at $235,000 and there were multiple offers up to $235,000.

One thing to keep in mind with Hubzu and the other auction sites is that the banks do not pay any of the closing costs or transfer taxes.  Add in their auction or "technology fee" and the total cash needed can be quite a bit more than purchasing a house in a traditional sale.

Tonya Toomey · Answer

I know this is an old post, but I'm hoping someone will see and give some thoughts? I was wondering if the auction sites (like Auction.com) list them x number of times, look at the highest bid that doesn't meet the reserve, then they sell them in bulk to another agency (perhaps for the price of the highest bidder), to other groups such as Hubzu.com or CastleRockREO? I know the banks do sell properties in bulk, auction sites frequently relist properties multiple times and hubzu sells their own properties and properties for others - but I was wondering if that's how the game is played?

Aaron Carter · Answer

Thanks for the input. I now have the house under contract for $142,000 we close on July 9th.

It also has a 2 bed 1 bath apartment on the property as well. Have a renter lined up for $800 a month including utilities as they are not separated.

Still puts a good dent in our mortgage. And with it being on 7 acres there is still plenty of privacy.

Don't have the appraisal back yet but I am conservatively estimating $190,000. Needs about 3000 in work. It was built in 2001 so I the house doesn't need any renovation. Just need to get rid of some left over pet odors...

It was listed at $227,000 last fall before it was foreclosed on.

Account Closed · Answer

You should have bid one thousand more than the last bidder and see if you got the deal.

Joe Gore

Warren L. · Answer

I put a bid on a property on Hubzu few days ago. I was the highest bidder until the last hour when someone bid a thousand dollars more. The same property was re-listed on the site again yesterday and I guess maybe the bidder dropped out (if the person is a real bidder at all). The auctioneer didn't even review my bid which was only a thousand dollars less. This is not the first time I've seen this and it looks very suspicious, makes me think if Hubzu is a legit auction site.

John Oden · Answer

@Aaron Carter  I've been watching about a dozen properties in both the greater Nashville, TN and Tampa, FL markets and I've chosen Option #1, which is to let the auction end with my bid as the high bid, even though the reserve was not met.

The property to which I referred in my post has gone through no less than five auction cycles since I've started watching it. I've been high bid in two of those auctions but with the reserve not met. They continue to re-list and try again. This particular property did meet the reserve on one auction when a bidder ran it up to what I considered a ridiculous number. A week later, I saw it was re-listed, thus beginning another cycle. Since there is no vetting of buyers, anybody can bid anything without having to provide proof of funds, etc. I can only assume the buyer couldn't perform.

This same cycle repeats on every property I have on watch. I've been following Hubzu auctions for two months now, and I don't think a single property has sold. They simply continue to re-list. In only one case did I receive a counter offer, which I rejected.

I'll continue to keep an eye on Hubzu properties because the time and effort required is minimal, but I don't consider it a useful way to acquire property. The two markets I'm watching are pretty hot right now, and whoever or whatever in the Hubzu back office seems to realize this, but from what I see, they are just churning and nothing is getting sold.

Aaron Carter · Answer

I am in the same situation as you at this time and was wondering how things turned out for you and which option you chose. This will be my primary residence as opposed to a buy and hold.

Phil Z. · Answer

I had a situation where I contimplated wether the auction house was placing straw bids ..

Winning Bidder at Hubzu, but reserve not met---> Advise??