REO Auctions-Bidders Should Never Assume
We recently conducted an auction on a lender owned REO property where a similar situation occurred. The property, which had been listed for over a year, had received an offer from a local buyer of approximately 65% of the list price. The offer was rejected and the buyer did not increase the offer. A year later the lender hires SVN to conduct an auction on the property, a fully equipped restaurant.
Our auction marketing campaign identified 10 potential bidders that attended the pre-auction inspection. The former offeror attends the property inspection, informing everyone of how he made the offer and was rejected by the seller.
On auction day we had seven prospects register and competitively bid on the restaurant. The final price was a little lower than we had expected, but even so, the seller accepted the bid and signed the purchase agreement.
The former offeror did not attend the auction but showed up 15 minutes after the auction, while we were signing the contract with the winning bidder. The former bidder was incredulous because he just knew that the bank would not sell the property for what he had bid or less, because they had rejected him previously.
This has happened to us several times over the last few years, with the bidders often calling our office after the auction and getting mad at us. Our answer is always, “We are sorry but you should have been at the auction”.
The lesson here is that you never know what a client will do when presented with an all cash, no contingency auction offer, especially after holding the property for over a year. It only takes a few minutes to attend the auction or register to bid online, to make sure that you don’t miss a great opportunity. If you are really interested in the asset, don’t assume that it will be available after the event.