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Friday, December 7, 2007

Come gather 'round, suckers, wherever you roam

Have you been following this noisy sales ploy by a local homebuilder? It looks wonderful until you read the fine print (scroll down to section 3, "Reserve Price"). Ryan Frank of the O tells it like it is here. And if this document, sent to us by an alert reader, is authentic, it's pretty clear where the builder's heart is.

Comments (12)

I have heard on pretty good authority that the auction crowd will be liberally salted with Pollock's investors, who are there to bid things up and make sure none of the properties goes at a fire sale price.

Is that legal?

As anonymous alluded to, and the first comment at the O noted, the cool thing about the auction isn't that there's a reserve, it's that the Seller can bid up the price against a potential buyer. So instead of buying the price for "market" (i.e. auction) value, a bidder will get the home for an "enhanced market" value (i.e. the market price plus the bump caused by the Seller's bidding on its own house).

"the Auctioneer may ... bid on behalf of the Seller ... by placing bids in response to other bidders"

Wow. The Auctioneer is, almost, but not quite, a shill!

Anon - I believe that what you're describing is collusion and is illegal. Can someone confirm that?

It's not good business, but it's legal as long as the auctioneer discloses that he's at liberty to make bids for seller and follows the rules described in the disclosure.

All they need is an open bar. It always makes me spend more.

There's always the chance that the bids placed by the seller to protect the reserve price will end up being the high bid. If that happens on too many homes, he's back to square one. And next time around, it will be an auction with a wiser public.

I almost fell for it: http://ask.metafilter.com/76437/Should-I-buy-an-extra-house

You gotta love how much free publicity the auction is getting from the O.

I've dealt with Pollock before. He's a slime bag, who will use any tactic to hook an unsuspecting buyer. Fortunately, when they tried, without telling us, to switch lots and houses on us after placing our earnest money, we ran, not walked, away. This is the second local builder who I view as slime. The other is Arbor Homes, formerly West Hills Home. They too are slime. If you are trying to buy a new home, look closely at all the fine print, and also hire an outside inspector to look at all the ways these builders try to cut corners on high-priced homes.

I am not a lawyer but isnt this the type of sh** that got us into the housing market downfall in the first place. People that cant understand the fine print in a contract. And by fine print I mean the crap that is is in bold letters laid before you but you choose to ignore because it is more convienant

I knew it was bogus when the announcer mispronounced Scappoose!as "Scapose"

The biggest element of the housing crapfest is that the lenders that made these loans never intended to hold them. THey packaged them into some complex financial instruments that even really smart wall streeters couldn't understand. The lenders who created the problem aren't the ones paying for it now.

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