Pre-Auction Bid - Auction.com

[Mike Hibbs]

Does anyone have experience with a 'Pre-Auction bid' on Auction.com? Recently I place a 'pre-auction bid' on a home that has an opening bid of $40k, and Auction opens May 18th. I bid once and received an immediate message my bid was too low. (I bid much higher than $40k). I increased my bid and was told to send my POF...etc. And now I'm waiting in the dark, after I send POF. Any experience? Thanks in advance.

[Jake Harris]

Originally posted by @Mark Gee:

Thanks @Mike Hibbs

That's actually very helpful information about needing to be listed for 5 days before anything was accepted. I guess that makes sense and explains why it takes awhile to hear back sometimes.

What did you mean by: "I purchased 40k (22%) under the foreclosure amount."?

Could you be more specific about the #s? I'm working on 2 auction.com deals right now 

 I have bought a fair amount of properties online via the different auction sites. The foreclosing amount has very little to do with what the property will sell for at auction. Many lenders especially ones that had loans written in 06-09 have insurance and government backing that if the borrower defaults they will get total debt amount paid back. Other reasons they foreclose at total debt is that they can also now claim that as a write off. 

Now to the important part of buying it once its REO post foreclosure. It has more to do with the BPO (Broker Pricing Opinion) of current value. Most asset managers will then take a percentage of that BPO value and set that as the reserve most common is 80-90% of BPO price. However if an asset is not getting much traction (Multiple unsuccessful bids, Low to no interest or months of limited action) they will drop the reserve or accept prices below their reserve.

Additionally this is just a theory I have but I also believe that there are times when bank liquidity issues are also a factor to when they will accept lower than normal bid prices, and low foreclosure pricing. However there is no way for me to really research if that is true or not but it is my speculation.

Good luck sometimes it is a matter of being the top bidder several times before you can get an asset at the price you need to make sense. 

- Jake