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Woodinville Home Back on the Auction Block

Woodinville homeJust yesterday, I was touting about how to buy a home for pennies on the dollar (click HERE to read that post). In that post, I mentioned a home in Woodinville, WA that sold for $490,000 at a recent auction I attended. What happened afterward is a complete surprise to me…

Sometimes SOLD isn’t.

What I just discovered today, is that some of the properties sold at the auction I attended didn’t actually sell. It turns out that some of the sellers (Banks, Fannie Mae, etc.) had minimum reserves on the properties that were undisclosed to potential bidders. Winning bidders at the auction walked out that night excited, thinking that they just got a deal of a lifetime on a property, only to find out later that the bank rejected their winning bid.Rejected

Read the Fine Print.

In fairness to the property sellers, there was language in the contracts that stated the sellers’ management had sole discretion in determining whether or not it would accept the winning bid. But come on… If you’re going to have a minimum reserve, it should be disclosed prior to auctioning it off! At the very least, blank copies of the Purchase & Sale Agreement used by the auction company should be made available for review prior to the auction so a bidder knows beforehand what could happen.

The Dear John Letter.

Imagine being the winning bidder, and telling all of your friends and family that you just got a steal of a home at an auction. Then, a week later you receive notice in the mail that all of your excitement and celebrating was premature.  The bank decided that your offer wasn’t good enough.  That’s exactly what happened to the bidder of the Woodinville home.

The Silver Lining (For Me).

I received an email from Auction.com about the last call for bids on homes that didn’t sell last week (homes where the seller rejected the winning bid). That’s when I saw the Woodinville home being auctioned off again. Luckily for my investor client, the bank accepted his offer bid, and we are moving towards a smooth closing on his condo.

While I was in the process of writing this Blog post about the Woodinville home, I received a call from an interested buyer who wants to see it today and possibly put in a bid. What a small world this is! Here I am writing about a home, and a buyer calls me about it!  Maybe this bidder will fare a little better than the last?

Dear Mr. Bank President.

I wish there was a way of letting the management of the banks know that their actions do nothing to endear themselves to the public. Don’t they realize that the homes they are auctioning off aren’t worth what they once were? Before homes get to the auction block, they are listed and marketed by real estate agents. The fact that they didn’t sell on the open market should signal to them that they were over-priced. The auctions are supposed to be a last resort.  Now the banks are trying for a last, last resort, and in the process are creating further distrust in the minds of the public. I wonder if the winning bidder this time will be told his “winning” bid isn’t… Maybe they believe that the third time’s a charm…

What are your thoughts? Should banks be able to renege on the deal?

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