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Man is selling his house on Penny auction

Gianna1025

Gianna1025

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Just saw this online. This guy from Arizona is selling his foreclosed home on a Penny auction. His home is valued @ 127,000 and he set a reserve price of 2,750. Each bid costs .60 cents. He also said that the person with the most bids will win $15,000 and the person with the second most will win $5,000. Seems kind of crazy but this dude coulld stand to make a pretty penny! (See what I did there?)

http://www.huffingtonpost.com/2012/03/13/todd-talbot_n_1341336.html
 
Yeah this guy isn;t a fool, he will make more than what the hous eis worth,, although I like to see how he is able to give out money for the most bids 1st and 2nd place if his house is beoing forclosed on. I guess there is some behind the scenes stuff I dont understand about it but still not a bad deal for a nice house in AZ.
 
KevvDogg said:
Yeah this guy isn;t a fool, he will make more than what the hous eis worth,, although I like to see how he is able to give out money for the most bids 1st and 2nd place if his house is beoing forclosed on. I guess there is some behind the scenes stuff I dont understand about it but still not a bad deal for a nice house in AZ.
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If the home is already foreclosed, unless he lives in a state where they give a grace period where the homeowner can catch back up on payments and get the home back (which doesn't make any sense, but whatever) once that home is sold at the court house steps it's gone.

If the home however is near being foreclosed and this guy does this, he's gonna need a lot of bids in order to be able to satisfy the mortgage on the home or else the home can't be sold unless the lender approves it, aka a short sale.

It pretty much reeks of shadiness to be honest
 
I probably mis spoke on that. It is going to be foreclosed on? Any math gurus out there that can figure out how much he stands to make on this penny auction if every bid costs .60 cents? Obviously there are variables involved but lets just make up some attainable numbers!


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Gianna1025 said:
I probably mis spoke on that. It is going to be foreclosed on? Any math gurus out there that can figure out how much he stands to make on this penny auction if every bid costs .60 cents? Obviously there are variables involved but lets just make up some attainable numbers!


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If he gets 100k people to bid on the home, there's 60k in bid money alone. I'm sure the website hosting it takes a percentage of that as well, unless that 60 cents is the seller's cut after the company has taken their amount. If the home sold for 80k and had 100k people bid on it, the seller will make 140k before giving away 20k to the top 2 people who put in the most bids. Now he's down to 120k. Not quite enough to pay the home off if the mortgage value is at 127k, plus fees for doc stamps, title insurance, proration of taxes, etc. I'm sure it'll pay for the majority of the short fall, but he's still upside down.
 
mward2002 said:
If he gets 100k people to bid on the home, there's 60k in bid money alone. I'm sure the website hosting it takes a percentage of that as well, unless that 60 cents is the seller's cut after the company has taken their amount. If the home sold for 80k and had 100k people bid on it, the seller will make 140k before giving away 20k to the top 2 people who put in the most bids. Now he's down to 120k. Not quite enough to pay the home off if the mortgage value is at 127k, plus fees for doc stamps, title insurance, proration of taxes, etc. I'm sure it'll pay for the majority of the short fall, but he's still upside down.
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Actually, if he gets 100k bids, then it won't reach his reserve price of 2750. That would only be $1000. If it reaches his reserve price, it would sell for 165,000, which he would probably end up breaking even on after paying the auction site and other fees. If he somehow got it up to $50,000, he would end up making around $3 million minus any fees he'll have to pay. I think my math is right on that, but I'm not positive. He could end up making a ton on it if it works out for him, but I have my doubts.
 
bhilton said:
Actually, if he gets 100k bids, then it won't reach his reserve price of 2750. That would only be $1000. If it reaches his reserve price, it would sell for 165,000, which he would probably end up breaking even on after paying the auction site and other fees. If he somehow got it up to $50,000, he would end up making around $3 million minus any fees he'll have to pay. I think my math is right on that, but I'm not positive. He could end up making a ton on it if it works out for him, but I have my doubts.
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Interesting story. I got the same outcome as you when I played it out. This guy is def not a dummy, if he can pull it off he will bring in a great return.
 
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