I was the highest (not winning) bidder on an online auction. Homesearch.com called the next day and said that my bid was "waay off the reserve price", so it must be forwarded to the bank for review. The representative wanted to know if this was my "final and best" offer. I said that I'll let them know tomorrow, after talking with my realtor and possibly an attorney. She said ok. The auction did seem a bit suspicious to me...it seemed like I was the only bidder (besides what seemed like straw bids from the auction house). Also, as the time between my bids became longer (I was reaching my pre-determined limit), the bid increment dropped from $7500 to $2500. Seemed like they were trying to get me to press that button one more time! Anyway, I'd like some opinions about what to do. Should I stand on my original price? Should I offer a few thousand more? It's a potentially very nice home, but needs a lot of work. If I give them much more, there is not a lot of room for profit on a flip. Has anyone stood on their original bid and had it accepted? Thanks.

Hi I am a rental investor, and recently purchased a foreclosure property (occupied by tenants), site unseen, for cash, on auction, on this site. Here are my comments. - The whole transaction was painless, and we closed within 2 weeks, and I used their closing attorney with no issues. - I was the high bidder, but the reserve was not met. They approached me to go higher, but I told them that I had reached the limit of what I was prepared to pay. It was a fair price, and they accepted. The price was in line with other comparable foreclosures in the area, and was also well below market value. It was also high risk because I could not see the inside of the property, do an inspection, and the property was still occupied. - I believe that I was bidding against a "ghost bidder". (offer/counter-offer) -The terms of the contract were all completely in their favor. My conclusion is that they are a legitimate site. They are offloading (mostly) foreclosed homes, and that they provide an easy way to directly negotiate price through a series or offers and counter-offers (bids). I have no complaints. However, buyer beware! If you are going to bid on this site, follow these guidelines: 1. Spend a lot of time doing your homework on the property. Know what it is worth, and what you are prepared to pay, including the risks, and any hidden surprises. 3. Make sure that they give you a Special Warranty Deed, not just a Quitclaim Deed. I queried this in the contract, and they said that it was a 'mistake', and changed it. 2. Decide how much you are prepared to pay, and don't go any higher. How much is the property worth to you, and how much can you afford? Do not budge from this. Avoid online auctions if you like to gamble, and can't resist putting in "just one more" bid. 3. Be sure to do a title search. I did a title search on one of their properties and came up with $15000 in liens against the property. I did my own manual title search and also paid for a title search on the property that I eventually purchased. Both came up clear. 4. Factor in the RISK when deciding your final price. If you have not seen inside the property, cannot do an inspection, and have tenants to deal with, than assume that you may not get access to the property for 4 months, and that the interior is a mess, and requires a complete renovation. What is it worth to you under these circumstances? Will you still come out ahead? 5. Bidding is very stressful. Try not to get emotionally attached to the outcome of the bidding process. You may not win this one. 6. Do not put another bid in immediately when you are out-outbid. The action will go into overtime if there is active bidding in the final hour and the reserve has not been met. Maybe there is no real reserve, and you are bidding against yourself. That is why it is important to know what you are prepared to pay. If your final offer is not a reasonable offer, they will not accept it. They have their ratios and targets to follow. 7. They will adjust the "bid increments" once they see that they have a serious bidder. Do not bid again if the larger increment pushes you beyond what you are prepared to pay. Wait it out. Watch the site and check to see if the increment comes down again. I am curious to know if anyone out there has ever reached the reserve price. Also, do they always call the highest bidder? Good luck! I hope this helped you. Sue

In another thread recently someone pointed out that on most of these auction sites (and I think HomeSearch was one the called out specifically) if you read all the terms they do basically say they reserve the right to put in BS bids on their properties to drive up the price. So that very well could be what was happening to you. Regardless of that issue... As far as paying more than your bid, that is up to you based on what you think it is worth. Sounds like you can't go up much and still make the profit you want. That sounds like the answer is stick with the original or go up a small amount that is still in the range you wanted to be in. In my past experience I have had this situation always happen where I have no met the reserve but have been the high bidder. I have had them just give it to me since they wanted to be rid of it. I have had them come back and say they needed more and since it was a good deal I did go up a little but still within my MAO. I have also had some come back and said I didn't meet the minimum and give me a price they are willing to sell for and I declined as it was way more than I ever would have considered bidding. All that is just to say that there is noway to really know what they will do. You might say "No my bid was my highest and best" and they give it to you or you might go up past where you should and they still might not feel it is enough. Good luck but my advice is no deal is better than a crappy one, so don't overpay.

Hi Stacey, First, try to relax a little bit. I know it's easy to assume that REO companies are out to get you, but I really don't think that is the case. The banks actually want to sell these properties, it's just sometimes they are really bad at it! I'm a Realtor, so their antics don't scare me, I just find it frustrating. The bottom line is that Homesearch (actually Nationstar, the seller) must be able to pass clear, marketable title to you at settlement. This is stated clearly in the contract. If they can't, then the contract will be released and you will receive your deposit back. You will also have title insurance in case something was missed (very rare!). So, I think your Greenlight rep is correct on this point. You should choose your own settlement attorney (after you are the winning bidder), even if it costs you a bit more. That way, you will know you are being told the truth. And yes, the sales contract reads like you are heading off for your execution! Basically, they are explaining that they have never seen the property, they are making no claims or warranties as to the condition, they will not do a single repair, so buyer beware! Additionally you must pay all financing expenses, closing expenses as well as a 5% buyers premium. So, you must take this into account in your final bid price. As an example, if your winning bid is $200k, you are actually paying $210k plus closing plus financing costs plus any repairs required...so DON'T OVERBID! If you are not experienced in estimating repair costs, you must have a professional do an estimate before you bid. That means contractors, not a home inspector. If you are the winning bidder but have overbid and later decide to walk away, you will probably lose $2500 minimum (your qualifying credit card hold at Homesearch). So, you must get your Realtor to do a current market analysis, giving you a price for the home in it's current condition and what it could be sold for after the rehab. If you love the home, and the numbers make sense, I would say go for it. Just don't get caught up in "auction frenzy" and bid more than is prudent. On the positive side, sometimes banks will give you a great price on a foreclosed property, so it can work out very well, as long as you clearly see the potential issues.

Highest bidder on Homesearch.com auction, what now?

Andrew Spelman

Sun City, CA · Member since 2014 · 4 posts · 0 votes

11y

Sue, thank you for the response. We are presently in escrow on our home that we will be using as our primary residence and this is the home we are in contract with Nationstar Mortgage LLC. We did bid on this home via HomeSearch.com and it was the scenario where we were the highest bidder but reserve was not met. We did receive a phone call the following day asking for our highest absolute offer, in which I did offer a higher number than my highest bid on the auction. Our contract is set to end tomorrow and have yet to receive an extension notice or phone call from our Realtor.

This discussion began regarding HomeSearch.com, and I'd like more feedback from people that have been through an entire transaction with HomeSearch.com and Nationstar Mortgage LLC.

As I said before, we as buyers have done everything in a quick and timely fashion as well as paying the deposit and having funds ready for this all cash purchase. We have a hard time understanding what took so long to have the Deed in Liue signed and especially recorded with the county.

Highest bidder on Homesearch.com auction, what now?

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