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Uncertain about auctions

I’m still making my mind up about the US auction house that has graced our shores in the past month. Real Estate Disposition Corporation – usually known as REDC – specialises in repossessed properties. Nothing wrong with that but rather than sellers, i.e. lenders, being charged the average 2% to 3% UK fee, buyers pay 10% of the purchase price to REDC. And that’s the bit I’m not sure about.

Those unfortunate enough to have been repossessed need to get the best price possible for their properties as they are still liable for shortfalls owed to their lenders, unlike in the US where home owners can walk away once they’ve handed the keys back.

The extra 8% REDC is creaming off may allow it to have flashy TV adverts but it does little to alleviate the suffering of repossessed families. You can’t help but feel the money REDC is pocketing would be better going towards paying off the debts of those repossessed. There’s a market for the REDC model but lenders auctioning homes via it should ask themselves whether they should be helping it take advantage of the downturn rather than doing more to help repossessed families.

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