bostonbubble.com Forum Index bostonbubble.com
Boston Bubble - Boston Real Estate Analysis
 
 FAQFAQ   SearchSearch   MemberlistMemberlist   UsergroupsUsergroups   RegisterRegister 
 ProfileProfile   Log in to check your private messagesLog in to check your private messages   Log inLog in 

 
Go to: Boston real estate bubble fact list with references
More Boston Bubble News...
DISCLAIMER: The information provided on this website and in the associated forums comes with ABSOLUTELY NO WARRANTY, expressed or implied. You assume all risk for your own use of the information provided as the accuracy of the information is in no way guaranteed. As always, cross check information that you would deem useful against multiple, reliable, independent resources. The opinions expressed belong to the individual authors and not necessarily to other parties.

Auction Homes REDC Nov. 10th, 11th Boston at Hynes Conv.
Goto page 1, 2, 3, 4  Next
 
Post new topic   Reply to topic    bostonbubble.com Forum Index -> Greater Boston Real Estate & Beyond
View previous topic :: View next topic  
Author Message
Shoeshine



Joined: 10 Nov 2007
Posts: 38
Location: Greater Lowell MA

PostPosted: Sat Nov 10, 2007 8:57 pm GMT    Post subject: Auction Homes REDC Nov. 10th, 11th Boston at Hynes Conv. Reply with quote

Hello: , Is anyone familiar with this ???

I am registered and will be attending Sunday the 11th .

I have tried researching REDC and home auctions .

From what I can find , auction is rife with shills
and auctioneer bidding for Banks .

Any and all info on this and other Home Auctions appreciated .

I have negative vibes about this , but will attend .
Will post on what I see .
Back to top
View user's profile Send private message
admin
Site Admin


Joined: 14 Jul 2005
Posts: 1818
Location: Greater Boston

PostPosted: Sun Nov 11, 2007 7:47 pm GMT    Post subject: Reply with quote

There was some discussion of this a few weeks ago on the Paper Economy Blog:

http://paper-money.blogspot.com/2007/10/daily-2-housing-on-block.html

I was seriously considering going until somebody stated that the auctions have secret reserve prices. So if you are the winning bidder, you don't necessarily get the property, and the sellers effectively have a way to pull out of the sale while the buyers have no equivalent. All the properties have non-trivial prices for the starting bid, and it strikes me as dishonest that this isn't equal to the reserve bid. Either start the bidding at something trivial if you want the right to reject bids, or publish the true price that needs to be met in order to not be rejected.

Note: I haven't confirmed for myself that this particular auction has secret reserve prices, and this is just what somebody else reported for a past auction. It was enough to make me decide to not bother going, though.

- admin
Back to top
View user's profile Send private message Send e-mail Visit poster's website
Shoeshine



Joined: 10 Nov 2007
Posts: 38
Location: Greater Lowell MA

PostPosted: Sun Nov 11, 2007 11:20 pm GMT    Post subject: Reply with quote

http://www.boston.com/realestate/news/articles/2007/11/11/2000_bid_on_american_dream/

I hope this link works

I attended the auction .
The website Boston.com has an article on it .

When my splitting headache subsides ,
Sad
I will post about it
-
-
Back to top
View user's profile Send private message
admin
Site Admin


Joined: 14 Jul 2005
Posts: 1818
Location: Greater Boston

PostPosted: Sun Nov 11, 2007 11:39 pm GMT    Post subject: Reply with quote

Well, the Globe article confirms that there was a secret, reserve price for each property for this auction:
Quote:

But there's an important caveat: The winning bid isn't binding unless it exceeds an undisclosed threshold set by the seller.

I'm looking forward to reading about your experience there.

- admin
Back to top
View user's profile Send private message Send e-mail Visit poster's website
JCK



Joined: 15 Feb 2007
Posts: 559

PostPosted: Sun Nov 11, 2007 11:55 pm GMT    Post subject: Reply with quote

Don't a lot of auctions work this way? eBay, for example, allows the seller to set secret reserves.
Back to top
View user's profile Send private message
admin
Site Admin


Joined: 14 Jul 2005
Posts: 1818
Location: Greater Boston

PostPosted: Mon Nov 12, 2007 12:16 am GMT    Post subject: Reply with quote

JCK wrote:
Don't a lot of auctions work this way? eBay, for example, allows the seller to set secret reserves.


You're right. I knew you could have reserves on eBay, but I didn't realize they were secret. From eBay:

Quote:

A reserve price is the lowest price at which you are willing to sell your item. If you don’t want to sell your item below a certain price, you can a set a reserve price. The amount of your reserve price is not disclosed to your bidders, but they will see that your auction has a reserve price and whether or not the reserve has been met. If a bidder does not meet that price, you're not obligated to sell your item.


There are a few important differences between eBay reserves and the REDC reserves. 1) You know right away if your bid met the reserve amount. 2) The bar for bidding on eBay is lot lower in terms of the time investment and preparation, so if the auction is a fishing expedition for the seller, it doesn't inconvenience buyers to the same extent.

