Currently I work for a bank, where I am heavily involved with setting opening bids. I am interested in what you as an investor look for when purchasing at auction.
There are now 2 diff. types of investors.
- The old school that bought cheap enough where they could fix and re-sell at a profit - at least 20%. After all, a broker makes 6% on a sale w. no risk whatsoever.
- There are now hedge fund type investment groups what will pay close to retail (90%+) and since they aren’t using their own money, don’t really care. They are promising investors a 4% return while they hold/rent the property for 5 years and then the plan is to sell once properties have recovered in price. As the NYTimes said - this plan is really out there and unproven.
So, to set opening bids, set the bid at 80% of retail. What will happen is you will get multiple people looking/bidding on the property and it will run up from there. If you set the starting bid too high, they may not look at it.
We old timers have to sit back and wait until these groups move on.