So I finally started my real estate journey back mid-summer....
I found a local property on Auction.com and drove by to check it out - decent neighborhood, vacant, and didn't appear to be in too bad of shape. So I went thru the process of registering to bid. The $2500 cancellation fee made me a bit nervous but I understood that was to prevent anyone who wasn't a serious buyer from bidding. I had the cash in CDs to cover my maximum bid so that wasn't a concern.
I waited until the final day of bidding to see what it would be going for. Turns out no one else had bid so I entered the minimum. I bid back and forth with someone else (I assume it was Auction.com bidding on behalf of the seller). It eventually hit the reserve and I won the auction! Wooah!
I went thru and wired the earnest money, signed the contract, and broke the news to my girlfriend that I had bought a house online... ha!
It was taking a bit longer to get the signed contract from the seller. So I called. And was finally told that they were working on getting the signed contract from the seller but that the servicing agent was in the process of being transitioned from Cenlar to Rushmore and that while Cenlar didn't have the 'file' anymore that Rushmore hadn't 'onboarded' it yet. However, I was told that the seller had indicated that they intended to go forward with the transaction but it had to work its way through their process. Cool! However, it was taking a loooong time (months) so I kept calling... and calling and would get the same message. "The seller intends to go thru but we don't have an update but we are reaching out to them." That was fine since we were closing in on fall and school had started, which meant it'd likely be harder to rent. So I decided to be patient.
Finally last month (while I was at the BP Conference in Nashville no less), I got a message from Auction.com that the seller had signed and we had an executed contract! Awesome!!! So I liquidated my CDs and incurred a substantial early withdrawal penalty but it'd be cheaper than borrowing the funds so that was ok.
Having read that it was better to use your own title company, I decided to use a local lawyer and put Auction.com in touch with them. Last week, I got a message from the local atty that we had a closing date of Nov 18th at 1pm. Finally!
So Last Friday (Nov 16th), I called Auction.com to find out how I could get access to the property since there was a lock box. I called went thru the usual "Is there an address of a property I can help you with?", told them the address, and was told that after closing on Monday I'd be able to call and get the code but could do whatever I needed to at that time to get in the property. Again awesome!
I got a call yesterday (Monday) morning before closing from the local closing atty that they didn't have everything the needed for closing and would be back in contact to reschedule. Ok. I've been patient this long and besides - repairing and trying to get rented this close to the holidays isn't ideal.
Well, this morning, I get a call from Auction.com that there's been some type of confusion between them and the seller and that the property has reverted to HUD?! Uh.. ok. And as a result, they won't be following thru with the contract?! Wait... what ?! I, still in a bit of shock, point out that I've incurred expenses (e.g. CD early redemption) as a result of the info they've provided and that I have a signed contract. They politely pointed out that the contract allows the seller to back out.
So, needless to say, I'm running through a range of emotions - disappointment, perplexed, angry, and just p**ssed off. I'm not entirely sure what 'reverted to HUD' means and neither was the person I spoke to at Auction.com. Or why after months of "the seller intends to proceed with the contract" that the seller... didn't.. proceed.
Anyway, if you've read this far. Thanks! I needed to vent. Also, any advice is appreciated. Ugh.
Great post...well articulated. Sorry for the experience. Many say they love auction.com but i'm not one of those people, primarily for the reasons you point out.
So, put your money in the bank and go to a non auction.com foreclosure sale and try again.
The house is now owned and will be marketed by HUD. Keep an eye on
You may be able to acquire the property at 87-88% of the listing price.
I've never met anyone who has successfully purchased a property from them......
Be careful with Auction.com when purchasing a property. You should always go to the courthouse stairs or where ever the place is that is having the foreclosure sale. That way you get your property (today), the paperwork and all documents needed to record the deed! If you go on-line, you will be subject to the "run-a-round" that you just received.
Here's an example of a purchase on-line. My real estate friend and co-worker did basically the same as what you did, bought on line. They were excited, jumping for joy they got this property. Well, after three months of playing around with Auction.com they find out that a developer (adjoining property) built a home and upon building the home, hooked up to the water and sewer. The property they now owned had an easement to the water and sewer through the adjacent property that the builder was building on. Guess what happened? YUP, because the property that was issued a building permit by the city built over the easement and the purchased property would now have NO EASEMENT to get to the resources to make the property (bought through Auction.com on-line) habitable!
Now with all of that said, having myself, the co-workers going to the city, water & sewer districts to argue the case, was eventually resolved by a court case that lasted two years and eventually my co-workers lost their case against the builder. They then had to either tear down the property or take off a garage that the sewer line was under in order to hook up to the cities utilities. Yes, my co-workers lost their butts on an on-line purchase deal.... Buyer beware!!!
They did finally complete the renovations, hook up to city utilities and was able to sell the property for a $20,000 loss! What an expensive lesson to learn. Now we are brokers, I'm a Managing Broker and this stuff real does happen every day! So, I will never buy on-line through any auction company!
@Peter McDonough I purchased one over the summer that I flipped but it was far from a smooth process. Way too much back and forth after winning the bid and signing the contract.
How much did you pay for the darn house ? You never said ????
I purchased several homes from auction,.com over the years with some bumps but was able to make some money. This last home I got under contractI did all the paperwork and waited and waited. In the mean time I kept getting threatening emails about not closing even though my escrow officer kept reminding them that there is a lis pendens on the property Finally after 6 weeks or so they cancelled the deal and refunded my deposit . They still have not cleared the lis pendens ( it is from the previous owner whom was foreclosed ), almost a year later the property is still not back on the market...
We bought our primary residence through Hubzu about 5 years ago. We won the auction in July, but did not close until October. I don't know how many hours were spent on the phone with uninformed call center reps who had to put us on hold while they "researched the file." It's worked out well for us eventually, as we started out with instant equity in an area that has appreciated steadily...but I won't use them again.
I've bought 5 or 6 SFHs from auction.com on the courthouse steps or during the subsequent outbid period at the courthouse. All closed withing 30 days of winning the bid. Used to be my favorite way to buy until the hedge fund reps began showing up.
Online auctions is like dealing with the govt or your local DMV but much worse! Noone has a clue as to what is going on. The person in charge of that file keeps changing hands.
And I am 100% sure that they bid up the properties untill it hits reserve. Be very careful when bidding, you might think you are bidding against another investor but in fact you are actually bidding against a computer.
Interestingly, throughout the process the Auction.com reps would repeatedly assure me that this was outside the norm, but I suspect that's not exactly true.
I think that what bothers me the most is the lack of transparency in the process.
I can't help but wonder if Auction.com's business model is essentially getting a buyer under contract then seeing if the seller's interested the contract - somewhat like wholesaling in reverse.