Redondo Beach Real Estate Auction Properties

Auction Properties for Sale Redondo Beach CA

While not often seen I could not help but notice that there are now two properties listed in the MLS as "AUC" for auction. Both are from the same listing Broker (more on that later) and being marketed in a similar manner (not surprising).

As both are priced substantially below the likely selling price, I am anticipating getting numerous inquiries. Here's the listings and what you need to know.

Auction Definition 

"An auction is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder. 

The open ascending price auction is arguably the most common form of auction in use today. 

Participants bid openly against one another, with each subsequent bid required to be higher than the previous bid. 

An auctioneer may announce prices, bidders may call out their bids themselves (or have a proxy call out a bid on their behalf), or bids may be submitted electronically with the highest current bid publicly displayed."

How Is This Different Than a Best and Final Multiple Counter Offer?

With the low housing inventory the past few years and many Buyers involved in multiple offer situations, they have often referred to their Best and Final as a "bid".  There are substantial difference between the SMCO and a true auction.

To start with, in a true auction the Bidder is usually well aware of the other bids. In a multiple offer situation the Buyer is often bidding blindly against themselves. In a standard sale, the Seller does not have to take the highest offer. In fact, often a stronger offer, meaning better financing or terms, may win out over a higher price. In a true auction, it is all about price. Also, at an auction there may added fees to the final bid price.

Types of Auctions

As part of the Foreclosure process properties are often sold on the courthouse steps. 

The trustee’s sale is a public auction and the property is sold to the winning bidder. The trustee may require bidders to pay the full bid amount in cash or cashier’s check. Anyone may bid at the sale, including the lender and any junior lien holders. A trustee’s sale may be postponed by announcement at the sale. If a sale is postponed more than three times, a new notice of sale must be issued.

These sales follow a pre-ordained very specific format.

At least 20-days before the trustee’s sale, the notice of sale must be posted on the property and in one local public location. The notice is also published once a week for three weeks in a local newspaper, starting at least 20-days before the sale date. The notice is mailed to the borrower at least 20-days before the sale and to anyone who requests the notice. The notice must contain the date, time, and location of the sale, the property address, and the trustee’s contact information. In addition, the notice of sale must be recorded with the county recorder at least 14-days before the sale.

The Buyer of a Trustee sale may have to deal with eviction issues, other liens, and is acquiring the property in its as-is condition often sight unseen.

For non foreclosure sales, the requirements are usually a lot less stringent.

The Buyer will usually be able to engage in a 45 day escrow and have the purchase financed. At a Foreclosure sale, as noted above "all cash". 

At private Auctions, there may (or may not) be a premium placed on the final sales price and often a Broker Commission might be paid if they bring the successful Buyer. (No commissions are paid at Trustee Sales.)

Real Estate Auctions Not Just for Distressed Properties

There has been a growing trend globally to market hard to price unique super luxury properties through the auction process. That may seem counterintuitive but when you think about it, often these homes are hard to value and expose to the market through traditional means.

Here's some examples:

2507 Ralston Lane & 1738 Havemeyer Lane Redondo Beach Auctions

As mentioned at the beginning of this post, it is quite unusual to see 2 true "retail" auctions listed in North Redondo Beach at the same time. 

Both are following a similar format;
  • Listed well in advance of the auction date
  • Limited Open Houses before auction date
  • Broker Participation
  • 1 picture in the MLS
  • Family Trust Sales
  • No Court Confirmation
The Havemeyer property Private Remarks in the MLS (which are not visible to the public on sites such as Zillow) does state than an offer might be accepted prior to auction. 

The piece about court confirmation is very important because there is a variation of this theme where after the sale confirmation is required and yet another bidder may come along and over bid. Let's leave further discussion of that to a post on Probate Sales.

As noted above, sigh unseen I am fairly comfortable stating that these listing are in the MLS at considerably below what their fair market value may be.

Two thoughts about that.

I totally get it that the auction Broker wants to generate as much interest as possible and is serving his client.

Unfortunately it becomes misleading to the market because there will be Buyers looking at these list prices who are misled into thinking those are the prices the homes can be bought at.

Well at least until they close escrow at much higher prices!