REDC ( San Diego Foreclosure Home Auction Review Part 3

Read Part 1

Read Part 2

Just a week and a half ago, Chris asked “In other words, I am curious to know if the starting values are inflated to make it seem like a better deal, or are the starting values real current values for the homes?” I would like to answer that question and analyze the validity of the previously valuation price in the REDC booklet/ushomeauction site with respect to actual present day value. First off, the starting values of the auctions are not the current values of the homes. I consider the starting bid irrelevant because the auctions are bid up so far beyond the starting bid that REDC could start each auction at $1 and it wouldn’t make a difference. This is not like an Ebay auction where you might not have people looking at your items during your auction lifetime which means you need an adequate starting bid to protect against giving away the auction. In the REDC auction process, all bidders who want to bid are present at the auction.

As I said in part 2 of my ushomeauction review, the average single family home price in San Diego was $314,000 while the average condominium price in San Diego was $204,000. Therefore I’ll analyze a single family home and condo that auctioned in line with the average price.

Case 1 (Single Family Home) – 8712 Glenhaven St. , San Diego, 92126
Previously Valued To (according to ushomeauction): $580,000
Final Auction Price: $300,000
Auction Discount with respect to previous Valuation: 48.3%

5 year Zillow housing valuation chart of 8712 Glenhaven St:

Glenhaven 5 Year Home Price Chart

10 year Zillow housing valuation chart of 8712 Glenhaven St:

Glenhaven 10 Year Home Price Chart current estimate: $492,000
Last Sale Price (according to Zillow): $515,861 on 11/8/2007

Analysis: As you can see, the foreclosed single family home auctioned for $300,000 which was well below both the ushomeauction valuation and Zillow estimate. Matter of fact, according to Zillow, the home auctioned for the same amount that it was valued over seven years ago in January of 2001. If the last sale price was indeed $515,861 in November of 2007, some home owner foreclosed on the home only 3-months after purchase and would have lost over $210,000 based on the final auction price! That is a terrible three month investment and that is why many individuals are very hesitant to get into the housing market. During the peak of the boom, this house was worth about $613,000 which is very close to the valuation of $580,000 that ushomeauction stated. It seems from this property that they are using a valuation of three years ago. That is somewhat deceiving even though it is true. It’s telling people that “hey, this home was worth $580,000…what a great deal!!!” and thinking “but it isn’t going back to that price in a very long time.”

Case 2 (Condominium) – 9362 Twin Trails Dr. #102, San Diego, 92129
Previously Valued To (according to ushomeauction): $279,900
Final Auction Price: $210,000
Auction Discount with respect to Previous Valuation: 25.0%

5 year Zillow housing valuation chart of 9362 Twin Trails Dr. #102:
5 Year Chart Twin Trails Dr

10 year Zillow housing valuation chart of 9362 Twin Trails Dr. #102:
10 Year Chart Twin Trails Dr current estimate: $290,500
Last Sale Price (according to Zillow): $246,500 on 8/3/2007

Analysis: Again based from the Zillow charts and final auction price, you can see that the foreclosed condo auctioned well below both the ushomeauction valuation and Zillow estimate of $290,500 and $279,900 respectively. In this case, the Zillow and ushomeauction valuations were only separated by $10,000 compared to the larger spread for the single family home. The ushomeauction valuation of $279,900 was far from the peak of the value of this condo during the housing boom which (according to the 5 year chart above) totaled around $381,000. And according to the previous sale price on Zillow’s site, it seems that this condo sold for $246,500 in August of 2007. Just three quarters of a year produced a foreclosed condo and a depreciation of 14.8%. This condo fell right in line with the 17% year over year decline San Diego properties experienced just within the last year.

Conclusion: In this time of rising foreclosures and when dealing with the REDC foreclosure home auctions, you should really disregard the previously valuations that they state in their booklets and website. When doing research to find out how much to bid for a particular house (or even when buying directly from a home owner), you may want to use Zillow as a housing data tool, but don’t trust them entirely either. Crunch the numbers to find out how much of a mortgage you can afford and go visit the home and surrounding area to get an idea of the health of the housing prices whether we’re in a housing downturn, bottom, or have already begun to ascend higher. As of now, we can use a general rule of thumb that San Diego properties are fetching roughly 40% below REDC previous valuation prices while silicon says that Oakland auctions for 75% below, San Jose 25% below, and Salinas at 50% below. Different areas of the country will fetch different prices depending on the health of the market and how much speculation there was during the housing boom so make sure to do your homework as I did with these foreclosure properties.


41 Responses to REDC ( San Diego Foreclosure Home Auction Review Part 3

  1. Excellent resource! thanks for the in-depth analysis and making it available on your blog!

  2. Shrapnel says:

    I don’t think I saw any discussion in the comments on just how often the lender does not accept the winning bid. I was the winning bidder on a San Diego home auctioned at the LA auction. My bid was $235K. Five days later the auction house called and said the back rejected my bid and countered at $325K. I spoke with another winning bidder at the auction who told me not to get my hopes up, his last 3 winning bids were also not accepted by the lenders. Any idea how often this is the case?

  3. Carla says:

    I work at a midsize regional bank on the East Coast and I’m telling you the folks here now own dozens of properties in CA and haven’t a clue on how to value them for auction. They don’t read the blogs and go off of closed sales only thereby missing winning bids rejected by lenders, which are a far better indicator of value than Zillow. The decision to accept a bid is made based on how much loss they would have to book doing it. The decision rests with accountants and not sales managers. Banks are just like private owners in their hesitation to accept reality in the housing market. Not that it would probably do much good other than in the cold water in the face department but here is what I would counter to the bank. “I’m not going a penny higher because that it all this place is worth. If you don’t want to accept my bid, have fun 1) paying the auctioneer for nothing 2) paying the carrying costs for a few more months and 3) doing this all over again in 3-4 months. Oh, by the way – the top bid then will be $10-15k lower. The same genius thinking that got you guys into this mess to start with is still in charge. You didn’t have a clue then and you don’t now. Wake up, take what you can get and move on or somebody will be bidding (low) on you.” I can’t say it will work but if they keep hearing it, it might rattle enough green eyeshades that the sales people will start being listened to.

  4. Tony says:

    Check this out, I just did a refi buy out of my ex wife on my home in Goodyear AZ. The house was valued around 430K during the boom of 05, went to refinance, and the appraiser valued it at 325K, this is a 25% correction. Here’s the rub, Zillow has the house valued at 365K, I looked at the appraisal and the banks are going on the resale value only, because the appraised value to build my exact same house was 365K. So buyers know this, but sellers plan for it, the value of the home will be reduced greatly no matter which tool you want to use, because they already have a number in mind before you even get the appraisal done.

  5. Dopes says:

    I made this comment in a Washington Post article about the REDC: “Let’s examine one of the sale properties being offered by the REDC. I just picked this home at random, no special reason, but it points out why the average Joe or Jane has no business being at one of these auctions with stars in their eyes. 3896 STONEYBROOK RD, WHITE PLAINS 20695. The MLS record for the property shows it being listed on 28 Jan 2006 for $715,000. The tax record states the house sold on 08 Sep 2006 for $625,000. Public deeds show a loan amount of $475,000. A search of home sales on that Stoneybrook Road show nothing ever being sold for anything close to that amount. A second MLS record shows a new listing date of 22 Sep 2006 for the price of $635,000. Rather quick and odd turnaround for a home listed in the tax records as a “principal residence.” This listing went until 17 Mar 2007 when it expired. A public record shows a foreclosure filing against the home on 22 Jan 2007. A third MLS listing on 28 May 2007 shows the home being listed for $558,900 and ending at $526,900 on 11 Oct 2007 when it was withdrawn. A fourth MLS listing shows the home being listed on 15 Oct 2007 for $510,900. This listing was withdrawn on 07 Dec 2007. The property had now been marketed for 346 days at this point. A public auction document dated 05 Dec 2007 shows the mortgage amount now due at $492.000. This brings us to the present when the REDC auction now touts this property as “previously valued to $625,000.” Personally, I feel like this is a misrepresentation because after 346 days on the open market this house couldn’t even be sold for $510,900. This lesson should be telling you that if you don’t have access to the MLS (or know someone that does) and have the ability to search public records, you shouldn’t be coming within a mile of these types of auctions. Does anyone else find it odd that the property’s tax record still lists the original purchaser as the owner? Why doesn’t the bank selling the home that foreclosed on it have their name on the tax record? It sure look like the banks are dumping their trash at premium prices and they want you to buy it!”

