Hat tip to Susie who sent in this article about a law recently passed in California:
The new rules apply to one- to four-unit properties sold at foreclosure auctions. If an investor wins one of those homes at auction, then people who want to live in it, as well as nonprofit organizations and government entities, get 45 days to submit competing offers.
If the home is a rental, the tenants living there could win by matching the investor’s offer. Other would-be buyers must offer more than the investor.
Known as SB 1079, the law takes effect Jan. 1, 2021.
State Sen. Nancy Skinner (D-Berkeley), the bill’s author, said her goal was to make it easier for individuals and affordable-housing groups to compete with investors.
“Homeownership is the primary way people have to build up generational wealth,” she said. “When we have rules that give advantage to a corporation, then that dream is just not available.”
The manager of the foreclosure auction is required to maintain a website that details the highest bid at the auction and how to submit competing offers.
I don’t know how many amateurs will be paying more than investors for homes sight unseen, and without proper title searches for additional liens. But there will be a few!
It was the last paragraph that was the most intriguing.
The State of California has institutionalized transparency!
Making the highest bid known to the public could revolutionize our business. Can you imagine if Zillow ran a website that openly tracked the offers on their homes for sale – buyers would love the transparency! Then every brokerage would be pressured into doing the same, and boom – no more agent shenanigans!
Are you thinking of selling?
Transparency can help ignite a bidding war, and get buyers to bid up the price because it becomes more about winning, then getting a deal. It’s how I handle my listings – let’s talk about how I can help you!
Here’s the classic courthouse-steps example of how auctions help to drive up the price:
Best new listing of the day – and highest price ever in SD County (I think):
And spend all my time mowing? On the plus side, no HOA. 😉
What is to prevent one from just forming a 501(c)(3) and use that to buy the property that you want in foreclosure. Then turn around and sell the property to your LLC and the exact same price. Does not take a rocket scientist to get around.
Kind of like how “underhanded realtors” who were handling the bank REOs from 2008-2013 in North County San Diego and sold them to other realtors and investors who were part of LLCs to hide their names from the banks. Dig a little deeper and you found that the LLCs were owned by other realtors in their own office or personal friends and investors. The banks were being ripped off and no one did anything about it from 2008-2013. How many bids did you win Jim on REOs during that period? How many times did JTR say “It sold for what. How could that be, because I presented an offer that was way more than it sold for and no one responded. This is bullshit.” Those REOs were supposed to be sold in an open market to the highest bidder but they were not. The REO realtors just rigged the sale. JTR and his clients were screwed and the banks just used our bailout money and tax dollars to redistribute wealth to people who are the same ones today who cry for __________ (fill in the blank with your favorite like you used to in “Mad-Libs”). Readers please Google “Mad Libs” if you don’t know what that is before you say that the last sentence was a political dig on liberals. It’s not all about you.
Transparency and Open and Free Markets work in the real world and universe. What is to prevent 501(c) (3) non-profits or the CA Government (Gavin and friends) from buying all of the foreclosures and turning them in Section 8 housing in your charming little neighborhood a la “project room key?”
Get good help.
I loved Mad Libs when I was a kid!
I presented an offer that was way more than it sold for and no one responded.
Yes, defrauding the banks became standard practice – everyone was doing it. Jenae’s kingpin did go to jail, and so did this guy who I mentioned last week. Thousands of other agents got away with it, and still have the mindset engrained in them today. They look for ways to get away with stuff.