There was an increase in home sales throughout the country last month, but it appears that there will always be people (and banks) trying to skirt the system.
According to azcentral.com, an Arizona website, there is funny money auctions going on …
“Prices on some foreclosure homes are being dropped below the opening bid just hours or even minutes before the auction. Buyers aware of the ‘drop bids’ scoop up the houses before other bidders know about the price drops.”
There are many valid points as to why this practice is unethical or maybe illegal and the most telling is the following:
The person whose house is foreclosed on thinks that they can’t afford to buy back their house because the bank wants a very specific amount. The original owner finds it too expensive, so he or she doesn’t even consider the option of buying it back. All of a sudden at auction – boom – the price drops to where they could have bought it back! Only to be beaten by a banker’s buddy who knew the bid price was going to drop!
Is this ethical? Is this illegal?
But one also has to ask: If enough homes are bought up and off the bank’s books, it does free up a bank’s capital so they could be lending to small businesses or someone looking for a school loan.
If “bid-dropping’ expedites sales is this a bad thing?