Very interesting article from the Union Tribune on an auction that's taking place this weekend. While the investor group made up of attorneys from LA do not have to sell the prices they receive will be very interesting.
SignOnSanDiego.com: In declining market, sellers putting homes on the block
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"Urgency to sell" and "distressed" are distinctions with very minor differences. Any sentient being realizes that if the selling group wasn't bordering on distressed they'd would have already marked the prices down to the market-clearing levels and been done with these things, no auction required. This is now an exercise in game theory. My guess is that the selling group can take a hit on these properties, just not a huge one, as evidenced by this auction ploy. I also think that potential buyers probably realize this as well. My guess is that these properties will get bids that will not cover the debt on the properties but will ultimately be high enough such that the selling group will bite the bullet and take their losses - probably all of their equity plus another 10% of the original price they paid. It'll hurt but they won't go BK. But I could be wrong.
If you read between the lines in the article, it is clear that this auction is a carefully disguised short-sale. It is evident that the group of lawyers who purchased the 16 houses cut a deal with the lender to enable them to unload the properties for less than the amount of the outstanding loans. No notice of default has been filed so these lawyers will worm their way out of this situation without blemishing their credit.
It sounds like the auction is just a ploy to get bigger offers than they would normally get. If the property was forced to sell at the highest bid price or at least the auction would start at the "Absolute minimum", then it would be a legit auction. This is just another way to get people hyped up and take their money.
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