That said, I'm not really not sure I like the idea of reserve bids on eBay or anywhere else. It seems like a way for sellers to bait and switch buyers with a false starting price and a way to waste buyers' time pricing something for you which you have no intention of selling. It would be less objectionable if buyers had a similar "out."

- admin
Back to top
View user's profile Send private message Send e-mail Visit poster's website
john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Mon Nov 12, 2007 1:30 am GMT    Post subject: Reply with quote

How does this work? A bunch of banks own these homes and they are trying to cut out the realtor?

I'm surprised about that one $585k house selling for $350k, I mean even if the person foreclosed upon put 20 percent down, that would mean that the bank still didn't get their money back. If this foreclosure had to do with a reset, my guess is that they financed at best 95%. I'm wondering why the secret base price was so low on that...
Back to top
View user's profile Send private message
admin
Site Admin


Joined: 14 Jul 2005
Posts: 1818
Location: Greater Boston

PostPosted: Mon Nov 12, 2007 1:48 am GMT    Post subject: Reply with quote

john p wrote:
How does this work? A bunch of banks own these homes and they are trying to cut out the realtor?

That's my understanding of it. Granted, I stopped reading once I learned about the reserve.

john p wrote:

I'm surprised about that one $585k house selling for $350k, I mean even if the person foreclosed upon put 20 percent down, that would mean that the bank still didn't get their money back. If this foreclosure had to do with a reset, my guess is that they financed at best 95%. I'm wondering why the secret base price was so low on that...

Even if they didn't put 20% down, aren't loans for more than 80% usually split into multiple mortgages? It could have been just the primary mortgage holder who foreclosed.

Also, maybe the $350K wasn't the reserve price. Maybe the reserve price isn't revealed right away. The post on the Paper Economy Blog that starts "BE VERY CAREFUL" indicated that the seller has 15 days to reject the bid, and he actually had a sale fall through precisely because of this, so I don't think the house has actually sold just yet. I think the lady from the article who was crying for joy may be crying for a different reason in a few days if that poster's experience is common.

- admin
Back to top
View user's profile Send private message Send e-mail Visit poster's website
Shoeshine



Joined: 10 Nov 2007
Posts: 38
Location: Greater Lowell MA

PostPosted: Mon Nov 12, 2007 3:16 am GMT    Post subject: Reply with quote


Sunday , Nov 11th, 159 properties where scheduled to be auctioned.

The auction was loud and rapid fire .
The auctioneer was rattling off bids
that simply didnt exist.
If a property was decent, bidding would jump
dramatically with no real bidding from the audience.
The auctioneeer would occasionally shout out bids
that actually existed .
Tuxedo clad assistants running about the room exhorting
on bidders to bid more.
From my take on things , 90% of the people
in the auction could not see thru the charade.
Shills, and fake bids taking out of thin air,
in attempt to drive bidding above a hidden reserve
price the bank was willing to accept.

I was shocked at some of the high bids (if they truly existed)
and also shocked at some of the low prices the auctioneer
would end a particular property with.

I think if a property had no real interest, the auctioneeer
would simply rattle off a fictious number , quickly
followed by a shout of SOLD !!!

I serioulsy question how many of these properties will truly close.
I will start checking in a month the various registry of deeds sites
to see how many of these properties close escrow.
I have the catalog of all listed properties.

The number one thing I am taking away from this auction is,
if the properties that "SOLD" at some of the low gaveled
down prices truly close,
and get recorded at the Registry of Deeds,
then we havent begun to see the freefall Real Estate prices
are about to take .

I bid on 5 different properties, each time I was beaten
out by $5000 from another bidder I didnt see.
In hindsight , I should have bid $5000 more on every property,
but chances are, someone, real or imagined would have outbid me.

Two guys (investors) I knew from about Town ,
managed to buy two different investment properties .

They bought a two family fixer upper with no parking for $85,000
and a 4 family with plenty of on street parking for $145,000 .

They will fix them up a bit , then fill them with Section 8 Renters.

I know the last price the two family was listed for on Realtor.com
was $125,000 and once sold for and carried a $248,000 mortgage.
Not sure what the 4 family was previoulsly listed for , but
it was previously sold for $301,000.

Multi family Investment properties were being gavled off
for ridiculously low prices in all the poorer Cities.

If this auction was a sign of prices to come,
then the Bubble will not burst , it will explode.

It is not impossible
we will see 1999 real estate prices again.

Exclamation
Back to top
View user's profile Send private message
admin
Site Admin


Joined: 14 Jul 2005
Posts: 1818
Location: Greater Boston

PostPosted: Mon Nov 12, 2007 3:06 pm GMT    Post subject: Reply with quote

Thanks for posting that, Shoeshine.

Here's another attendee's experience, which jives with yours:

http://bostonreb.com/blog/2007/11/12/weekend-auction-report-reader-thoughts/

I think the place in Arlington he referred to was the one that I had my eye on. I'm glad I didn't bother trying for it, though, now that I know that they didn't allow people inside beforehand for that particular property.

