Online real estate auctions-another thing to hate about them

[Sherry Norman]

Well I was the high bidder on the 2 family property at 46 Harrison St. in Morristown.  While the sale was still in attorney review, the attorneys for the auction house tried to impose a contract with all kinds of odd exceptions and carve outs that they insisted the buyer accept on the title insurance.  Turned out after I pulled preliminary title work, and had my surveyor look at the public records, the driveway that was supposed to be included on the property had apparently been deeded away.  The driveway is crucial to value in this town,  an area where on-street parking is restricted.  Not only that, but my surveyor said it appeared that the house was encroaching on the neighboring property by a couple inches!  None of this covered by title insurance b/c seller won't allow it to be required for close.

Next was the task of trying to talk to someone at the auction company who understands the import these issues have on the value of the property.  The auction process is so far removed from the seller that it seems nobody at the auction company has the authority to discuss a price reduction that reflects the depressed value that these issues represent to the house price.  They are issues that probably could be resolved is some way, given enough time and money.  But the auction company says the seller won't reduce the price at all.

Given that I had already spent around $1000 on preliminary title and survey,  I offered to get full survey and title work done to prove to seller (although it seemed like they already knew b/c 3 deals on this same property had fallen through previously), provided that the seller would agree to pay for it if we couldn't agree on a price reduction after that.  No soap.  So the seller intends to put the property back up on its auction site without disclosing these issues.  And each buyer in turn will spend way more than necessary on due diligence until a sucker who doesn't perform due diligence comes along and buys this property worth way less than it appears.

I'm wondering if the Real Estate Commissions in the involved states (NJ for the property, CA for the auction company) allow this kind of non-disclosure?

[Tom Gimer]

Sorry but this was a public auction. All participants agreed to do all their homework up front.

"Bidders shall independently verify all information prior to sale" ... I would be very surprised if there wasn't such a statement/disclaimer in big bold type in the property information packet.

You can't renegotiate a winning bid. Under the circumstances the options should be either to close or default. If the auction company is actually returning your deposit and not defaulting you you should feel extremely lucky.