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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REDC Foreclosures almost got me! Real Estate Auction Scam?

I have some updated information about REDC Auctions in another more rent article.  Make sure to visit and read that one too!  Let's Revisit the REDC.



It's time that we purchased a home. At least that's what my husband is telling me. We like being homeowners and now that the prices have fallen, home ownership (AGAIN) looks a bit reasonable. I tried to convince my husband that we should wait another year or so, but he's not buying it. So we're looking for bargains.

That's where REDC auctions came into the picture. We saw these big yellow signs on houses all around town. The whole city is a great big Open House Day. After visiting a few open houses, we go to the website . . . and we are hooked.

Yeah, we've got enough money for the 5% earnest money fee (I've been working my butt off - that's why you haven't had updates on this blog . . . sorry).

We pick out a couple of houses we like, we call our mortgage broker friend, we get pre-approved and we are ready to go right?

"Ahhh, have you looked at the Purchase Agreement Contract?" Our mortgage friend ask.

"No, not yet." I say. He knows that I always read the fine print on EVERYTHING I sign, BEFORE I sign it.

"Well, let me know when you read it," and he chuckles. Chuckles -- at ME.

I quickly download the purchase agreement and start reading, but it's long and I hate reading long involved documents "on screen" so I try to print it out. Can't. REDC has it password protected and they won't give me the password.

So, I go around them and made image files (photo snapshots) of each page of the PDF file. Yeah, it's a long process, but I did it. I print out the agreement and get my trusty partner "the highlighter" and dog gone it -- what do I find?

All kinds of statements that scream out to me, DON'T DO THIS!

No seriously, from reading the fine print I found out:

1. You need to provide 5% earnest money and have all paperwork done for a 21 day close or you forfeit the money. OK, tight deadline, but it can be done if you have all your ducks in a row. Check.

2. This is not an absolute auction -- like a regular auction. The properties has a reserve and the lender/seller has 15 business days to decline the winning offer. If they decline, you get your earnest money back in a few weeks. Not fair but they're covering their butts, but OK.

3. You will never get the starting price on the property. There is a secret reserve that must be met. And the seller or REDC will not tell you the "secret reserve." I hate that method of auction so much, that refuse to use the "reserve price" stuff on my E-BAY auctions. But I understand because they're not trying to sell a $500,000 house for $1, OK.

4. The seller is allowed to use fake (shill) bidders to insure they meet those secret reserve. But here's the rub . . . they are allowed to used unidentified fake bidders at the auction, so you -- the bidder -- don't know who you are bidding against.

BIG RECORD SCRATCH SOUND . . .

You must be out of yo' mind!

I can not believe that this is even LEGAL,

Hell, I know it's not ethical,

And it definitely makes no sense. . . I can't believe thousands of people are going for this!

Wait a minute, wait-a-minute, wai-a-minent . . .

So basically, as a winning bidder you give a minimum of $5,000 in a cashier's check to strangers, you bid against the seller who has a multitude of "secret agents" pushing the price of the property higher and higher . . . and you have no idea how high the price will/can go. And the seller still have 15 BUSINESS DAYS (that's 3 weeks folks) to deny or accept your winning bid? Then they may give you back your deposit/earnest money in a few weeks . . .

Ahh, I don't think so.

Stay away from the REDC / USHomeAuctions.com auctions. As I told my husband, the deals are coming. Just have a little more patience.

Want to know what others are saying about REDC auctions? Here's some interesting discussions on the web:

SD Lookup.com on REDC Auction

REDC Complaint

Discussion of REDC Auctions

A very enlightening discussion of REDC Auctions



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The House of Cards, too little too late?

<-- Click picture to see the video

Video and article by CNN about the housing crisis . . . the bubble.
To me this is too little, too late information. I realized all this stuff all by my little old self and realized that this day was coming a couple of years ago.

But one good thing comes from this investigation.

It answers the questions I had about WHY in the hell was this going on?
Why couldn't people see that this was a disaster ready to happen? Was I the only one that saw what was coming down the road? Was "I" the only sane person that the "mad party?"

The answer = GREED.

I guess Micheal Douglas was wrong in that movie when he said "Greed is Good." Hmmm.
The Article and the Video

There would have been no housing bubble if we would have followed 2 simple rules . . .

Stumbled upon a blog called Everything Finance . . . good stuff, go read. The author had a simple, yet very truthful post on the 25 ways to grow rich (actually, to live comfortably). And he/she bolded rules 3 and 4.

3. Spend no more than 2 1/2 times your income on a home. For a down payment, it's best to come up with at least 20%

4. Your total housing payments should not exceed 28% of your gross income. Total debt payments should come in under 36%

And I thought to myself, what the hell happened to good old-fashioned common sense? The above rules make utter sense. And if we would have held FIRM to that sense (by "we", I mean the collective population) we would not be in a housing bubble (or housing deflation) right now. How did this happen? Did greed really make this happen? "Greed" is really that powerful that we will set aside good sense to follow it -- to believe that gaining 10% - 15% - 25% appreciation in one year can carry on forever? Did people REALLY and truly believe this? Or were they just bull-shitting so the next guy would jump in the game and continue the "appreciation" run?

I mean, the people that bought a house for $600,000 put $10,000 into "renovations" and turned it over the next year for $750,000 . . . did they really believe that this would continue? Or in the back of their mind they said "Whoo, got away with it. Hope this crazy "appreciation" scam holds out 'til I sell my other three houses."

The two rules above are so common sense, so "fundamental" -- how did we get into the 5 and 6 times your salary for a house purchase is okay pot? Are we the simple minded frogs that get cooked alive because the heat was slowly turned up?

The Impossible Dream - Buy a House Outright

Buy a house outright (no mortgage):

(Put your eyeballs back in their sockets! Dog gone it!)

My logic: I watch the housing market constantly – it’s one of my morose hobbies. Currently, house prices are going down. The last 3 years, house prices skyrocketed to nosebleed levels. I don’t want to be part of that game.

I want the house that my family will be comfortable in, with all the room we need inside and outside (I don’t care about tax write-offs, we’ll talk about that later). And with my cool income from my first goal ($100,000 minimum in interest annually) taxes and maintenance are no problem at all!

Anyway, if I make the type of money I’m talking about with this website/blog, then AMT (the tax rule from Satan) will kick in and that house deduction is a mute topic anyway.

In other words, I want the FREEDOM to live in a house without a mortgage or debt.

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