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MWtoSD
Posts:1085
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| 11/25/2009 4:31 PM |
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I saw the preview/commercial for this story. I do not know if they will post the clip online or just the text from the story. I thought it was quite interesting and gives some information as to what to expect about the REDC auctions.
Airdate: 11/25/2009
It's fast-paced, loud, a total frenzy, and when the gavel slams down, you could be a homeowner.
And business is booming. Every weekend in ballrooms across America, hundreds of people flock to foreclosure auctions, hoping to get a piece of the American dream at a fraction of the price.
INSIDE EDITION went to auctions in New York City and Dallas, and right away, we noticed something curious.
As soon as the bidding started, men in tuxedoes began pointing and yelling into the crowd as if they saw someone bidding. Maybe they were seeing something we didn't.
"I thought of the movie Ghost, when Whoopi Goldberg could see Patrick Swayze but nobody else could. It was as if they were screaming and yelling and pointing and shouting, but you couldn't see anyone else they were talking to," says real estate expert Jim Randel, who attended an auction with INSIDE EDITION. He says he believes auctioneers create this hysteria to get people to bid.
There's another thing we found curious. The brochures showed hard to believe starting bids, $500, $1,000 for nice homes. But when those homes came up for auction the auctioneer started at $1,000, but immediately jumped to $10,000, then $20,000. INSIDE EDITION saw that time and time again.
The auctions are run by REDC, Real Estate Disposition Corporation. The chairman, Rob Friedman, says there's nothing wrong with generating interest in the homes with low starting bids, and they are legally allowed to bid up the price themselves. "People are getting great values at these auctions. We have sold houses for $500 in several auctions," he says.
Kim Rose went to an auction outside Sacramento, California last year and had the winning bid for a ranch-style house. At just $195,000, it was a terrific bargain.
"Never in my mind did I ever question the fact that I didn’t buy a house that night or that it was a possibility that I wouldn't have bought the house," she says.
Two weeks later Kim got a call from a local real estate agent. "He says, 'I'm the real estate agent that the bank just contacted this morning to put the house back on the market.' I was devastated," she tells INSIDE EDITION.
A heartbroken Kim later found out the bank had rejected her winning bid. She believed when the auctioneer said "sold," she was getting that house for that price. "I didn't make an offer, I bought a house."
Friedman says what happened to Kim is unusual, and that all bidders are told the bank has 15 business days to accept or reject a bid.
"Here it is on your brochure and you need a magnifying glass to read it," says INSIDE EDITION's Chief Investigative Correspondent Matt Meagher.
"It's announced at the auction, it's on our website, it's literally in seven different places. We really do want all buyers to be informed," Friedman says.
But Jim Randel warns consumers, if you're thinking of attending an auction, it's buyer beware: "You might be able to pick up a good deal here but at least know what the rules of the game are," he says.
As for those guys in tuxedos who appear to be pointing to no one, the company says they are not always responding to someone in the audience, but they are legally allowed to do that.
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MWtoSD
Posts:1085
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Aeneid
Posts:112
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| 11/25/2009 6:18 PM |
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Caveat emptor! In a business world, everyone is out to make money for themselves and off of you. Therefore, if anyone goes into an auction house thinking that they get some good deals, they are just fooling themselves. Of course, there are some well informed folks out there. I am talking about average buyers like myself.
Slightly off topic: I am wondering if house buyers' behaviors have changed over time. Presently, alots of information is available over the internet and things are more transparent. It then follows that buyers are more educated and therefore making financially sound choices. True? |
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ElPato
Posts:637
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| 11/25/2009 6:29 PM |
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REDC seems like a giant stacked deck to me. They took all the junky stuff that wouldn't sell, and held these high pressure auctions. And they blanket the TV with ads. If you had smokin' hot deals, would you really need that kind of advertising budget?
To be fair, they do disclose their rotten terms publicly, so caveat emptor is appropriate.
I tried to warn folks (an old post) but I think I got drowned out by the massive marketing machine that is REDC....
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ElPato
Posts:637
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| 11/25/2009 6:32 PM |
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| It is nice to see the mainstream media addressing this, even if they are 20 months or so late. |
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cbr600f4i
Posts:364
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| 11/30/2009 6:52 PM |
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| As I've posted before, these homes auctions are pretty much a scam, the rules are completely in the sellers favor. |
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sdbri
Posts:634
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| 12/03/2009 12:35 PM |
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| The root of the problem is this is in no way an auction. That alone should make it fraudulent. They can market it as a new sales model if they like, just do not call it an auction because it is no more real than Disneyland. |
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