Back on the Market: My Visit to a Home Auction, Part 2
A couple of weeks ago, I wrote about my visit to th
e REDC Home Auction in Oakland, with hopes of being the winning bidder on a small 1 bedroom condo that sits just around the corner from me.
As you know, I walked out empty handed after 4+ hours, but having enjoyed the event and feeling somewhat empowered at understanding the home auction process.
Lo and behold, early last week, as I was cruising the latest Redfin listings, the condo made another debut on MLS. The ask: $225,100. Quite a big range from the opening auction price of $139,000 and the winning bidder’s price of $175,000. Based on my Redfin data, the bank owned it for $247,000+ and the last assessed value was just over $200,000.
For that price, no way was I pursuing that any further.
Fast forward a couple of days later. Unfortunately, I was travelling and didn’t get to my usual daily Redfin updates, but the price was dropped to $179,900. And swoosh, it was in contract within a day.
So what happened?
The listing agent knew that it had been up for auction but didn’t know why the transaction didn’t get completed. I called REDC and while they couldn’t give me the specifics, here are some reasons why an auction property may not close:
1) Seller couldn’t obtain the financing
2) Seller didn’t have the full deposit amount needed at the auction
3) Winning bid did not meet the reserve price
My best guess is that this property fell into either 1 or 2. The winning bid was less than $5,000 from the current list, so I’m assuming that it is not #3.
What I didn’t know and learned is that all properties do have an undisclosed reserve price, set by the bank and like in Ebay, typically higher than the opening bid. With this condo, REDC said that since it was back on MLS, most likely the bank took it back for some reason or another and then had it listed. I had put in a back up bid before I left the auction for $170,000, but obviously that didn’t seem to appeal to the bank.
I still think this property is still a great value, but given the current state of the union, I’m glad I’m not the buyer since I was planning for it to be an investment property (way too small for our household).
If you are looking for some values or just want to attend an auction to get a first hand experience for yourself, REDC is holding another smaller auction next week for some Nor Cal homes, next Monday and Tuesday evening. Unfortunately, this appears to have been recently scheduled as there isn’t any open houses being held for these properties. Check out their site for details.