    The reason I bring that up here is I haven’t seen where you have discussed the MLS history of these properties. If you can’t sell something for 18 months on the open market for the asking price, then it surely isn’t worth anywhere near that price in an auction. Another serious issue is the REDC price of homes in relation to mortgage fraud. How much of this stuff got “previously valued” what it did because of cash back fraud, phony appraisals etc?

  6. The REDC owner/lender can reject/counter all bids. It’s in the contract!

    In simple terms, the bid is only an OFFER per contract law in California!

    I have bought and sold over 400 properties since 1990. Some with REDC in the 1990 S&L Crash. But today’s REDC is more of a RETAIL AUCTION BULK REALTOR! I have inspected about 100+ of there properties in each of the Southern California Auctions! 3 so far, so over 300 properties inspected!

    I will buy any amount of homes at under Building Costs! Aka $100 to $50 per sq foot if they are less than 5 years old. Condos $75/ft or less. I have over $2m of cash available for down payments or 100% purchases. But, no luck. If I go to the Inland Areas From Chico 2 Sacramento 2 Stockton 2 Fresno 2 Bakersfield 2 Lancaster 2 Palmdale 2 Barstow, I can get home at $50/ft less than 5 years old all day long. But to deal with the “tenants” are a problem due to their income being 25-35% of the Annual income of Coast Cities. Add in the the gangs and you have a Iraq environment! Not good for a professional investor like me.

  7. happy renter says:

    Zillow, or any housing site for that matter, makes some significant assumptions regarding the condition of the home. With a forclosure, you just have too much variability in condition to even hope to estimate value. Buying forclosures is a risky business and to place your faith in the value calculated by some programmers in Washington is just stupid–do your own homework or it could end up costing you more than most people make in a year.

  8. Anonomus says:

    These auctions are nothing more than shark bait. In my opinion, invisible people at the auction bid on the houses to price levels the auctionaire wants to let the house go for. Lots of smoke and mirrors and shill bids in my opinion. I think the market values are a lot less in many cases

  9. Ryan says:

    I read all three parts of this blog, and it was an excellent read, thanks! My wife and I are actually planning to bid on a home in the Ventura county auction coming up, but really have no idea what to expect. I was curious..

    1)When you say the houses get bid far above the starting bid, how much greater did you see the final prices going for above the starting bid?
    2)I would also like to know the probability of the bank not even accepting winning bids.

    It all just seems like so much work and hoping, for a very big chance things do not work out in the end and I find it a little disheartening. Especially with the ridiculous prices houses WERE going for in Ventura county, and how much is probably still owed on these houses, I really wonder if the auction prices will even be good enough for the banks.

    Thanks again for the info, great read!

  10. dan008 says:

    it dont matter how far the final price bid up to because what ever price it is still going to be the bank call either they will sell or not and change are they wont sell for a lost just like the owner of a house.
    If i were to guess only 20% of the house get sold at the auction.
    You are not going to get a good deal, who want to loose money? The bank dont.

  11. James says:

    Thanks for the info – I’ve been looking at going to one of the REDC auctions in a couple weeks. Incidentally do you know of any other RE auction outfits that work on the same scale?

  12. haystackfarmer says:


    Instead of focusing on how much the final auction price finishes in respect to the starting bid, I think you should just focus solely on the final price and how it relates to our current housing market. People like johnjasonchundotcom invests in properties at specific dollar/square foot values and you should go in with a plan too. It doesn’t matter whether these auctions start at $1 or $150,000, I believe they should fetch their fair market value within 10% or so.

    In pt 2 of my review, I stated the average price for a condo in San Diego was $204,000. My co worker just purchased a 2 bedroom condo (non foreclosed) in the Spring Valley area for $190,000 so my average is pretty right on with how the market is right now.

    The housing market is still deteriorating so look to get better prices as 2008 continues!!!!

