Orlando Real Estate Blog

A few months back I reported on some horrible auction experiences.  Of late we have been attending several auctions…some better then others.  The one I see to be the best at the moment and has the most professional setup is REDC which specializes in bank owned aka REO properties.  I have attened several auctions to date held by REDC, with my clients, and we have bought3 properties.  All proved to be good deals…  However, we had been the highest bidder on several occasions only to have the bank refuse our winning bid…all of the properties have a “reserve bid” amount that is the lowest the bank will take, unfortunately they do not share that amount with you until they tell you it has not been met with your bid.

Before you go…do your homework, and have me attend with you, it doesn’t cost you a penny and you get my services.  Many times I have seen properties bid up to prices above what the property is currently listed for. I saw one sell for $50K that was listed for $40k…yikes!  Why would you pay more then the bank has it listed for in the MLS….plus REDC charges a 5% premium on top of that.   Keep in mind that the banks I have done deals with recently, and it has been about 12 in the last three month, have always taken less then the list price.  DO NOT PAY MORE THEN THE PROPERTY IS LISTED FOR!!! That is just crazy and shows you how a fool and their money are surely parted.

Still our favorite way to approach bank owned properties is via the MLS and traditional methods.  We have an inspection period (Which is not granted in an Auction Property) and you don’t have a room of people bidding against you for the same property.  I guess people are competitive by nature and when you want some thing, you want it and will pay a little more to get it even if it is not the best financial decision.

So go to the auction, buy something…the timing could’t be better, but be sure to do your homework on the properites and do not pay more then the property is listed for.

I have have been to several auctions of late by the very nature of my line of work.  Sometimes pulled to go by a client, other times out of pure curiosity. They always prove to be interesting so I recommend you pack up the kids and head to one for some good ole’ entertainment.

One auction of note, was the Lou Pearlman auction in the Windermere community of Chain-Du-Lac. The auction was a “bankruptcy auction” and subject to the judges approval and the judge declined the winning bid of $3,750,000 due to the fact that the bank pay off was much higher hence the current asking price of $5.6M. Hurry…buy this $5.6M fixer upper before it is too late….actually it will take a lot of work for a buyer to get the house in order and an investor would have to buy it for a steep discount when you consider the risk.

       This is Lou Pearlman’s old a/v equipment room….better run to Best Buy!

  The rear view of the old Pearlman House…now Bank of America’s…

Another auction I had the misfortune of attending was for a property called World Crest.  This is a condo hotel community located right off of Disney property.  I had a client fly into town to attend the event, willing to buy all of the units if the price was right.  We had to register the day before the auction.  See…this was an “absolute auction” for 15 units.  They made us at the time of registration place a minimum bid that we would definitely buy at. So we had to put a low number, what if we won!  We had to buy the units at a number the would CASH FLOW!  So we put $50,000 per unit down as I am sure everyone else did.  At that point I told my client they will probably cancel the auction and unfortunately I was right.  The auction was doomed for failure…why would you try to sell a vacation property in September…THE SLOWEST MONTH FOR TOURISM!  

Look at the monster turn out!

 Thank you for the free coffee and bagel but it doesn’t offset my fuel cost since it was about 4 bucks a gallon at the time.  Not only that I was told the auction cost the developer $150,000 upfront no matter if he sold a unit or not.  I am currently making a T-Shirt for the developer that says “I paid $150K for an auction and all I got was this shirt”.  I am available for consultation…its right on my card…”consultant”.  I would have saved him some serious money.

The auctions always have some good food…one event I went to in Lake Mary had a full spread…I loaded up my plate, got a drink and watched the festivities commence.  I can not say too much about this deal but we offered the seller a day before the auction a good price for the whole community…it was declined because they wanted our deposit hard…which we would not do until we had a due diligence period to inspect the property.  So they went forward with it and boy did they work the room good…I had to give them credit.  Less then half the properties actually closed at this point and the first bidder payed a lot more then the second or third buyer did, talk about losing equity fast for “lucky” bidder number one.  They still have properties available in that community today.  We offered a fair price that could have allowed the developer to wash his hands of the community.  Are you still reading this…..I can’t stop going on about this. It also amused me that the owner of the auction company said he would buy the lots himself if he wasn’t prohibited to do so, due to auction rules,…I call BS on that one. 

I just got another auction come across my desk…”honey forget the beach”… we are going to see a train wreck and I can tell you the time and place,  plus we will be fed!  The only way an auction will work, in my opinion, is if it is “100% Non-Cancelable Absolute Auction” to the highest bidder and I have not seen anyone willing to do that to this point. So for now auctions are going going gone….