Real estate auction gone wrong

Real estate auction gone wrong

Martinsburg, WV · Member since 2017 · 30 posts · 3 votes

Looking for advice. I went to an auction yesterday. Got a great deal on a house, I was the only bidder. Got the house for 280k plus 5 percent to the auctioneer for a total of 294k,which is what the auctioneer said the minimum the family would accept. I wrote them a check for the 10k deposit and signed the contract. Sellers are out of state so the contract had to be mailed to them. Today I got a call from the auctioneer. He stated a real estate agent called and had a cash buyer lined up at 350k and wanted to know if I had any interest in selling it to them. I said yes. Three hours later the auctioneer called me back saying he was in a bind. The new buyer was in town and was ready to sign a contract for 350 and close on December 14th. Here is where it went south for me. The auctioneer states that since the sellers had not yet received the contract and signed it. That it was not official even though they agreed to sell to me the day of the sale for 280k. My 10k check will not be cashed. But now I’m out of the picture completely. Is there anything I can do in this situation ?

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Peter MckernanBusiness Member
Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
5y

@Mike Bell Yeah, I agree with @Mark Davidson clear everything through an attorney, and confirm that for sure! 

The whole thing seems not completely fair, and I understand that the contract was not signed by the seller, there needs to be some clarification on the EMD you put down of $10K, and also when another offer can be presented and accepted. Also, when that offer is presented and accepted the $10K should be refunded since you were not the winning bidder.

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  • Peter MckernanBusiness Member
    Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
    5y

    @Mike Bell Are there outlined auction process and did the people/buyers at $350K sign a different agreement and send it to the sellers to sign as well? 

    If they signed an offer at $350K and sent it with the auctioneer notifying them there is a higher offer coming to sign it, then the sellers will of course want the higher offer. The only loophole would be something that is written in the guidelines of the auction stating that the offer and price agreed upon at the auction site would be good. There maybe some other verbiage in the auction guidelines. That is the best route to take, seems like once that price is agreed onsite of the auction should be the standing one. 

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  • Martinsburg, WV · Member since 2017 · 30 posts · 3 votes
    5y

    @Peter Mckernan

    The contract I signed seemed pretty basic. I do know it stated that if the contract was breached I lost my 10k deposit. The auctioneer states that if the sellers had already signed and sent the contract back it would be a different story and I would be able to sell the home at my day of closing for right around 52k profit. But since the sellers are out of town the contract had to be mailed to them. Sellers do have a contract with the auctioneer. They did accept the bid over the phone at the completion of the auction which is when I signed the contract. It just doesn’t seem right to me that all parties agreed AT the auction, contract was established, deposit check taken, and then the following day someone else gets tossed into the mix.

  • Investor · NW Florida · Member since 2018 · 32 posts · 6 votes
    5y

    Research the Statute of Frauds.  It's my understanding that a verbal statement that I'm going to sell my property to you could be made in front of the sheriff and the minister of the First Baptist Church and be completely unenforceable.  The contract has to be in writing and signed by the seller.  

    What I don't like is that you are apt to lose your $10K if you don't perform, yet there's no penalty on their part.  I'm wondering who regulates auctioneers?

    Verify everything with your attorney if you want to pursue this further.  Personally, I'd chalk it up to experience and move on.  There's always another deal.

  • Peter MckernanBusiness Member
    Residential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
    5y

    @Mike Bell Yeah, I agree with @Mark Davidson clear everything through an attorney, and confirm that for sure! 

    The whole thing seems not completely fair, and I understand that the contract was not signed by the seller, there needs to be some clarification on the EMD you put down of $10K, and also when another offer can be presented and accepted. Also, when that offer is presented and accepted the $10K should be refunded since you were not the winning bidder.

    The McKernan Group4.957 Reviews
  • Martinsburg, WV · Member since 2017 · 30 posts · 3 votes
    5y

    @Peter Mckernan

    @Mark Davidson

    My EMD of 10k will be refunded. After speaking to a few local friends that are much more familiar with real estate auctions and contract laws, it sounds like I just got caught up in a bad situation and came out on the losing end. 2 more days and the contract would have been signed by the sellers and returned to the auctioneer and then I could have made money on the transaction. About 52k in total. But since it was not yet signed. It is not legally binding, the auctioneer chose to give the benefit of the situation to the seller. Sucks on my end for sure. But not much I can do but blame it on bad luck. Thanks for the replies

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