  13. J.R. says:

    I have been counseled that buying foreclosures is risky in general due to leans and other liabilities that may be attached to a foreclosed home. So you need to do a through title search.

    My personal experience buying properly is limited to one purchase and later sale of a condo. I thought that is why I paid a bonded title company to assume that risk for a normal property purchasing scenario.

    Anyone have comments or experiences regarding assumed liability?

  14. Waiting To Close says:

    Ok.. so you found a property you want to bid on, you did your home inspection, well scratch that, you went and take a look at the property, It’s not going to be anything close to a home inspection, none the less you like the property, you did all the pre-auction prep work etc. and came up with a max price and want to take a shot at bidding on it. Now what, well.. make sure your prep work included READING the CONTRACT carefully and understand that it’s 100% ONE SIDED in favor of the seller. In the event you’re the unlucky one to win the bid, yes that’s right, I did say UNLUCKY, because the nightmere may just be starting. ….READ THE CONTRACT..READ THE CNTRACT….and other docs you’ll have to sign..all of the over 100+ pages. I’ll comment more on my experiances as time goes by.

  15. Waiting To Close says:

    I’m currently waiting to close and it seems as if i’m in limbo. Here are some things to note, based on my own experiance and I can only attest to my situation.

    My seller is “Countrywide”, the title company is “First American Title” and the lender I ended up with at the auction is WaMu. My auction date was Sun April 6th 2008 in Orlando FL, signed the contract and started my 15 business day wait for sellers approval. Come friday the 25th (15 business days later) nothing, so I figured they did not approve but saturday the 26th ring,ring and its a call from the title company saying the seller accepted an the “CLOSING DATE IS ON OR BEFORE MARCH 26th”. (30 days from acceptance) also remember that the 26th is memoral day monday so I figured it will be friday the 23rd. Anyway they also said I should inform my lender. Note that they waited till the very last moment to approve, don’t know why. So six or so days later I locked the interest rate with the lender, all’s well, things are looking good. Now it’s one week before close and no word on a set closing date, called the title company and they say the seller is having problems with the title.
    Well, on friday I got a call from my WaMu agent, (very nice person I must add) telling me she spoke with the title company and it dosen’t look good for the close. She also informed me that the title company told her that the seller can extend another 30 days. I didn’t believe her, she said to me, “READ THE CONTRACT, ITS ONE SIDED”, well, I went and read the contract and low and behold they are right. Ok, So what’s the big deal you asked, Well here’s the ringer that my WaMu Agent informed me about. The intrest rate lock is only for 30 days, extend beyond that will cost Me, she did say something like the most it will cost is about $450 but I had already shutdown in anger so I didn’t understand what she was trying to tell me. it’s now saturday May 24th, two days before closing date “ON OR BEFORE MAY 26th”, I know there will be no closing come monday but I still count the days away. Stay tuned for the continuing saga of the REDC surprises. Does anybody get the idea that all these dates and deadline means nothing to the seller but can be fatal to you. “BE FORE WARNED”. Stay tuned.

  16. Waiting To Close says:

    Finally closed JUNE 25th or rather signed the papers, could’nt get the keys though untill the following day JUNE 26th. The papers and money had to be FedXed back to First American Title and they had to review before I could get access to the property. By the way, I made an error with the Month in the previous post, it should read “CLOSING DATE IS ON OR BEFORE MAY 26th”

  17. Mike says:

    Great info. here. I am going to the auction in Houston the first weekend in August and have my eye on one property in particular. We’ll see how it goes. Sounds like if I don’t get it at the price I want to pay, the ultimate Buyer will get screwed, or the property will come back on the market in a month or two. Will let you know how it goes.

  18. Manuvns says:


    Did you visit the auction in San Diego held at Aug 16th , 2008 . If yes will you post a review of the same . Your posts are really informative . thanks

  19. haystackfarmer says:

    I am out of the San Diego area now but I did notice that the booklet I received from REDC in the mail, before I left, was much thicker than the one correlated with when I went in January earlier this year so that means more and more homes are turning into foreclosures and up for auction. I can imagine that this trend will continue through the middle to end of 2009. So don’t go rushing to buy a house, take your time to do your research, and find the best situation for yourself. If I have a chance to attend one of the bay area foreclosure auctions, I will definitely provide a comprehensive review/posting about my experience. If anybody does have a similar review on another California REDC auction, please post the link here (I can imagine most people wouldn’t spend such a long amount of time sitting through all the auctions…the time can really amount o a long experience).

