Residential Real Estate Agent · Royal Oak, MI · Member since 2014 · 42 posts · 16 votes
Does anyone have experience with a 'Pre-Auction bid' on Auction.com?
Recently I place a 'pre-auction bid' on a home that has an opening bid of $40k, and Auction opens May 18th. I bid once and received an immediate message my bid was too low. (I bid much higher than $40k). I increased my bid and was told to send my POF...etc. And now I'm waiting in the dark, after I send POF.
Any experience? Thanks in advance.
That's actually very helpful information about needing to be listed for 5 days before anything was accepted. I guess that makes sense and explains why it takes awhile to hear back sometimes.
What did you mean by: "I purchased 40k (22%) under the foreclosure amount."?
Could you be more specific about the #s? I'm working on 2 auction.com deals right now
I have bought a fair amount of properties online via the different auction sites. The foreclosing amount has very little to do with what the property will sell for at auction. Many lenders especially ones that had loans written in 06-09 have insurance and government backing that if the borrower defaults they will get total debt amount paid back. Other reasons they foreclose at total debt is that they can also now claim that as a write off.
Now to the important part of buying it once its REO post foreclosure. It has more to do with the BPO (Broker Pricing Opinion) of current value. Most asset managers will then take a percentage of that BPO value and set that as the reserve most common is 80-90% of BPO price. However if an asset is not getting much traction (Multiple unsuccessful bids, Low to no interest or months of limited action) they will drop the reserve or accept prices below their reserve.
Additionally this is just a theory I have but I also believe that there are times when bank liquidity issues are also a factor to when they will accept lower than normal bid prices, and low foreclosure pricing. However there is no way for me to really research if that is true or not but it is my speculation.
Good luck sometimes it is a matter of being the top bidder several times before you can get an asset at the price you need to make sense.
Real Estate Investor · Saint Petersburg, FL · Member since 2013 · 1k+ posts · 951 votes
11y
With Auction.com the "pre-auction bids" are not an auction bid. They are your highest and best offer to purchase the home and have the seller pull the auction. Your bid will not be entered as a bid in the auction and is just an offer, despite them calling it a bid. If it's not what the seller was looking for they'll run the auction and see where it ends up at.
Residential Real Estate Agent · Royal Oak, MI · Member since 2014 · 42 posts · 16 votes
11y
Wayne Brooks from the verbiage on the site it appears that this is a way to purchase the home before the actual action. I would like to purchase this before the auction opens...before more eyes are attracted to the home.
Thanks, Patrick L.
I am guessing they will wait for these highest n best offers to be submitted until the auction date, then make a decision?
Residential Real Estate Agent · Royal Oak, MI · Member since 2014 · 42 posts · 16 votes
11y
@Mark Gee the whole process was surprising smooth and straight forward.
I bid during the pre-auction period, and was contacted by Auction.com via phone almost immediately. I was told the home must be 'advertised' on their site for five days before the bank would accept any offers. (Home was NOT on MLS) I was told my offer was 'slightly' lower the the banks reserve. (Also told I was only bidder at that point) I increased my bid by 2k, waited until the next day (5th day). I was called next day at noon to confirm bank accepting offer.
I do not know if the bank reserve would have changed if it went to auction, knowing the numbers I doubt in my case. I purchased 40k (22%) under the foreclosure amount.
I no longer hate or are scared of Auction.com listings.
That's actually very helpful information about needing to be listed for 5 days before anything was accepted. I guess that makes sense and explains why it takes awhile to hear back sometimes.
What did you mean by: "I purchased 40k (22%) under the foreclosure amount."?
Could you be more specific about the #s? I'm working on 2 auction.com deals right now
That's actually very helpful information about needing to be listed for 5 days before anything was accepted. I guess that makes sense and explains why it takes awhile to hear back sometimes.
What did you mean by: "I purchased 40k (22%) under the foreclosure amount."?
Could you be more specific about the #s? I'm working on 2 auction.com deals right now
I have bought a fair amount of properties online via the different auction sites. The foreclosing amount has very little to do with what the property will sell for at auction. Many lenders especially ones that had loans written in 06-09 have insurance and government backing that if the borrower defaults they will get total debt amount paid back. Other reasons they foreclose at total debt is that they can also now claim that as a write off.
Now to the important part of buying it once its REO post foreclosure. It has more to do with the BPO (Broker Pricing Opinion) of current value. Most asset managers will then take a percentage of that BPO value and set that as the reserve most common is 80-90% of BPO price. However if an asset is not getting much traction (Multiple unsuccessful bids, Low to no interest or months of limited action) they will drop the reserve or accept prices below their reserve.
Additionally this is just a theory I have but I also believe that there are times when bank liquidity issues are also a factor to when they will accept lower than normal bid prices, and low foreclosure pricing. However there is no way for me to really research if that is true or not but it is my speculation.
Good luck sometimes it is a matter of being the top bidder several times before you can get an asset at the price you need to make sense.
Investor · Turtle Creek, PA · Member since 2015 · 12 posts · 2 votes
10y
So from what I am reading it sounds as though with the Pre-Auction bid, the house may very well not even make it to auction. If I am very interested in a property should I just go ahead and enter my pre-auction bid?
Real Estate Agent · Orange Park, FL · Member since 2016 · 1 post · 1 vote
10y
We have done several pre-auction bids. Some are accepted, some not. I once put in an offer a REO for $145-148K, when it was on MLS. The bank turned us down. A few weeks later, it was on auction.com. I put in a pre-bid offer for $120K and they accepted the offer!!! Also, I still got paid a commission. (I'm a Realtor.) Point: you just do not know 'what' the Bank is thinking or will do.
A few weeks ago, we bid on a property on auction.com. We had our numbers and I didn't budge past them. The auction ended without the reserve being met. The following day, the home was back online again. This time, I upped my numbers just a few thousand. We "won" the auction at $205K, yet subject to the Seller's approval. We were contacted by auction.com, wanting to submit our bid to the Seller. We did the paperwork, then wiring our $10,200 EMD; now waiting to hear as to whether or not the Seller/Bank will accept our bid/offer. Auction.com is saying the Seller has 15 days to respond, which irritates me. I'm missing out on other auctions. The property is also occupied and I am concerned about the timeline. Trying to evict near holidays is not good in our county! I was hoping to have an answer as fast as we have in the past. Apparently, not this time.....
Investor · Lakeland, FL · Member since 2016 · 105 posts · 61 votes
10y
I'm currently about a week or 2 away from closing on a property that I bid on with a pre-auction bid. It's taking kinda long for a all cash deal ... over a month so far since the contract was signed by the seller (Wells Fargo). I have been wanting that specific house for a while.. it was foreclosed on by Wells Fargo in 2013 and they then sold it to HUD and hud sent it back to Wells Fargo and they listed it on auction.com... I own the property across from the one that I'm buying.
Investor · Florence, AL · Member since 2016 · 65 posts · 20 votes
9y
Pre-Auction purchases are definitely not fast! I made a bid in July, it was accepted and I wired the 5%. It finally closed yesterday. The aggravation is, having to keep that "cash-only" funding available that long. And the former owner got to live there for free the whole time.
A great deal so it'll all work out....just frustrating at the time.