Sunday, February 24, 2013
Let's revisit the REDC Auction/Foreclosure Issue: Is it still a scam?
So, I noticed the remaining interest in the topic of REDC Real Estate Auctions since my last blog post about this topic. For those of you who don't know, REDC is the company that runs Auction.com. I read the fine print on how they ran their auctions several years ago. My thoughts on their services are here in my article: REDC Foreclosures almost got me!
Okay, so after 3 years of auctions and people complaining about how REDC conducts their auctions, there have been new developments. It seems that REDC has expanded and in 2012 they introduced Short Sales and Luxury Homes within their offerings. They also introduced auctions that you can participate in solely online so you do not have to go to the live event.
I think it became clear from my article that this auction event is a marketing gimmick for the largest banks in the country to unload the immense inventory from the housing bubble that turned into the housing crisis. Now, notice I said it was a "marketing gimmick or the big banks." I have realized through several accounts of people who have successfully purchased property through REDC and Auction.com, that this whole scheme was a way for big banks to take out the commission they would have to pay Real Estate Brokers and Agents.
Let me explain. In the past, when large amounts of houses were foreclosed upon, there was an old REO System where the bank would now "own" the house and they would commission a Real Estate Agency to sell the properties. With each sell of a property, the bank then owed the Real Estate Agency a commission. But as you will see later in this article, REDC and their infamous "auctions" are trying to do away with those pesky commission to Real Estate Agents/Brokers -- and keep all that money for themselves.
I completely realized this when I read a great account of a Real Estate Agent that helped clients successfully navigate through the confusing steps and regulations of a REDC auction. Her full account of the situation is outline on her blog Cyndi Mino's Real Estate and Happenings in Huntington Beach.
But when I read this in one of her posts:
Oh, and yes, I did get some commission out of this whole thing – a whopping 1%, but wait, I didn’t actually get the 1% because of some stupid fees that the auction company kept and then my broker gets his split. Yes, we agents do not get to keep all this commission that you think we all get. We have to split it with both agents and then both of our brokerages get their splits too – Whoo hoooo, by the time I get my check, I might be able to pay my cell phone and gas bill for all the expenses run up from this sale.
I realized what the big banks were doing. Do you see it yet?
You see, the new advice going around on the Internet is that these auctions are totally doable for the average person if they have some help from knowledgeable people with real estate experience -- in other words . . . real estate agents. It seems that people that have that type of expertise on their side (Real Estate Agent as Consultant) have a better experience with REDC Auctions.
It's a curious thing. In the traditional REO selling environment the Real Estate Agent was paid by the big bank wanting to get rid of its property quickly and for the best possible price. In this new real estate process or scenario, the Real Estate Agent is commissioned by the buyer and gets whatever is left over as commission . . . in my estimate the 1% that Cyndi Mino talked about.
This is an interesting development don't you think?
So, it seems that these auctions can be successfully won, with a little professional help. And that professional help gets paid "chump change" for all their hard work, when in the past they would have been paid well for their expertise.
My only question is: Did you think we were stupid REDC and won't figure out what you are doing?
Yet another unfair process by the big banks. It feels like the burden of everything now is on the "average guy." What do you think, my family?
Read more about REDC Auctions and Real Estate Agents here:
How to Buy a REDC Auction.com Home Successfully
Is REDC Auction a Scam?
The Evolution of an REDC Auction Deal
Anyone has experience with REDC? (Trulia)
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