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Today I went to court in Panama. I’m not suing anyone and no one is suing me. I was summoned to be there as a witness.
About 2 years ago, there was an auction for an incredible 50 acre property with a main house, 6 rentals, a restaurant with an amazing infinity pool, plus a 65′ x 65′ yoga studio… all overlooking a beautiful mountain view. It is 100% off the grid and has it’s own water source. The owner trades extra electricity to an internet service provider for free internet at top speeds.
I was ready to bid on it. But when I went to look at the property and talk to the auctioneer company, I discovered that they had done very little marketing. Only some online press releases. No signs. Never talked to any real estate agents or attorneys in Panama. No marketing in Panama.
They told me they were bring in their own buyers (code word for shills). This was going to be a dishonest auction and I did not want to be part of it so I did not bid.
The auction company convinced the seller to sell as an absolute auction, meaning that she would take whatever the high bid was regardless of the price. They told her that was the best way to get the price up. And it usually is, unless it is a rigged auction.
When they had the auction, there were only 2 bidders. The $3,000,000 property sold for $700,000.
Great deal for the buyer .. right?
Not so, because the seller was there and she saw that no one showed up except the auction companies buddies. She got screwed out of her property by the auction company. My guess is they planned to resell it later for a couple million.
This is a hard to find property and they put up no directional signs. They had no printed marketing materials. No details to give anyone about the property because they were not expecting anyone except their friends.
Needless to say, the seller sued the auction company. It has been 2 years since the auction and the property is still in limbo.
Bottom line — if you’re going to do a Highest Bidder Sale or auction, do it the right way. Do tons of marketing to get a LOT of people to the property and the highest price possible and do not EVER have your friends or associates bid on the property, that is against the law in most states.
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I used to attend a lot of auctions. I was fascinated to learn that the use of auctions goes back at least as far as the ancient Romans auctioning off battlefield “finds” after the blood stopped flowing, and before that in ancient Babylon where maidens were auctioned off. Needless to say, there are many centuries of experience in how to use, and how to abuse, auctions effectively.When I pulled up the listing on Amazon for my old hardback of “How to defend yourself at auctions” by Leona Rubin (1972) — the best book I’ve ever found for understanding what works, what doesn’t, and what to beware of at auctions, I was very surprised that Amazon could not suggest any related titles at all on the same topic. I’m sure the book is long out of print, so the free interlibrary loan process is probably the best way to get a look at it.
I remember reading recently about some big bucks foreclosure auctions being rigged in California. While the technology and the relevant legals may change and update, the ancient competing motives for how to fairly, or unfairly, carve out the best deal … never change.
FYI.
–Dee
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