What happened when property went back to bank for $100k over opening bid? See radar ID# 12580682

radar ID# 12580682
This opened at $100.00 and was sold to bank for $107,000.00. Usually the ones that go back to bene go for the opening bid amount. I was not present at auction. Could there have been a bank representative there bidding against others?

The bank gets to make the first bid which is the opening bid. The bank can also do what is commonly referred to as a “low/high” bid. This is where the bank has instructed the auctioneer to start out with a low opening bid but to bid up to a higher number on their behalf. Most auctioneers will announce that this is a low/high bid at the start of the sale.

So then is the winning bid price typically the “hi” of the lo/hi? And could i assume that I could have bid just above that and won or will the auctioneer just keep going up until there’s no value left. The reason I ask is that the winning price still is a great deal on many of these.

Hi Tom, The winning bid may or may not be the highest amount the bank is willing to bid. The auctioneer would bid on behalf of the lender along with other bidders. If no other bidders bid above the last bank bid then that would be the winning bid.

Michelle, thanks for the speedy replies. So are sales that are announced as Hi/Low worth pursuing? I read some thread on this site that said how all of the investors groan when the Hi/Low was announced by the auctioneer. I guess I would just bid according to my research and highest bid, treating it like a normal auction.?.? -Thanks

HI Tom, Usually they are groaning because they are hoping that the bank is not bidding above the opening bid amount and then they are only competing against each other. It would be like any other sale, you would just have the bank bidding like any other bidder at the steps. It doesn’t matter if it is the bank or another investor you need to stick to YOUR game plan.

Michelle - First of all thank you for all of the information you have posted online here. Its been very useful and I have learned a ton.
Regarding the post above and high low bidding. Doesnt this result in the bank winning the property back at a very low price? Why dont the other investors just bid anyway up to what they were going to bid, even if its lower than the “high” bid announced by the auctioneer? Doing it this way would cause the banks to have to pay closer to auction market value instead of winning the auction at an artificually low price. I am sure I am misunderstanding this but I still havent figured out how that works.

It is my understanding that the auctioneer does not announce the max bid but will bid along with the other bidders. That is how it is intended to work but may not necessarily be the “practice”. The banks are bidding against was is owed. Remember, the banks have already laid out the cash when they originated the loan. Their losses will be based on what they end up reselling the property for and how much it costs them to prep and hold the property. With so many properties going to sale each day I doubt an investor would want to waste any time bidding on a property for the sole purpose of increasing the winning bid.

I agree w. Michelle. Most professional investors have figured in advance how high a bank is going to go when they start w. a low bid. As Michelle said, why waste your time and everyone else’s when you know the bank will bid high enough to take the property back. That said, there are, on occasion, rare exceptions where the bank will stop at a low enough figure where someone will buy it. If you haven’t determined how high the bank is going, then bid. As mentioned, the professionals usually know that figure in advance and won’t bid.