The auction story - How it started

With a Lender pre-approval letter or proof of sufficient cash for a cash purchase you got to sign up as a bidder and get a piece of paper with a hand written number on it to waive if you agreed to the next price.

This video is the auctioneer explaining that there is a "reserve" bid price (minimum they will accept giving them the right to reject any under-reserve offer), and that if you're not the highest bidder you probably won't find out what the reserve price was.

Approximately 75 people were there, many admittedly to watch the show. About 20 to 25 people got approved to bid. The 75 Buyers, tire kickers and agents toured the property, while the sign ups happened in the dining room of unit #2. Around 1:30pm they called everyone outside to explain how the auction was going to work.

The comedy of errors started early on, around 1pm, when one of the several members of the auctioneer group (the "dudes") said they would be auctioning all 5 of the remaining units off. Soon after another said that was a mistake and it would only be unit #2.

In walks Tim Brown of Brown & Co, and while I was on the street and can't verify, I believe they all got together and decided to auction the middle two units as well as #2. The confusion didn't help, and given the relatively small crowd, offering up 3 units wasn't wise. (update, Brown & Co. denies being involved with the auction. I don't doubt that since it was another business handling it, and Brown & Co would not have made the mistakes these guys made. They also claim to be against it, another easy thing to believe.)

You can see from the above video how things started. In addition there was an question and answer period explaining who the Lender was, what rate they were offering and now much down payment you needed. Apparently they had been telling potential bidders they could come in with as little as 10% cash.

There was so much confusion, and there were so many Buyers who were not represented by experienced TIC agents, that they pretty much crushed their chances of getting decent bids from the outset. Not that a TIC in a 6-unit building is a candidate for auctions, especially those on 4 to 5 days notice. This is no Single Family Home in the Sunset as the auctioneers found out the hard way.

By the way, among the many mistakes leading to confusion, they listed this TIC in the MLS as a Condo (update: corrected today, Feb 25th, the day after the auction, when it was withdrawn from the MLS). I'm not sure how many bidders showed up expecting their pre-approval letters to really mean something, and their hard won 5% interest rates to help them afford more, but if they did, 6.5% paying 1 point and having to put down 20% to 25% certainly would have been all the deal killer they needed. I just double checked the MLS again and no where does it mention anything about TIC's, fractional loans, or anything else.

How it started? Not well. It didn't end well either.

1 comment: