Confused: Homeowner Bid On Own Home At Auction
Could someone clarify this. I attended an auction today and the homeowner's property was in the middle of being auctioned when I arrived (the same time that the homeowners arrived - didn't know they were the homeowners until after the auction). The trustee accepted their deposits while letting the auctioneer to continue auctioning the property. Once the homeowners deposits were accepted, the bidding jumped drastically. Another bidder won at $450,000. The opening bid I was told was $100,000. The excess, I thought, goes to the homeowner but I thought the homeowner couldn't bid up the auction amount on their own property. :-?
Why do you think the homeowner is not allowed to bid? Auctions are for the public and the homeowner is a part of that public, right? They will have to close the transaction just like anyone else.
Tom
If the lender is allowed to bid then the homeowner can also bid if it is a public auction. The primary thing required at an auction is cash,they do not care who brings it.
Then what can an innocent bidder do if they are not aware that they are bidding against the homeowner who is only bidding the price high in order to get the excess funds?
There better be no innocent bidders at an auction for a $450k house. At the auction it does not matter who you are bidding against. You should already have done your research and know what is the maximum dollar amount you will bid. Sounds like you got emotionally involved with this house.
Brenda
Brenda's absolutely right. When I started out in this business my mentor had a great saying, "never count the money in the other guys pocket."
great thread!
Cash is King. If qualified to participate, the foreclosed Homeowner can certainly bid on the property. The foreclosed homeowner must be prepared to complete the purchase if he/she is the winning bidder, or risk losing the good-faith deposit. If the former homeowner is not the winning bidder, and the winning bid exceeds the judgment amount plus costs of sale... the former homeowner can make application for the return of excess proceeds.
No I wasn't emotionally involved. I don't even bid, I go to learn and this is something I hadn't seen before; nor read anywhere. I've seen someone come to stop the auction but lost it due to lack of funds needed to bid. "Innocent bidder" meant the bidder didn't know that they were bidding against the homeowner.
[ Edited by winuinc on Date 04/15/2004 ]
This is an example of how "hot" the DC market is. This home 5 years ago wouldn't have gone above $175K (Capital Hill East). The new owner is paying $450K for a house that needs significant work. While a renovated home around the corner just went under contract for $475K.
Thanks for clearing this up for me