  20. SV Interested says:

    Wondering what percentage of winning bids are later countered for more after the auction. And how do you find a real estate professional with experience helping people buy at auction. We’re in San Jose area and the auction is on 9/27.


  21. SV Interested says:

    Also, in the event the seller does not accept the final auction price, are the fees paid to REDC refunded?

  22. DataNow says:

    I went to REDC SoCal L.A. auction in August 2008 for the first time. This auction is a banks wet dream. Most of the properties were in in lousy neighborhoods and the homes were tear downs from my viewpoint. The few decent homes they had were bid up so high that they barely sold for less than on the open market. A few even sold for more than in the open market. I can’t believe how many stupid people attend these auctions. I sat in the front of the auction and there were a lot of people around me and barely spoke English but they were bidding on homes! I couldn’t believe that these morons even had any money to buy even the tear downs. Half the people that showed up probably didn’t look like they had any legal status to be in the US. These morons were bidding on the tear downs like there was no tomorrow. They were either shill bidders or they must have a ton of cash under their mattresses since there weren’t any good deals to be taken. Freaking unbelievable! I’m never going to a REDC ever again, it was a complete waste of time.

  23. wondering says:

    when you buy a home at the auction do you also get stuck with any liens or 1st or 2nd mortgages on the home what is the catch for some reason going in with 5,000 and paying 5% seems a little to easy

  24. REDC-WTF says:

    I just attended the auction in San Diego too bad I did not have the chance to see this blog b4 It would have saved me a lot of time. I spent most of the day waiting for 2item to come up and when they did, the both were sold at a higher price than similar houses in their respective neighborhood. On top of the auctioned price you have to add the 5% premium to be paid to REDC. I am glad I did some research b4. I might have paid more than it was worth. I guess this has to do with ego or just people getting to emotional and want to win at any price.
    As for me, I won’t be spending my time their anymore since there are very few interesting items. Most of the houses/condos are just shacks.

    Thanks to all of you for the info. It is very informative. Too bad bad I did not see it b4 going to the auction.

  25. DangerousDv says:

    The bad things I see here are:

    1) Your adversely high earnest money of $5000 at risk.
    2) The undisclosed minimum (“reserve”) price.
    3) The misleading “previously valued as” price.
    4) In the real world, a potential buyer spends 10-40 hours evaluating the property and possibly some $ for a pre-appraisal. Here, the time spent by each guy must average about 1 hour per property!
    5) One more one obvious point: In a conventional home purchase, the buyer pays the county, title & loan fees. If the transaction involves real estate agents, then the 5-7% fee is worked into the purchase price. Here – once an offer (bid) is accepted by REDC, this last 5% real estate agent fee (“buyer’s premium”) that is traditionally paid by the seller, if coughed up by the buyer. Will every bidder take this into account when they are arriving at their magical winning price? I doubt it.
    6) All the punitive contractual agreements in fine print that the bloggers here have warned me about.

    Definitely stacks all odds in REDCs favor.

    The good things I see here are:
    1) The nice downloadable .xls list. You can then import 90% of this data into a MS Streets map!
    2) On the day of “auction” the bid offer can be subject to a new Countrywide (or any other) loan and will definitely be pending a new appraisal by a licensed home appraiser. So a bid that’s too high will actually get reduced down to a renegotiated price that’s approvable to the loan officer.

    I’ll have better insights to share when I go to my first auction tomorrow in Sacto, CA. I hope they don’t steal my $5,000!
    I’d like to create a google notebook where the bid results will be published by me. Then the general public can likewise add their results thereafter.

  26. Buyer Beware says:

    Hey, “Waiting to close” what was your bid amount compared to the actual “real” price of the house. I attended the Orlando December 2008 auction and I would say every property went for about 50% of the real market value not their previously appraised value. Knowing this the bank should approve non of them but then why would the hold the event.