- admin
Back to top
View user's profile Send private message Send e-mail Visit poster's website
john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Mon Nov 12, 2007 3:10 pm GMT    Post subject: Reply with quote

This is ridiculous. If it went down the way you say; the whole tuxedo thing it sounds like a P.T. Barnum show. If they are allowed to interject phony prices in the bid up that is wrong.

What sucks about this market is that each and every step of the way we learn how there are no rules that govern to prevent shady behavior and the government is always a day late and a dollar short. I mean we have to feel the pain of unregulated auctions before we learn the lesson that sleazy people will yet again try to take advantage. This is a comedy of errors for our government to clamp down on a sleazy industry.

If someone is trying to rush you into something, slow down. If someone is trying to pressure you, slow down more.

I wish that they required these auctions to be videotaped so that you could see if people were planters or not. I wonder if you had to sign a disclosure to say that you were in no way related to the seller or the auctioneer?
Back to top
View user's profile Send private message
SamChady
Guest





PostPosted: Mon Nov 12, 2007 4:07 pm GMT    Post subject: Auctions Reply with quote

I have been to auctions for antiques, and although I have no evidence of the "mystery" bids that were seen, you would be surprise how fast bids are recorded. Once you have the auctioneers eye, a wink or a tiny head movement is all that is needed, so its VERY easy to miss the bidders.

Without a reserve price, the auctions could not function as no one would risk putting there stuff for sale. Its a standard and ethical thing to do. Its so uncommon to have "no reserve" that the auctioneers really tout this fact when the item comes up for bid.

As far as the "showmanship" of the tuxedos and shouting, that is what makes an auction fun, and its a sales technique to get people excited and drive the highest price possible. Its ethical, and a good way to sell a maximum number of items which encourages a lot of people to show up.

The "fake bids" argument does not really hold too much water since if the auction house does not sell the property, they get no commission. So if some bids are plants, they have a great risk at the end of outbidding everyone else. Of course, below the reserve is totally safe, so I suppose it could happen there without too much risk.

It seems that there is proof that some properties sold on the cheap - if that one person's friend really gets them. Please keep us informed.

I did not want to attend since all the properties were outside Boston. Any news of upcoming Boston auctions?
Back to top
admin
Site Admin


Joined: 14 Jul 2005
Posts: 1818
Location: Greater Boston

PostPosted: Mon Nov 12, 2007 4:15 pm GMT    Post subject: Re: Auctions Reply with quote

SamChady wrote:

Without a reserve price, the auctions could not function as no one would risk putting there stuff for sale. Its a standard and ethical thing to do. Its so uncommon to have "no reserve" that the auctioneers really tout this fact when the item comes up for bid.


What would the risk be if they started the bidding at the reserve price? I don't see a good reason to have a separate starting price, unless it's something nominal (like $1K).

- admin
Back to top
View user's profile Send private message Send e-mail Visit poster's website
JCK



Joined: 15 Feb 2007
Posts: 559

PostPosted: Mon Nov 12, 2007 4:22 pm GMT    Post subject: Re: Auctions Reply with quote

admin wrote:
SamChady wrote:

Without a reserve price, the auctions could not function as no one would risk putting there stuff for sale. Its a standard and ethical thing to do. Its so uncommon to have "no reserve" that the auctioneers really tout this fact when the item comes up for bid.


What would the risk be if they started the bidding at the reserve price? I don't see a good reason to have a separate starting price, unless it's something nominal (like $1K).

- admin


I'm sure it's psychological.
Back to top
View user's profile Send private message
john p



Joined: 10 Mar 2006
Posts: 1820

PostPosted: Mon Nov 12, 2007 4:28 pm GMT    Post subject: Reply with quote

As far as showmanship... I don't think there is anything fun or funny about people being foreclosed on. The showmanship is a technique to get people to put down their guard and the pace is designed to throw people off their judgment. Trying to confuse someone is sleazy. I wouldn't care if they were auctioning antiques, but houses cost so much that we do not need another wave of dumb buyers making more mistakes and needing to be bailed out again. If the byproduct of these auctions cause negative impacts on society i.e. we have to spend public money to bail out foolish people, I think there needs to be a special tax on auctioneers and fund set aside so that responsible people don't have to pay the price for their shady practice. If they want to walk a tightrope and justify their buyer beware method, I want to make sure that the tax payers don't have to pay for the street pizza when the buyers slip and fall.

If the government had a problem with these techniques (which help pump up the subprime bubble) why would they let these tecniques continue in another form?

I'm also seeing the term "bubblehead" being thrown around. Is a bubblehead someone who contributed to the bubble like a realtor or sleazy mortgage broker? or is a bubblehead a new buyer that is a bit more guarded because of the documented predatory practices of the aforementioned?
Back to top
View user's profile Send private message
Display posts from previous:   
Post new topic   Reply to topic    bostonbubble.com Forum Index -> Greater Boston Real Estate & Beyond All times are GMT
Goto page 1, 2, 3, 4  Next
Page 1 of 4

 
Jump to:  
You can post new topics in this forum
You can reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum


Forum posts are owned by the original posters.
Forum boards are Copyright 2005 - present, bostonbubble.com.
Privacy policy in effect.
Powered by phpBB © 2001, 2005 phpBB Group