Home Buying in 85718>Question Details

Investtucson, Both Buyer and Seller in Tucson, AZ

REDC Auctions

Asked by Investtucson, Tucson, AZ Tue Oct 5, 2010

Are the REDC auctions a huge waste or time ? or do good deals actually come out of them ? I was told that they have a reserve, and even if you win the auction you are not guaranteed the house. So whats the point of the auction ?

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Auctions are for the very savvy buyers that does all of their investigations and inspections before attending. You have to know the rules and have all of your financing in hand and ready to close. You will also put more eatnest money up and it is at risk if you default. There can be some bargains but the Bank already has determined the minimum they will accept so don't think this is a half price sale or a sale at any bid. They will get their appraisal amount or pull it. You as a buyer will also have to pay closing costs and a 5% fee to purchase. I have not seen a lot of real bargains after you add up the costs and risks. We traditionaly get the seller(Bank) to pay closing costs and there is no fee charged to the buyer. We arrange inspections and the earnest money is protected if the buyer decides to end the deal. I think this is a much better deal. If you want ot discuss further call me at 520-548-8940, rmills@ gotucson.com.
0 votes Thank Flag Link Thu Oct 7, 2010
I went to the one a couple of weeks ago and it is about half and half. The really do try to create a frenzy atmosphere and it is a bit scammy in nature. Some of it can be a waste of time because the bank must ultimately approve the sale. Not all homes have reserves. I watched a house I was interested in go for $145,000 at auction (and was approved). The home sold or less than $80 per square foot and was worth $125 per square foot easily. Some homes must be paid for in cash, some allow you to get financing. If you would like more information, give me a call - Todd Wolff, 520-979-5938. You need to be prepared if you go to one or you can really get taken to the cleaners because their rules are quite different than a regular real estate transaction.
0 votes Thank Flag Link Tue Oct 5, 2010
Depending on your time frame Short Sales have GREAT value. & You have more control
0 votes Thank Flag Link Tue Oct 5, 2010
The auction is basically another way of marketing the property. The seller is trying to generate as much interest as possible and create the emotions that induce bidding wars, which usually drives up prices. True foreclosure auctions, at the county courthouse steps, are usually better deals, but have higher risk to the buyer because there is no title search/insurance, no inspections, etc. Auctions such as REDC/auctions.com do have an opportunity to arrange financing and do provide title insurance, but you must do your home inspections prior to the auction. The buyer's premiums typically add 1-5% of the purchase price on top of the "winning bid", and earnest money is predetermined by the auction terms (and usually higher than in a traditional sale).

Basically, if you are a savvy investor and are willing to walk away if the property is no longer a good deal, then yes, they can be worth it. Calculate all your costs and determine how much you are willing to pay before you go, and stick to it.
Web Reference: http://www.maryediaz.com
0 votes Thank Flag Link Tue Oct 5, 2010
One more thing.... if we'd successfully negotiated a deal on the property I mentioned while it was listed with the REO agent in MLS, I'd have earned a 3% commission... with the REDC auction.com procedure, I was still compensated but only half of that. And yes, there was a small extra fee for the buyer as well... I think it totaled maybe another thousand. It's designed for savvy cash buyers to be able to navigate the auction system without representation, but although my client is a contractor and a cash buyer, he feels he needs me. Regardless of my own commission and interests, I visit the property with him, talk it through, run comps on after fixup value, rents, etc. This auction is all REO's and they are often available for much less than they were listed, even REO, and it runs a lot like ebay, so you have to have the time & patience to play the game. And I do recommend representation, if you can find someone willing.
0 votes Thank Flag Link Tue Oct 5, 2010
You need to check out the fees they charge, it might change your mind. If you are looking in Tucson, why not have Spirit help you with your search for properties, I'm sure he can find you what you are looking for and negotiate on price for you as a buyers agent as well.

Good Luck
0 votes Thank Flag Link Tue Oct 5, 2010
I suggest to stay away from auctions, as they benefit the Sellers not the buyers. FYI, worst housing market since the Great Depression. Why auction when there is so much inventory of REO, estate sales, and other "good deals" out there. Auctions favor the seller, not the buyer.

I have seen you have posted many good questions on here, please feel free to give me a call. Take you out to lunch, answer any and all questions you have and maybe we can work together moving forward.

Spirit Messingham
520 471-6900
0 votes Thank Flag Link Tue Oct 5, 2010
It's a bit of a marketing technique for sure, but I have a client who successfully navigated this system and got a good deal as a result. There was a reserve, so the opening bid of say $5000 is a bit misleading. That said, we did close on the property for 27k, and it'd been listed REO for quite a while on MLS at 39k.
Web Reference: http://www.susandenis.com
0 votes Thank Flag Link Tue Oct 5, 2010
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