Saturday, Mar 07, 2009
The USA auction House is really here!
REDC: All Homes Must be Sold
Sorry, didn't mean this to be an ad. but remember that news about REDC, the USA style mass auction house, coming to the UK? I thought it will take a while or maybe even causing riots, but they ARE actually here!
Posted by peter_2008 @ 02:25 PM (3501 views) Add Comment
19 Comments
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1. little professor said...
For those that missed the original story:
The Americans are coming
US-style foreclosure signs could be coming to your street as the world's biggest and brashest repo auctioneers hit Britain.
Get ready for a US-style repossession revolution on the streets of Britain. A controversial American property auction company that specialises in selling off repossessed homes at rock-bottom prices is preparing to open for business here, in what some will see as a bid to cash in on the UK's credit crunch.
Real Estate Disposition Corporation claims to be America's largest real estate auction company, and is well-known in the US for holding blockbuster "foreclosure auctions" where, amid much razzmatazz, hundreds of homebuyers and investors compete to buy repossessed properties at prices often far below their most recent valuations.
Now Britain is set to get a taste of its "pile 'em high, sell 'em cheap" sales tactics.
In the US, REDC's distinctive black and yellow signs reading "lender foreclosure - public home auction" have become an increasingly common sight in front yards.
REDC plans to put up almost identical signs in the UK which will clearly identify properties that have been repossessed and are to be auctioned off.
Fears have already been expressed in some quarters that signs indicating bank repossession could affect the value of neighbouring properties and even destabilise local housing markets. In the UK, for-sale boards for homes that are to be auctioned off after being seized by banks do not usually carry the "R" word.
2. Shivermetimbers said...
Is the previous value the minimum price expected to fetch? If so they are still way to expensive.
3. mark wadsworth said...
SMT, the advert suggests that there are no reserve prices, although that seems unlikely to me.
But will RDC publish the actual selling prices? That'll be fun.
4. enuii said...
Correct me if I'm wrong but I was under the impression that repossessions do not show up on publicly accessibly land registry figures i.e. the ones freely available on the net.
5. shining wit said...
The strapline says "All homes must be sold" but the FAQ says:
Q. What happens to the properties that do not sell?
Ans. We sell almost all of the properties at auction. Register today at www.AuctionToday.co.uk so you don't miss out on this amazing opportunity!
Is that not against the trades description act?
6. peter_2008 said...
Shiver @ 2 start bidding is from £0 and some may have reserve. Previous Value is just the factual, well, "previous value", so I think most of bidders will use it as the start point to apply a % discount.
Mark @ 3. no, they won't publish the sell price according to their FAQ. You can only find it out from Land Registery or just go to the auction.
The catch? Well, instead of getting 2% - 3% from the sellers like most of UK auctioneers, REDC actually charge a whopping 10% + VAT!! from the buyers. This can be a double edge sword. As sellers (most of them are lenders) have nothing to loss, even if it doesn't sell, they are more motivated to put as many properties up as possible. This may increase the competition and push down the price, but it may also encourage unrealistic reserve.
I think the Yanks may be surprised to see how deep in denial the Brits are.
7. Shivermetimbers said...
Thanks guys. Never thought my comment would be published.
8. crunchy said...
The timing of all this is very interesting. Very.
Why now would a bank worry about losses when we are ultimately footing the bill and fiat money is filling the banks.
I have always thought that sometime soon the panic will set in therefore I feel that this perfectly timed chain of events may well be the
catalyst to finally normalise prices. Warning there will be a lot of X BTL rubbish sold before the better properties finally filter through.
Estate agents had better wake up. The price slashers have landed and not a moment too early.
9. Dantheman said...
Peter@6. Surely they all have an Unpublished Reserve Value...............How far below the most recent valuation figure [The joke figure!] is the average URV?
And as a percentage, on sold houses, what the average discount off the most recent valuation?
I.E. Are any of these houses, sold through REDC, sold for 50%-60% less than the most recent valuation figure?
Those are the figures we need to get some idea of whether or not its worth going.............
Under FAQ it states:
What does "reserve" mean?
Ans. It means the Lender has an UNPUBLISHED RESERVE VALUE that the property must exceed at auction before they are obliged to sell it. The lenders are very motivated to sell. A more detailed answer can be found in the auction catalogue and on our website under "Important Information for Prospective Buyers".
10. shining wit said...
enuii...
I was under the im,pression that auction sales and private sales were not included in the land registry figures
11. iguana said...
All transfers in title must be lodged with the land registry, see Land Registration Acts1925 onwards.
12. shining wit said...
iguana
Yes they must be lodged and rigistered as all transactions that transfer ownership of land and property but I don't think these are included in the figures relating to the 'average house price' figures that they release.
Feaky Snuckers !
13. mark wadsworth said...
@ Shining - auction prices are excluded from the HMLR index, but they are recorded as normal in the Registry itself, so if you look up an auctioned property on e.g. www.houseprices.co.uk, it will show the price reported as having been paid.
14. Johnny5thumbs said...
Wow - 11.5% commission (10% buyers comission + VAT) ! - Makes your local EA's auction rates look like an absolute bargain. Our local agent charges a few hundred quid for the brochure and entry fees, and 2% comm if it sells. Can REDC really get away with 11.5%? Maybe they're hoping that bidders will get carried away in the heat of the moment and 'forget' about then 11.5% ... :0(
15. Johnny5thumbs said...
Sorry - I didn't realise :-
----------------
"Q. What is the 10% buyer's premium and what is it used for?
Ans. The 10% covers Auctioneer compensation."
-----------------
'Compensation', eh - and there was me thinking it was to make shedloads of money for REDC - it's only to compensate the poor souls at REDC for kindly giving up their evenings to help out distressed homebuyers. May I be stricken by a thunderbolt for my disgusting cynicism ...
16. The Auctioneer said...
At the end of the day the houses will sell for the highest bid provided it meets the unpublished price set by the Lender.
The difference is the market is being opened up to the man in the street ( by making the process more transparent).
Rumour has it many existing traditional auction houses are shaking in their shoes. If this works they are history unless they can reinvent themselves.
Mortgage Lenders have given REDC a chance. I say good luck to them
17. Wcoveney2009 said...
anyone who has property and then has it repossed will lose any capital left in it so it the banks who win again
18. Chandu Shah said...
please mail me your auction catalogue.
19. Davidbaer said...
What I like about small business owners is that they are not afraid to take huge risks and lay it all on the line. But, I agree they do need a lot of help with their marketing. I think having them go the social media and email route is not only the least expensive but its also the most effective. Thanks for the stats!
With Facebook and Twitter being among the leaders of the Social networks, marketing as a small business is being transformed..
Respondents according to the Vertical Response survey appear to need some differentiation with the use of SE marketing and Social media Marketing.