The same auction processes are being offered in Washington, D.C. And to correct Scott, these aren't reserve auctions. A reserve is set in advance. It may be either public or secret, but there's a price that the seller and the auctioner have agreed is the minimum acceptable bid. Once bidding exceeds that amount, the property really, truly is sold.

What the questioner is asking about is something entirely different. The auction is conducted. A number is arrived at. At that point, the number is presented to the seller, who decides whether to accept or reject it.

I'm not sure I'd call it a scam. But I do think it's dishonest and deceptive unless those rules are clearly presented to the bidders prior to bidding. (And really prior to the bidders taking the time to go to the auction to bid.)

Tue Jun 10 2008, 13:47

I don't think it's a scam at all. Even when you sell something on ebay there is a reserve price set. The owner of the home should have the right to refuse a bid if it is too low. We are selling our house using this method. If the auctions high bid is only half of what we set as a low reserve why should we be forced to sell? I don't see it as a scam in any way shape or form. It's an auction with a reserve , the reserve price is not public.......if the buyer meets the reserve price pre set then there is no discussion, if the reserve price is not met, then we will be notified of the highest bid and be able to consider our options. We want to sell our house but do not NEED to sell our house. We are not going to let someone just STEAL it. If there was no reserve and the auction ends and the highest bidder bids one dollar, should the owner have to sell it for that price? Be realistic.

Tue Jun 10 2008, 12:59

Interesting scam... I haven't seen Realtors advertising the auctions but I have seen some FSBOs do it in the Dallas area. I wonder if it's going to become a trend.

Tue Jan 15 2008, 11:13

Patrick,

Even a reserve price auction would be understandable if buyers were made aware before hand that there is a reserve price and if the highest bid does not reach this reserve price than the property would not be sold. One of my buyer's agents had a client that insisted upon attending one of these auctions, nothing was ever explained to the buyer, or the buyers agent ,of a "reserve price" or that the highest bidder may still not get the property UNTIL her buyer had won the bid and the auction was over. The agent conducting the auction (who was a Realtor) told her that her highest bid would be presented to the bank as an offer. The buyer immediately told the Realtor 'this is a crock of &%$* and forget to it.

I have been conducting Short Sales for years, and as you stated most of them go back to the bank. There is a two fold reason for this #1 banks are often times uncooperative and #2 many agents who do not know how to handle these types of transaction are "attempting" to do so with little or no training in these types of sales. When conducting Short Sales the agent must be on top of the bank on almost a daily basis. If the agent simply sends the offers off to the bank and waits for a response, they could be waiting until (pardon the expresion) the second coming of Christ. Banks are notorious for loosing short sale offers, claiming they never got them, and when they do respond many times they are looking to get full market value. An agent who is experienced in short sales knows they need to explain to the buyers agents that persented the offer (or offers) that the bank is trying to recoup as much of their losses as possible and that the buyers agent can still come back with a Counter Offer. My advice to agents that are 'trying their hand at short sales" is not to do it unless you have a very experienced mentor or fellow agent that his helping you through our first 4-5 short sales. Rembember that your seller is counting on you to help save them from foreclosure, and if you don't know what you are doing, you could be doing your seller a great injustice.

As far as Trustee Auctions, it sounds like Phoenix is very similar to Vegas. I have only been to a couple Trustee Auctins and 95% of the time each house never receives a single bid, and just as you stated most of the homes are going back to the bank.

Thanks Michael and Patrick for your posts.

John Goad, Jr. of The Goad Team
Century 21 Infinity

Tue Jan 15 2008, 09:53

I've seen some of these appear in our Tucson market as well. Many organized property auctions also operate the same way and it certainly is misleading at first glance.

Tue Jan 15 2008, 05:55