My high school baseball coach used to say,
“I don’t believe anything I hear, and only half of what I see!”
In our latest contest, readers submitted their guess at the highest bid + 5% buyer’s premium for this property in SE Carlsbad:
https://www.bubbleinfo.com/2014/06/03/carlsbad-reo-contest-2/
The auction included an outrageous set of conditions, which many thought would drive down the price to compensate. They included:
- The 5% buyer’s premium tacked onto the highest bid.
- No showings.
- Tenant-occupied, and buyer was responsible for evicting.
- Cash only.
- No buyer’s agent commission paid.
- Not in the MLS.
- 5% deposit required upon winning.
- Reserve price.
They conducted the auction online, which gave participants the convenience of bidding from their couch at home. It should have allowed bidders the chance to double-check the comps as the auction wore on – because every time a new bid was made, they extended the ending by 1-2 minutes.
Those checking the comps would have seen that in the heat of the frenzy last year, three of this identical model sold for $638,000, $653,000 and $679,000. Then in October this sale with nice view closed for $705,500, which was the highest price since May, 2007:
http://www.sdlookup.com/MLS-130050274-2704_La_Duela_Ln_Carlsbad_CA_92009
The bank foreclosed in 2011, and nobody wanted it then for $459,088. The opening bid this week was $325,000, and once the auction started the initial bid increment was $25,000.
Most of our readers guessed it would sell in the $400,000s, which would be an adequate buffer to evict and remodel.
Look what happened today:
AND IT DIDN’T HIT THE RESERVE PRICE!!!!!!
Somebody was willing to pay almost $200,000 more than the bank didn’t get in 2011, and that wasn’t enough to reach the reserve price? Hopefully the bank will come to their senses and reconsider before that bidder changes their mind. Counting the 5% buyer’s premium, the highest bid was $678,038!
Our closest and winning guess was $568,050, and submitted by blucore – congratulations!
Only rational conclusion : the market is insane and the banks, even more so.
Unless the auction was set up to give the bank a comp, for later use in a private transaction. Then, a crazy reserve price makes sense.
Auction.com is one big giant sucker bet. I have followed numerous houses and none of them ever hit the reserve price despite being bid up to retail. At least in other states, I think many of them are ‘pre-foreclosure’ in that the bank won’t approve a short sale unless the owner agrees to first put it up on the site and see if they can beat the short price. If this was really bank owned, and the tenant is in there under a lease that was protected by the Protecting Tenants in Foreclosure Act, good luck getting them out anytime soon…. Big fat waste of time.
Welcome back elbarcosr!
And agreed, this is price discovery. The listing broker will likely MLS input at $639,000 and call it under market.
Wow, Jim, my bet *$486K* wasn’t even close! What do you think the reserve price was? Any ideas?
I don’t know, but if it was based on appraisals it was under the final bid.
If they were just conducting some price discovery, well I guess that is their right – but one of them should have looked up and said, “Wow, let’s take it!”.
Irrational exuberance! I don’t understand what’s going on lately. I live in a townhome and in the past 12 months prices have gone up very quickly. I would say about a dozen homes have recently sold in what my opinion would be overpriced within days or weeks. More than half of those homes including my neighbor sit unoccupied. Somebody comes by daily to water the plants and check the mailbox and they’re gone. Maybe I’m schizofrantic, but is there a driving force to send people out with a blank check and buy at inflated prices to help prop the market?
I think this demonstrates the disconnect between many who are in the market, ($400K for this house), and reality.
Unfortunately we will never know who the bidder(s) was/were on this one.
You’d think it would be a pro flipper who was comfortable buying sight unseen and evicting.
But it could have been the occupant, or neighbor who had a higher than normal demand for this particular property.
Or maybe an abnormal demand due to being seen here? 🙂
The Bubbleinfo Bump™ is worth at least 5% jump up in price.
Wow, pricing houses makes no sense to me anymore.
At least this time I’m on the “winning” side of the game as an owner.
Auction.com is not a buyer’s friend. You may in fact be bidding against one of their employees who is working on the auction of the property and who has neither the intent nor ability to purchase the property, and (here is the kicker) is not even bidding on behalf of the beneficiary. At least that is how myself and a hand full other investors I know interpret there terms, conditions and disclaimers.
Yes their shill bidding is well documented and a bill is in the state legislature to ban it outright. They are sleezeballs.
I don’t think you can draw any conclusions from this auction.
My thoughts exactly………what a very shilling auction, well either that or the bidder is paying with”Q.E” dollars.