There was standing room only in the Elegant ballroom on the 23rd Floor of the Wells Fargo Tower last night. Another real estate auction creates a frenzy of Utah home-buyers seeking “deals”.
Last night Eric Nelson and his ENAuction team unloaded some 58 properties in just a matter of hours. Find a list at www.enauction.com. Similar to the bank foreclosure auction conducted earlier this summer, buyers had to register in advance and deposit a refundable $10,000 cashiers check to participate.
ENAuction at Wells Fargo Tower on June 12th, 2008
All properties seemed to sell for significantly less than their “estimated values”. In fact, some properties went for a mere 25% of what they were noted to be worth. All sales however, are ”subject to approval”. Basically, the seller reserves the right to reject any or all of the high bids from last nights auction.
Some argue that the auction is merely a gimmick to generate interest and bring buyers to the negotiating table. Several bidders from the previous auction expressed deep disappointment when they discovered that the bank had rejected their high bids. Based on the auction conducted in June, approximately 40% of the properties did not get approval to sell for the auctioned prices. Nonetheless, that means that roughly 60% of the high bidders did walk away with a property, and at their price.
If you attended either last nights auction, or June 12′s auction, feel free to post a comment. I’d like to hear your perspectives, especially if you were a participant.
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I went to a similar auction in Las Vegas a couple of months ago. What a joke, they hardly accepted any of the bids.
I was there last night, I thought it was fun. Good music too! Anyone know what the bands name is?
I attended the EN auction earlier this summer at the Wells Fargo building. There were 205 bidders there. We all plunked down ten grand to get a bidders card. It was crowded. From the start it was clear that the bids for properties at the low end of the price spectrum were strong. There was no question the bank would approve them. They went at full retail. In fact, some of them were simply not good deals.
The higher-end properties didn’t get strong bids. That was expected. There is a glut of properties available on the market. I followed one of them, a property in the Highland/Alpine area, quite closely. It was a very nice home listed for about $950k. No problems (at an auction you can only hope that doesn’t change before you close). The bank had told the former listing agent they wouldn’t take a penny under $700k. The agent actually had a “subject to sale” contract on the property for about $900k. Unfortunately the buyers existing home didn’t sell before the property that was auctioned was foreclosed and then auctioned off by ENA. The bids topped out at $526k. Some bidder thought they got a steal. But they ended up very disappointed. The bank didn’t accept the bid. Can’t blame them. They would have been nuts to have done so.
There are quite a few buyers looking for deals. Sharks circling, fins everywhere. The low end of the market was in play. While a few “deals” may have been gotten at the auction, I’ve found that there are generally better deals to be found in simply shopping the regular listed properties.
Here’s why: If you “win” at an ENA auction you don’t know if you really won. Why wouldn’t the bank simply have someone approving ON-SITE in real time? Instead they slant it all their way. Take ten days or two weeks to approve. Meanwhile they’ve got your money. Plus you pay an auction fee (on top of what you bid). Plus you can’t register at the last minute and be represented by your broker. Plus you don’t get time to fully inspect. If condition changes, old owners tear it apart or the property is damaged before you close you have no remedy (without risking your earnest money or taking legal action). Plus you can’t have any financing conditions to protect yourself. Plus you have to immediately increase your earnest money on the spot or lose your ten grand. The auction employees were all, “yeah, they will take the high bid.”
Hah! As if.
It is all slanted the bank’s way. The deals were marginal at best. The risk wasn’t worth the reward. It was just a way of rounding up folks with pumped up greed glands – and then milking them for an “acceptable” price later – providing that the excitement of the auction didn’t cause them to get stupid and over-bid in the heat of the moment.
Art Brothers – MBA
Branch Broker, RealtiCorp PC
Very insightful, thanks for sharing