    I won a bid at $165,000 retail of the house is probably $270,000 but the idiot who bought the house at the peak of the market paid $450,000. I couldn’t imagine they turn down every offer.

    I haven’t been able to find a whole lot of success stories on REDC so I’ll reply with the final outcome. wish me luck!

  27. Wiser Bidder
    have bought many properties in Scotland a few with nationwide and we where looking to buy a holiday home in america but reading through all the emails i don,t think i will we do not have the problems you seem to have if the reserve price is not reached you are asked at the end of the auction if anybody wishing to buy would like to speak to the auctioneer,also if you are succesful the contract is bindiing on the day i think i,ll stick to buying at auctions in scotland it seems to be much less hassle and the properties are cheaper .

  28. I have access to public records so I was able to find current comps within the last 3 months, in a radius of .25 miles, the transaction history that tells me what the bank paid to take the property back and how long they have been holding it and any tax liens on them. I do not know if any of this information will do me any good but I am going to bid on a few houses at REDC this february 7th based on a discounted after repair value (I will inspect at open house this weekend) of 65% because of their testomonial on the booklet makes this claim. When it’s over and I find I wasted my time I will post my experience and we can all have a good laf at my expense.

  29. Also, I will reduce my offers be the $5000 fee (thanks for the headsup dangerousdv)

  30. I have access to the public records so I am able to find out the following; 1) last three months current comps within a .25 mile radius, 2) how long the bank has been holding it, 3) how much the bank paid at the trustee sale, 4) how much they lost, 5) any tax liens outstanding. I am inspecting the houses this weekend at the open house events with a certified inspector (a relative doing me a favor). I don’t know if any of this info will do me any good but I am going to the REDC auction on Feb 7th and I plan on bidding a 65% discount (less the $5000 fee) because of the testimonial on the cover of their brochure. I will post my experience and if I find I wasted my time we can all have a good laugh at my expense.

  31. KK says:

    I just bid on a house at the San Diego REDC auction on Jan 28 2009. I had my eye on the property for myself as a primary residence for months. With a nasty cracked slab throughout the house, the price dropped to $225,000. It is still not in my price range so I wait a few months until I find out it is going to auction.

    They had it previously valued at $299,000 (that was probably almost a year ago). It bid up to $180 and it was an investor who won. I guess they saved $45,000. but maybe not since nobody would buy this place. Good luck with that and thanks ALOT for taking my little bungalow 😦

  32. Kevin says:

    BuyerBeware: What happened with your closing? I’m interested in going to the auction in Minneapolis next month. I’d like to read more stories about post auction closings (or breakdowns).

    Great articles.

  33. Michael A says:

    I am currently on day 2 of my 15 day business cycle.

    This is just a summary of my experience so far.
    It all started when I became interested in a property that had been reduced in price 2 times since Dec 08 and was listed on the MLS. I inspected the house and contacted the seller’s agent who told me that I would have to contact REDC and that her agency was there for just moral support (or basically they pay her agency to list the house on the MLS and drop the listing price several times to attract buyers). So I checked out REDC’s website, and learned about their auction that took place in Pittsburgh. I figured I would go to the auction to research what properties were being sold for and possibly bid on the one property I was intersted in.
    I got my $5,000 cashier check assuming that there was a 95% chance I wouldn’t need it because others would bid too high on the house. The house was previously valued at $127,000. After renovation this would be the asking price. I would only bid $25,000 to $30,000 for it. The ridiculous fast speaking auctioneer started the bidding off at $500, which we all know means absolutely nothing. Within 5 seconds (and a bunch of shouting from the auctioneer’s strange assistants) the bid was up to $15,000. Then it went back down to $12,500 because someone raised their hand by accident. It stayed at that value for about another 10 seconds and then I raised my card to acknowledge that i wanted to bid the next amount of $15,000. The couple a few rows in front of me, although being pressured by the auctionneer’s assistant, declined to increase their intitial to bid $17,500.
    I was taken to an area behind the stage signed off on the purchase agreement, gave them my $5,000 check and was told to contact the closing agent. The closing agent told me the next step is to wait for the bank, Fannie Mae, to approve the offer.
    So far I don’t have any complaints besides being misled on the MLS. I also don’t feel too confident that the bank will accept the offer and hate the fact that they have 15 business days to decide.

