Getting Hosed by 3rd Party Auction House on REO Buy

[Jill Patton]

Hi, 

About three weeks ago, I won a bid to buy a REO from the online bidding site - Hudson and Marshall (H & M). I signed the contract and made the EMD. H & M said the bank verbally agreed to accept my bid and sell the house to me. I was waiting to get the executed contract back but instead I got an email today saying the bank had decided to re-sell the house on another 3rd party site.

I put a lot of work into this house (i.e., getting the city liens cleared, etc.) based on H & M's promise to sell.  And, the bank just decides to walk?  Ugh!  Also, I've had $12,000+ tied up and I passed on other deals waiting to close on this property. 

Seems like "false advertising" to me.

And, I've bought a ton of properties at foreclosure auctions but this was my first time trying  H & M and its been a horrible experience.

Has anyone had a similar issue with this auction house, or another one? 

If you were the investor on this deal, what would you do?

Thanks, 

J

[Chris Martin]

Last paragraph first... depending on where the property is, there generally is little to no discount on REO property. The "foreclosure discount" of a decade ago doesn't apply, since that concept applied to a completely different foreclosure environment. The 'seller' is an REO company and if you look, 99% sure they have a broker's license or use licensed brokers in every state they operate. The auction is the brokerage. Look up the property card in your county to see who the owner is. Most of these sellers use auctions for property they couldn't easily move (sell) through MLS. The business logic is 'get the best price' and auctions accomplish that task for the type property they auction off.

All the legal prep work has been done. Ask for it and they may provide it to you since this is an REO and not a foreclosure.