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REDC Foreclosure Auction in Mesa – results

auctionLast Saturday I attended the REDC home auction held in Mesa, AZ.  These auctions come to the Phoenix area about every 4 months or so.  The week prior, my clients and I went to look at 4 homes that were to be auctioned. 

My clients bid on two different houses.  The smaller one (1,511 square feet in Gilbert) – they would go up to $130,000.  The larger one (2,146 square feet in Gilbert) – they would go up to $150,000. 

They got outbid on both by $15,000…

Another buyer bid $145,000 + 5% “buyer premium” = $152,250 TOTAL price

Another buyer bid $165,000 + 5% “buyer premium” = $173,250 TOTAL price

If you are curious about what goes on at an auction, don’t hesitate to get in touch with me.  I’ll be writing another post about what the properties actually go for at auction. Stay tuned.  

Auctions: Did you know?…

1 – Auctions are fast paced – they auction 40 properties per hour.

2 – Your winning bid price is NOT the price you pay.  Add a 5% “buyer premium” that goes to the auction house costs.

3 – You MUST inspect the houses BEFORE bidding.  Once you are the winning bidder – you cannot change your mind.

4 – There was probably 1,000 people at this particular auction held at the Mesa Convention Center.

5 – You must bring $5,000 cash or cashiers check to the auction.  You must also have 5% to put down as Earnest Money on the day of the auction – the $5,000 you bring goes towards this amount.  This is different than the 5% buyer premium that is added on to your property value/sales price.

6 – You can have a real estate agent to help you (see the properties before auction, do research, and attend the auction with you).  This representation costs you nothing.  The agent earns a 1% commission paid by the auction house, but they represent the interests of the buyer.

7 – Your winning bid is “subject to seller approval”.  Depending what the auction has worked out with the banks/note holders – your winning bid might be unacceptable.  I’ve seen properties that were “bought at auction” come back to be advertized on the MLS a week later!

8 – Most of the homes you can get financing (a loan) for.  Some are “cash only”.

9 – Auctions are fun.  If you want to know more about the process, feel welcome to call or email me and I’ll tell you all about it.

10 – Many of the homes available at an auction have been available for you to buy for months.  They have been for sale, with a post/sign in the yard, and listed on the MLS database.

 

Happy bidding!

Becky Wyatt

480-383-9209

Becky@BeckyWyattOnline.com

9 Comments For This Post

  1. Ari Says:

    I will be attending the next auction. Let’s keep in touch and share information.

  2. Ari Says:

    The “seller approval” part really worries me. This is where most auctions potentially fail. I wonder if it would be better to simply buy a foreclosed home?

  3. Becky Wyatt Says:

    With a foreclosure (AKA: REO, REPO, BANK-OWNED) the bank has already picked a price and listed it with an agent – so that advertised price you see, is often what they will take. My experience has been the REOs are flying off the shelves and buyers are often biding over the asking price for REOs because they are priced so competitively. Also, while an REO is sold AS-IS – you still get your inspection period (usually 10 days, and if you decide against it, can get your earnest money back).

  4. Nicki Says:

    If you purchase a home through auction and the home can be financed, are bank loan requirements the same as usual for the buyer? Or are the banks less strict when it is an auctioned home?

  5. Gary Says:

    Hi. I read your blog regarding the Mesa event with REDC. I was in attendence as well and was the high bidder on a property. However, with the “seller-approval” option, I believe this whole “auction” talk with the REDC is just a bunch of crap. It should correctly be called a “proposed short sale meeting” instead of an “auction”.

    I believe a “seller-approval” option should be eliminated and if the seller would like to be protected from extreme loss, then a “minimum reserve” should be set like real auctions.

    REDC kept my deposit money for about 45 days, the home was vunerable to vandalism and theft waiting for a decision, and then finally returned my money saying the seller declined. I wonder if all the deposit money held in escrow gains interest. I did some quick math and figured that someone makes about $19,000 month in interest on the number of properties that were offered the night I was there–figuring a convervative average deposit down. Ummmmmm…

  6. Becky Wyatt Says:

    This is so interesting Gary! Thanks for commenting with a real experience example. I’m with you. The auctions give a lot of people a headache. In my opinion, my clients have gotten the best deals with bank-owned properties that are listed on the MLS. I give them access to them the first or second day on the market because the best deals are gone the first week on the market. – Becky

  7. Sharon Says:

    I am in the process of filing a lawsuit against REDC for failure to disclose some of their “rules” prior to the auction, making no attempt to sell the properties, but rather to collect their 5% up-front fee, and another 5% cancellation penalty. Just my opinion but I think they are all about the fees they charge bidders and very little about disposing of the properties.

    I would highly recommedn that you do exactly what Becky says. Look at MLS listed foreclosures, and make a lower than listed price if you wish. Uless you have cash stay away from REDC. If anything goes wrong with your financing they do not return the money that went to escrow, without deducting their fees, and blaming the losses to the Buyer on the Sellers, which makes absolutely no sense. If anything goes wrong REDC will not allow an extension of the escrow even though their rules state that an escrow can be extended at $150 per day. Stick with a Realtor.

  8. Becky Wyatt Says:

    Thanks for sharing your experience with REDC here Sharon.

  9. Craig Says:

    Don’t buy at REDC Auctions. Read how many people have been duped out of their money. Have your lawer read the contract and the advice your lawer will give is don’t do it! I have bought a property through and REDC austion in Phoenix. The auction is the easy part. Getting the escrow company to close the deal is extremely difficult and you may end up loosing your deposit at the hands of the escrow company with no legal recourse. Don’t be tempted. The deals are not at these auctions.

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Becky Becky Wyatt  
REALTOR®
HomeSmart Real Estate
480-383-9209 phone
888-855-4817 e-fax
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