    For anyone seeking advice, I would read Dangerously DV’s review (above). Go to the auction with a max price that you would bid after inspecting the property. There are some deals but also some insane offers that people were bidding. Also, be aware of all the advantages the seller has in their contract this way you have the proper expectations.

    I will try to update this when I hear back from the bank.

  34. Larry says:

    Michael , did you hear back from them?

    Anyone knows about San Jose, CA? or Hayward CA?

  35. Big fish says:

    Tricked! I won the bid and never heard a word from REDC ao i called and realized that everyone was clueless. I received an anonymous phone call from a guy a met at the auction telling me the home I paid the 5% fee on and won the bid on was being auctioned online today. I called REDC to find out how this could happen and the rep told me that the auction winner didn’t have financing??? Are you kidding me, I’m pre-approved and was wondering about closing. Don’t waste your time with these greedy people.

  36. Collette says:

    I think the starting bids have a lot to do with what the bank/current lien holder is owed. As we all know, lots of properties have been over-valued for years. When you value a house you have to consider location, condition, and so on. Some people are willing to pay a bit more than market sometimes for what is their best location etc. So, in these auctions you have to weight everything up. Don’t overpay for them at auction. They’ll have to sell them some time. Check the houses on tax assessor’s sites for back property taxes owed too. And on some sites (Los Angeles for example) you can see recent sales in close proximity – great help. There are bargains to be had though. Good luck.

  37. Collette says:

    Just want to say that taking the median price range for a house anywhere is a bit misleading…this usually includes all sales, all areas – however, as we all know there are prime locations and less desirable locations so it is not weighted properly. You have to look at the comparable sales for a specific area. Try Assessor’s websites again. Ask agents for recent sales also, not listings, sales. A house is worth nothing until someone pays a price for it.

  38. Judy says:

    Went to a REDC auction in Washington, D.C. last weekend. Won the bid. Met with Bank of America, the owner, and a title company. Gave $. On Tuesday, they called and said I was rejected unless I gave them more $. How much more do you want, I asked, how much more will you give, they replied. Not Bank of America, not the tiltle company, not REDC are willing to say what the reserve is and all actually claim they don’t know. It’s disappointing. Don’t know if it’s a calculated scam or uncalculated incompetence. They also said that even though I won the bid on Sat, if someone called on Monday and offered more $, they would get it. So watch the auction online and call on Monday with higher bid if you want a property.

  39. Deb says:

    I went to a REDC auction in Atlanta this summer, and what I saw was pretty consistent with the experiences of other posters here. The “previously valued to” values were way out of line. Many of the houses were currently listed for sale way below these inflated values and had not sold, so obviously the houses weren’t even worth the listing price. Worse, I heard people out at the food venues saying things like, “Did you see that it was previously valued at….” with stars in their eyes, obviously uninformed and ill prepared to be there. I keep a close eye on real estate values in my area, and as one example, there was a house that I was watching that was “previously valued to” over 900K. It was listed on the MLS for 699K immediately prior to the auction. It “sold” at auction for 240K, which was very close to the actual market value that you could have bought a similar property for. The winning bid was rejected by the bank, and the property came back up for auction at one of their online only auctions a few weeks later. The bank evidently couldn’t accept the fact that they had made a loan for 3 times the actual value of the property.

