L.A. Times Media Group in new foreclosure auction venture

Interesting item in today's L.A. Times: "Searching for new sources of revenue, Los Angeles Times Media Group is getting into the real estate business."

More: "On Monday, Times Media Group and other partners will launch ZetaBid, a business that will auction foreclosed homes and other properties. The company would also run a website where the properties could be viewed.  The other partners are London-based GoIndustry-DoveBid, an auction specialist, and CataList Homes of Hermosa Beach, a real estate brokerage. The partners will share fees paid by the buyer on each home sold."

More: "The Los Angeles Times is part of Times Media Group but has no connection to the new venture, said Times Editor Russ Stanton.  'We will treat ZetaBid like any other real estate entity from a coverage standpoint,'" Stanton said.

The ZetaBid website, which lists some of the properties for sale, says the first foreclosure auction event will be Sept. 27 and Sept 28 in Ontario. As with most foreclosure auctions, ZetaBid will charge buyers a 5% "buyer's premium," and sales will be subject to meeting a hidden reserve price on each home; in other words, the winning bidder does not always get the property.

--Peter Viles
Your thoughts? Comments? E-mail story tips to Peter Viles

Comments

[Gene J]

I was very sure the courthouse steps did auctions for free with no buyers premium. Is this auction different somehow?

Will inspections of the property be allowed?

5% sounds like a realtor's commission for the buyer. Why doesn't the seller pay it?. 5% for no work?

Seems like an easy deal to pass up especially with the hidden reserve. Maybe the sellers could get a better deal on E Bay?

[Brad]

I guess it's up to the banks to set the super-secret reserve minimum but it will be interesting to see the spread between this minimum and the current asking price. Many of the current asking prices of REO's are in fantasy land. As things continue to unwind, buyers -- and especially investors -- have an expectation of tremendous discounts on REO.

[Jon Strum]

This strikes me as a rather obvious conflict of interest for the LA Times. With all of the foreclosure auction companies out there, the fact that one more has launched is not news.

However, because the LA Times is a player in this company, they are free to use their media properties -- like this one -- to spread the marketing message.

I was feeling sorry for the few journalistic survivors still tethered to the great listing hulk of the Good Ship L.A. Times. But now that I've seen the Times' bailout strategy -- transform your news organization to an infomercial network -- I'm only bitterly disappointed.

How does it feel to lose all of your professional journalistic cred in a single day?

[zach]

At one time you could make a buck in porno's to

not anymore the market is over flooded with billions of titles and sites and a lot of them are free

I think this site will fail if they charge

everyone wants free now

so the only way to make a profit is to have advertisers playing their commercials before you get to view the property

there is no other way

I wonder what idiot came up with this idea so late in the game ?

[peteviles]

Jon Strum writes, "This strikes me as a rather obvious conflict of interest for the LA Times. With all of the foreclosure auction companies out there, the fact that one more has launched is not news. However, because the LA Times is a player in this company, they are free to use their media properties -- like this one -- to spread the marketing message."

Thanks, Jon. I hear you, but I disagree. My feeling is the news organization, and this blog in particular, owes it to its readers, in the spirit of full disclosure, to explain that this new company launching -- ZetaBid -- is backed by our corporate parent. Maybe I'm wrong, but I believe there is some interest in what Tribune and the Times are up to these days.

You can decide, going forward, whether you think our coverage is promotional, or is based on news judgment. I hope you eventually agree that our coverage of ZetaBid is no different than our coverage of REDC or the other players in the space. In the meantime, you're free to express your opinion here.

[sfvrealestate]

Doesn't or didn't the Times or its parent company also own Help-U-Sell or one of the other discount brokerages?

[RichW]

"sales will be subject to meeting a hidden reserve price on each home"

What a joke.

[Laker]

From Zetabid site: "....You are welcome to use your own lender and collect from them a pre-approval letter (not a pre-qualification) to present on auction day. However, if you choose your own lender, there is no financing contingency. Failure to achieve loan approval and close the transaction within the specified time frame may result in the forfeiture of the buyer’s deposit in accordance to your purchase contract....."

Buyers, beware, if you use your own lender in order to get good rates, and end up not getting a loan, zetabid will take (steal) all your 5% of the purchase price.....

[Giacomo]

Gosh, that is exciting, exciting news. No worries, I think the reputation earned Times Media in recent years is fully intact.

Hmmm, "Zetabid." Oh yeah, that sounds like a winner.

[Uncle Billy Reminisces]

Dove? Catalist?

We had a thread not so long ago that talked about both of these creatures:

http://latimesblogs.latimes.com/laland/2008/06/
suit-alleges-fo.html

[Dan]

Peter,

Since they're affiliated with the LA times, could you ping someone over there and let them know that "hidden reserve prices" smacks of marketing scamminess. Serious buys want an idea of pricing before they're willing to drive out to Ontario.

[bode]

This does seem shady, but Peter was up-front with the shady part. Of course many are interested in what Tribune is up to, but my question is, how is this product different than anyone else's? The "talking your book" part would come from the fact that I find it hard to believe the Tribune geniuses came up with this idea. Any article on the in-house brand should in all fairness mention everyone else who is better or worse.

To the commenter who said hidden reserve prices are unsavory, that's simply the reality. Remember, a foreclosure auction is the bank selling off an asset they don't want to own, so they can recover something and minimize their loss. They model and analyze and decide what the right price is -- they won't give it away if they feel it could fetch more money, simply because they decided to hold an auction. That value calculation -- how much do we lose -- is at the center of the mound of REO houses. How the banks choose to handle it (pricing them realistically, not realistically, holding onto them for a sunny day) will impact how the market recovers.

I hate to always pimp calculated risk, but please go back and read some of Tanta's posts. Each short sale, each auction, each modification, is the bank decided how to lose less money. They are in the business of making money, and minimizing losses, and you don't minimize losses by posting the reserve price or selling for any amount because it is expedient.

[David]

Is this why the Times has been so quick to jump on the bandwagen and print nothing but negative news about the current housing crisis?

[Rob]

Dan, Bode,
This is why you DON'T go to these auctions. They will be overpriced. You will not find a bargain trying to purchase property this way. You will undoubtedly pay more than you would have going about the conventional way.

[skeptic]

Here are some more details on how the auctions work [to drive up prices], from the DoveBid website: "Bidders bid with confidence when they see others eagerly bidding to acquire the same assets."

http://www.dovebid.com/company/realty_about.asp

I wonder if the auctioneers return bidders ernest money deposits *with interest* if the seller/banks decide to back out of a deal?

[Maggie Knowles]

They have a hidden reserve price because they know that many buyers won't even think about bidding on a property if they knew what the reserve was. If buyers knew what the reserve was, they wouldn't waste their time going to the bank to get the cashiers check, registering, driving there, pay for parking, and then waiting all day until the property you want comes up for bid.

If you do win the bid, likely someone will give you a call a few days before closing to say they need another $50K or they will cancel the deal. Also, the seller's addendum that the buyer must sign or no deal, gives the seller flexibility regarding time periods and gives the buyer nothing but rigidity and stiff penalties if they close late or cancel. No penalties for the seller. Buyer has to pay commission too. They are so one-sided, it's insulting.

I wonder, do you think they have people who bid just to drive up the price too?

[Rational Renter]

Did you hear Jim Cramer's astonishing prediction?

"I am predicting 100% defaults on all non-fixed-rate loans from 2005 to 2007. No one in America is using that negative a forecast. Do you ever hear anyone say 100% of those loans from that era are going to default? I am."

[mucker]

Why Zetabid? Well they could have called it Zellabid but that would have looked bad you know, like a play on "sell a bid".