Real Estate Pro Articles

Foreclosure Auctions and Tax Deed Sales Investigated by Authorities

[Valid RSS feed]  Category Rss Feed -
By : John Cutts    99 or more times read
The U.S. Federal Bureau of Investigation (FBI) is reportedly looking into allegations that bids at auctions of foreclosed properties and tax deed sales are being illegally rigged by speculators in California. According to local reports, some bidders allegedly pay other bidders to refrain from making an offer on certain pieces of real estate so that the prices will remain low.

Hundreds of Napa repossessed homes and foreclosed properties from various areas of California are offered at these auctions, which are often held in state courthouse steps. According to housing market observers, auctions present great opportunities to real estate investors to acquire properties at very affordable prices. However, the more bidders there are, the higher the possibility of prices increasing.

If allegations of bid rigging in California repossessed properties and foreclosure auctions were proven to be true, participants will be charged with violating the Sherman Antitrust Act of the U.S., legal experts have explained. Violators can be sentenced up to 10 years in prison under the federal law and fined by $1 million. The FBI reportedly conducted interviews and issued search warrants in various areas of the state as part of its investigation into possible anti-competitive practices in foreclosure auctions.

Some realtors from the area have stated that there have been rumors before that such bid riggings take place in foreclosure and tax deed sales auctions, although none have yet to be proven. Normally, around 20% of auctioned properties get sold to third party buyers or investors while the rest revert back to banks and lenders.

According to industry observers, rumors of bid fixing have become more common when the number of foreclosures and home repossession started escalating in the state three or four years ago. They stated that investors who have the means to put down the cash required after each bid can gain a lot of profits from these properties since they are being offered way below their actual market price.

Analysts also stated that this could lead some to make sure that their target foreclosed property or homes offered as tax deed sales do not end in another bidder's hands. Despite circulating accusations of bid rigging, local analysts stated that people should wait for the result of the investigation before forming an opinion.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

Related Articles

Print This Article
Add To Favorites




© All rights reserved to Real Estate Pro Articles