Why would a property go to auction after being listed on MLS?

Question

Jeff B. · Answer

The MLS price is not attracting any offers, so they go back to auction with a lower reserve price attempting to unload a stale, non-performing loan.  If you could get access to the data, the time from the first NOD to the current MLS entry is likely to be approaching a full year and the lender needs to get this dead wood off their books.

You might attempt a Short Sale if they will talk to you.

If the new MLS goes stale too - - suspect issues with the property condition.

Jeff Greenberg · Answer

Auctions are another option if they can't get enough interest or price.  In a frenzy some people will pay more than they should have.  They also get additional exposure.

Wayne Brooks · Answer

A "short sale" no longer applies, the bank owns it.....there's no longer a borrower looking to sell for less than the mortgage....there no longer is a mortgage.  Banks will often place the property in an REO auction after it's been listed for a while.

Seye Omisore · Answer

I'm new to this, so I apologize if this is response...

The home is already foreclosed, therefore short sale is not possible because the foreclosure precess has already been completed. Therefore a short sale is not possible?

It's only been on the MLS for 60 days.

I have not seen the inside yet, but it makes sense that the cost to repair is too much and the bank doesn't want to reduce the price.

I should be able to gain access this weekend with my GC, so that should help give me insight.

Jeff B. · Answer

Good, glad we could agree :)

Wayne Brooks · Answer

By definition: a short sale is when the Mortgagor sells for less than the outstanding mortgage, with the mortgagee's approval.  Once it's an REO, there no longer is a mortgagor or mortgagee, there no longer is a mortgage...it's now called "selling at a loss", which I agree is "short" of what they wanted....but, enough of the semantics.

J., you're just confusing all the newbies...they're going to start referring to REO's short sales!

Jeff B. · Answer

hmm; A short sale is ANY sale less than the outstanding mortgage and yes, Banks will do this to clear their books.  Every loan that is non-producing is tying up funds for granting another loan.

When measuring a

• 'Bank Stress Test' An analysis conducted under unfavorable economic scenarios which is designed to determine whether a bank has enough capital to withstand the impact of adverse developments.

all non-performing loans impact the auditors rating of that institution.

Another way to say it, EVERY REO is subject to a Short Sale.

Jeff B. · Answer

Any time the Lender is in control, a Short Sale is possible; once, twice, ... N times, once between an Auction that fails.

Why would a property go to auction after being listed on MLS?

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