Posted by Eric C on September 28, 1999 at 22:43:54:
Hi Joe -
All I did was to fill a need. I asked myself the question, what added value could I bring to the table?
I did not want to own the property (very large)or commit to an actual purchase. So I asked why are you selling the property in this manner (auction)? How did you get in this situation?
What I found was that these folks were terrified. They did not care about any potential profits, they had been fighting the IRS, the banks, and everyone else for several years. Over that time, the debt only grew from the level of unbelievable to the heights of impossible. The bank only cared about a payoff and had carried the family as long as they could. My added value was certainty - I could take away their fear.
My agreement called for me to pony up any debt still remaining after the auction, if any. It also stated that for guaranteeing the results, I would receive half of the profits, if any.
Even those on the outside looking in, thought I was crazy to do this. But, in reality, there was an almost zero chance of loss. Acreage there had gone for as high as $3000 per acre a few years earlier, and all I was guaranteeing was $350/acre.
In the end, I put up no money. I made almost $ 400K - a nice day! I continue to do variations of this today.
It still works.
Auction, fair or not fair? - Posted by d.henderson
Posted by d.henderson on September 27, 1999 at 07:20:14:
Just wanted ya’ll to know about something that happened to me. I buy some of my houses through estate sales. Here in Texas it happens all the time, sometimes you can get really good deals if you do your due deligence. BUT…this time the house was being sold with owners families OK… Well I bid against another person and win the bid (wonderful deal) the auctioneer says he will have to check with the owners. He goes over and talks to them comes back and opens the bidding again. A man that didn’t bid the first time started bidding, I bid an extra $400.00. Now the auctioneer was going up $100.00 a time which is very rare at a house auction. Usually it’s $500.00 or $1000.00 every time you bid, depends on the size of the house. The whole thing didn’t feel right so I pulled out and let the new guy have the house. Checking into it but think that the family had someone jack up the bids, with the auctioneers knowledge. Hmmmmm.
Moral of the story, it pays to know your players.
On to the next deal!
dee-Texas
Re: Auction… Ok, guys, here’s something to try - Posted by Eric C
Posted by Eric C on September 27, 1999 at 12:51:47:
Hi D (and Phil)-
Auctions are definitely a hoot! Here’s something you may want to consider –
Ask yourself why is the property up for sale by auction? Many times, there is confusion(or fear)about the outcome of the sale itself. Are there third parties involved? What’s their interest?
Example - I got involved with a ranch up in the Hill Country that had been inherited by three people. They had received terrible advice (estate taxes) and owed the feds about $400K. To cover this debt, they took out a short term loan for that amount - but never paid. While the case was pending with IRS, the debt accrued to $ 750K. These folks were panicked. They just wanted out. They decided (with prompting by the lending institution) that an auction was appropriate.
I stepped in and offered them an option to cover their losses in case the auction would not produce enough to cover the debt. In return, I received half of the remaining proceeds, should there be any.
Auction day was very profitable for all of us. I now make this my standard procedure in dealing with estate auctions.
Re: Auction, fair or not fair? - Posted by phil fernandez
Posted by phil fernandez on September 27, 1999 at 10:24:57:
Hi dee,
Was the auction an absolute auction or one that had bottom line number that the heirs would accept. If it was absolute you would have an argument.
My guess was that it was not an absolute auction. I’ve seen this same thing happen to me at some of the auctions that I attend if they are not absolute. The auctioneer goes until he has exhausted his skills and there are no higher bids. Then he huddles with the decision makers, ( heirs, family members, sellers ) and may reopen the bidding. Just part of the game.
That’s why absolute auctions are much more exciting. The highest bidder ends up with the property when the bidding ends.
Posted by Irwin on September 27, 1999 at 08:34:24:
Did the auctioneer announce what kind of auction it was, i.e. with or without reserve, before he started?
It sounds like it was “with reserve” which means that the owner of the property must approve the sale before the bid is accepted as final. If the auction was without reserve, the highest bid takes it, no matter what, then you got shafted by the auctioneer. He should not have been allowed to reopen the bidding. I’ll wager that auctioneers have to be licensed in Texas, and there is probably a board where complaints can be filed if you think the auctioneer acted improperly.
Every once in a while at tax lien auctions the property
owner will surreptitiously bid to keep the liens out of the hands of parties who will foreclose.We have challenged these bids on several occasions and always prevailed. You have to be willing to make a stink about it or you will get taken advantage of everytime. You should have said “Excuse me sir but the bidding is already closed, why are we rebidding the same property? Can you show me the statute that permits you to do this? Can I also have the name of the bidding party since this is public record.” I have a feeling this may not have been the owner but maybe a regular or even the bank rep wanting to drive the price up. At least make some noise or you will become known as a pushover.
Re: Auction, fair or not fair? - Posted by d.henderson
Posted by d.henderson on September 27, 1999 at 11:14:50:
HI! PHIL!
We knew that it was not an absolute, but the problem was the new bidder. I think that the family put him in as a last resort to rig the bidding. The auctioneer had been seen talking to him about the house the day before. Might not have been anything, but felt fishy so I bowed out.
Thanks for posting always love to read your post. smile
dee-Texas