The Evolution of an REDC Auction Deal

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I couldn’t get the song out my head.  Leroy Van Dyke sang it.  My Dad would play this tune in the aftermarket cassette deck of our 1976 Chevy Caprice wood paneled station wagon over and over again. 

As I entered the grand ballroom of the Hyatt Regency Downtown Phoenix that early Saturday morning in June the lyrics from ‘The Auctioneer’ came flooding back to me.

He’d stand and listen carefully then pretty soon he began to see how the auctioneer could talk so rapidly.  He said,“Oh, my, it’s do or die I’ve got to learn that auction cry, gotta make my mark and be an auctioneer.”

The well dressed man standing at the podium announced the auction would begin in 5 minutes.  I was nervous.  More than 400 homes would be sold off that day.  I had whittled down my list of biddable properties to 13.  Luckily, the first home I planned to bid on was 26th on the list so I had plenty of time to work the butterflies out of my stomach.

According to their website, the Real Estate Disposition Company (REDC), also known as auction.com, has sold in excess of $7.5 Billion of real estate assets and conducted over 900 auctions featuring 105,000 properties since 2007.  What they don’t say on their website is that they do it with style. 

When the well dressed man standing at the podium opened up the bidding on the first home the ballroom became electrified.  Bidder cards shot up in the air.  Barkers barked.  Hep!  Hep!  Hep!  It was intense.

REDC auction bidBy the time the auctioneer came to one of the 13 homes my partner and I planned to bid on we were ready.  Many of the properties we targeted could only be sold to cash buyers like us because of their condition (i.e. occupied, unfinished, falling down, burned down or to put it nicely – uninhabitable.)  The one and only house we won that day happened to be occupied (it turns out it really wasn’t – good news for us!)

Now at this point you are probably are wondering why I titled this post The Evolution of an REDC Auction Deal right?  If you’re anything like me you thought we win the bid, pay the cash and start rehab on Monday morning.  Not so fast!  After my partner and I were led to a closing table to sign the contract documents we were asked if we would like a quick closing.  We emphatically said yes and it was noted in their file.

51 days later, after signing multiple addendums, amendments and exchanging countless phone calls with an out of state title company rep we finally closed on this home.  Can you imagine if we said no when they asked if we wanted a quick closing?  This deal didn’t progress, it evolved.

auction dealsDon’t get me wrong.  The REDC does an excellent job of facilitating these auctions.  It’s a first class operation.  Just remember that these are bank owned homes and the REDC works for the banks.  If you plan to purchase an investment property at one of these auctions you may face some of the same frustrations (aloof asset managers, poor communication, closing extensions) you would when buying an REO property on the MLS.

The best part of this story is that my investors were pleased with the end result.  We flipped the home in 61 days for a net profit of $18,300.  The worst part?  That damn song is still ringing in my ears.

Fifty dollar bid it now, fifty-five, will you gimmie fifty-five, to make it fifty-five, to bid it a fifty-five, sold that horse for a fifty-five dollar bill.

About Author

Marty (G+) is the Chief Financial Officer for Rising Sun Capital Group, LLC, a real estate investment firm based in Gilbert, AZ. His firm purchases homes at the courthouse steps and public REO auctions. They have two exit strategies, either fix and flip or seller financing.

2 Comments

  1. I know exactly how you feel Marty! I used to buy properties for our company out at the courthouse steps and got accustomed to the speed and ease of paying cash for a property and being able to change the locks the next day. We recently purchased a handful of homes from an REDC auction and it has been a nightmare closing on all of them. Actually, out of the 23 we ‘won’… they only actually let us have 17 of them, some of which we are still jumping through hoops to close on. I must say though, despite how time-consuming the process can be and the unfortunate 90-day deed restrictions on some of these properties… you can find GREAT deals at these auctions if you do your research.

  2. sorry this is not following discussion but we are told ten different things
    if we use a out side service to collect documents call the borowrs the servicer has told them we are but because we pay very little this this person is a processor andin a genaric way tells them what we need make sure the app has all info on it and let the customer know that if we can’t lower their payment androp balance we will not be able to help but a loan officer will go over details because at this time i can,tell you anyway 1 is i process loans not originate pr the LO works with you on what program makes sense. i just give him documents so he can be prepared as soon as you talk .

    Does this sound ok

    we are trying tryig to increase buusies so we look at this as a goood lead if we crub the list bettter andhe ones that provide really do get a geat program

    the bad thing the are a out ysource co and the payment is not based n closing

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