    I just made a pre-auction bid on a property that I really like. To determine the amount that I would offer, I researched the county tax assessor’s records for the 6 months since this property was foreclosed. I looked at every foreclosed home that had sold. I discovered that almost all of them had sold between 50-60% of the value of the foreclosed loan. Lower priced homes sold for a higher sale to loan value than higher priced homes, which makes sense because there is less margin. In other words, houses that sold in the 150K range sold closer to the bank’s foreclosed loan value (about 55-67%) than homes that sold in the 300K range (about 50-55%). Only one home had sold for more than the original foreclosed value, and it was only 2.4% more. My thought is that the owners must have had alot of equity in that house. This gave me a good idea of what banks would settle for. I researched and looked at other homes in the area to get a feel for the market value. I made an offer that was 54% of the foreclosed value. I called REDC to find out how the process works because I didn’t want to make an offer and be left in limbo and potentially tied to a dead contract for weeks or months. I was told that if my offer did not meet the bank’s minimum, I would be informed immediately by email, but if it did meet the minimum, the offer would be taken to the bank for consideration and I would get an email informing me of that. I did receive an email stating the offer was being considered by the bank, so at 54%, I must have at least hit the bank’s minimum and REDC must have this information somewhere on record. I am hoping to hear something within the promised 48 hour window. The person that I spoke to on the phone at REDC was very helpful, but FYI, I have never gotten a response to any email that I sent them. I realize my experience is a little different since I’m trying the pre-auction bid option, but it just seemed to me that it would be better than wasting an entire day at auction.

    There are bargains out there, but the process isn’t for the ignorant or faint of heart.

  40. Veronica Richey says:

    As the Customer Service Manager for REDC, I applaud all of you for doing your due diligence. We tell everyone to inspect the properties before they bid, and determine their bid price based on their own research. We frequently refer callers to the County Assessor’s offices and website, as well as provide them with the contact information for the local listing agents. The purchase agreements are posted online within the property details for each property so you can review them (or have any expert you would like review them) prior to auction. The previously valued to prices are based on the “higher” of a) the appraised value of the property in connection with the most recent mortgage on the property, b) the most recent asking price, c) the assessed value, or d) the most recent broker price opinion. The starting bids are set by the auction company as a starting point to ensure we can move through each property at a reasonable pace. As with any real estate transaction, the more information you have, the better.

  41. Silence Dogood says:


    I went to a REDC Auction today, and I thought is was very slimy. They disclaim everything they do, but it is still slimy.

    1) “UNPUBLISHED, MINIMUM SELLING PRICE”: They start the bids low to create the illusion that someone might win the auction at that price, but they don’t accept winning bids below an unpublished minimum price. Why not just start the auction at the minimum price the seller is willing to accept? (The answer is they are trying to create the illusion that the opportunities at the auction are better than they actually are).

    2) “WINNING BIDS MUST BE ACCEPTED BY THE SELLER”: Even if you “win” an auction (ie.. the gavel hits the podium), the bid must be accepted by the seller. In other words, you go to the little area in the back of the room to sign paperwork and open escrow, and in fact your bid may not be accepted. Some “winners” have complained that at this point the REDC broker tells the winning bidder, “the seller didn’t accept your bid of $75,000, but they would take $90,000”. REDC has completely disclaimed it, but that doesn’t make it fair and upfront dealing. It is good ol’ fashion bait and switch.

    3) SHILL BIDDERS: “Auctioneer may open bidding on a Property by placing a bid on behalf of the seller and may further bid on behalf of the seller, up to the amount of the Reserve Price, by placing successive or consecutive bids for a Property, or by placing bids in response to other bidders”. Put simply, they bid against you, and I personally saw the auctioneer taunt bidders to increase their bids (“Your not going to let THAT guy buy YOUR house, are you?”) against the shill bidder.

    4) CHEESY HYPE: Blaring pop tunes, young guys in tuxedos, and power-point presentations quoting Donald Trump and other real estate moguls with positive quotes about real estate. I don’t think anyone is going to hell for playing Michael Jackson tunes while showing pictures of Trump, but is this really the way you want to make a $125,000 purchase?

    Now, do some buyers make below value purchases and make a profit on some of the homes sold at a REDC auction? Probably a few. But make no mistake, these guys are sellers agents and working to make a commission on the sale. There is nothing wrong with that in-and-of itself, but if you had a scale with SLIMY on one end, and HONORABLE AND FAIR DEALING on the other, REDC is a lot closer to the slimy end for the reasons stated above.

    I have purchased property directly from Sellers, at Trustees Sales on the county courthouse steps, and from Realtors. With only a few exceptions, those experiences have been satisfying and profitable. I attended one REDC auction, and I won’t attend again or ever buy a property that way. I found it distasteful enough to spend 20 minutes writing this message for others benefit. Buyer Beware.

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