Going to Foreclosure Auctions? Watch out for Collusion!!

July 14, 2011 by 1 Comment

Foreclosure Auction

 

We’re not too big into foreclosure auctions but I know the banks are really starting to wake up and let things go at nice discounts at many of these auctions…. so it is becoming a really viable strategy for finding deals.

Here’s an interesting article I came across about foreclosure auctions.

It seems some of our fellow real estate investors were secretly banding together at California auctions to keep the bids low. I wonder how many of these little “clicks” there are throughout the country??

 

 

Investors Plead Guilty to Bid-Rigging at California Foreclosure Auctions

 

By: Carrie Bay
Eight California real estate investors have agreed to plead guilty for conspiring to rig bids at public foreclosure auctions in Northern California.

According to the U.S. Department of Justice, the investors face felony charges for conspiring to fix bids by agreeing to refrain from bidding against one another.
The bid-rigging occurred between May 2008 and January 2011 at public real estate foreclosure auctions in Contra Costa County and Alameda County in the San Francisco Bay area.
The Justice Department says the primary purpose of the scheme was to suppress and restrain competition to obtain selected foreclosed real estate at noncompetitive prices.
When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.
After the group’s designated bidder bought a property, the conspirators would hold a secret, private auction at which
each participant would bid the amount above the public auction price he was willing to pay, with the property going to the highest bidder.
DOJ officials say these private auctions took place at or near the courthouse steps where the public auctions were held.
According to court documents, the difference between the public auction price and that at the second auction was the group’s illicit profit, and it was divided among the conspirators, often in cash.
The eight conspirators were also charged with carrying out their conspiracy to defraud financial institutions by paying potential competitors not to bid in the public auctions for foreclosed properties, according to court filings.
“While the country faces unprecedented home foreclosure rates, the collusion taking place at these auctions is artificially driving down foreclosed home prices and is lining the pockets of the colluding real estate investors,” said Christine Varney, assistant attorney general in charge of the Department of Justice’s Antitrust Division. “The Antitrust Division will vigorously pursue these kinds of collusive schemes that eliminate competition from the marketplace.”
Each violation for bid-rigging carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. Each conspiracy count carries a maximum sentence of 30 years in prison and a $1 million fine.
The DOJ’s Antitrust Division and the FBI say they have identified a pattern of collusive schemes among real estate investors aimed at eliminating competition at real estate foreclosure auctions.
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Who knew this kind of thing was illegal!!??? 🙂
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Filed Under: Foreclosures Tagged With: , , ,

REO Rehab Complete – 53 Fullerton St Finished and Staged

April 25, 2010 by 11 Comments

We are working overtime trying to finish up a couple properties in order to beat the first time buyer tax credit deadline. I’m hoping their are lots of last minute shoppers out there who will be out looking for a new home over the next 7 days.

First up on the list is 53 Fullerton St. This was our first ever MLS/REO purchase. It seems hard to believe that over the last couple years, with all the deals we have done, we had never bought off the MLS. I was trained as an investor to market for deals and work directly with sellers…. this is our preferred method of doing deals as there is usually no competition and better deals can be made. However, with the flood of foreclosures, I couldn’t ignore the REO’s anymore. You have to be aggressive, and quick with your offers when working REO’s. It’s true that the well priced ones will go very fast, usually with multiple offers. So there’s always competition, which will limit your profit potential, but good deals can be had. As a matter of fact, we bought two REO’s last week and got an offer accepted on a third!

OK, back to Fullerton St. We did new siding, new windows, a new kitchen, 2 new full baths, new electric, new plumbing, a new boiler and a new driveway. This house had a very funky second floor bathroom. It was one of those ones where the tub was built right into the slope of the roof line. In order to take a shower you either had to be a midget, or kneel in the tub because there was absolutely no head room due to the slope of the roof. We corrected this by extending the bathroom out into the main hallway. We pushed the main hallway over, taking some space from a bedroom and a small closet. This allowed us to move the tub out of the roof line and gave us a functional shower and tub.  

Onto the pictures; (you can see the before pictures HERE)

House for sale Fullerton St Springfield MA

53 Fullerton St Springfield MA

Home for sale springfield MA

Fullerton St Springfield MA

Staged Kitchen

Fullerton Kitchen, Stainless Appliances

Cabinets and breakfast bar top facing Dining Room

House for sale 53 Fullerton St

Fancy Built In Fridge, Tile Countertop

Dining Room with Breakfast Bar to Kitchen

Dining Room

Living Room with nice shiny Hardwood Floors

Living Room looking at Staircase

First Floor Bathroom Tub and Shower panel staged

First Floor Bathroom Vanity

53 Fullerton St Bedroom

New Second Floor Tub that we Moved out of the Roof Line

Flipped house bathroom

Second Floor Bathroom

New Boiler

 

Damn…. this place shines!!!! It has 4 bedrooms, 2 full baths and 1500 square feet. I really like the floorplan of this house as it has a great flow to it. We enhanced this by removing the wall between the kitchen and dining room, creating that great open feel and adding the breakfast bar.

We’ve got two more going on the market so I’ll post some updates and photos of those soon.

Filed Under: 53 Fullerton St Springfield Tagged With: , , , , , , , ,