We’ve written about possible bid rigging in real estate auctions.
Now Massachusetts is investigating an auction of 300 foreclosed homes by California-based real estate auctioneer Real Estate Disposition Corp. to determine whether some homes were sold before the foreclosure process was completed.
According to the Boston Globe, about a quarter of the winning bidders at a November real estate auction held by Real Estate Disposition Corp. have yet to close on their homes.
“Frustrated bidders say they have spent thousands of dollars on deposits, fees, and financing only to find themselves mired in delays and legal complications that raise questions about the integrity of the auction.”
The Globe reports that “In several cases, bidders waited months for mortgage companies to take ownership of the homes that the companies had offered at the auction.”
The article also states that “In addition to those properties that the lenders had not yet foreclosed on, in other instances Real Estate Disposition failed to retain the lawyers necessary to conduct closings.”
Letters have been sent by the Massachusetts Division of Standards to several Real Estate Disposition Corp. employees warning them that they could lose their state licenses if they auction properties prematurely.
The Globe also reports that the company “has previously acknowledged the problems with the November auction, and said it has changed its policies to exclude any property from the auction until foreclosure is complete.”
We’re not big fans of real estate auctions.
Certainly, there are deals out there. But too often there is not enough time to conduct a proper inspection of the properties, and the opening bids are more opening gambits than real opening offers.
We also think that the due diligence necessary to participate sensibly in real estate auctions requires the time and effort of a full time job.
Unless you’re willing and able to make going to auctions your primary occupation, we think you’re more likely to waste your time and money than make a profitable deal.
What has your experience been with foreclosure auctions? We’d be happy to post any insights you might have.