U.S. Foreclosures(8)- Low Bid, High Bid

Often on foreclosures there are some extremely low starting prices. One of the them is the banks' low bid, high bid scheme.

In this case, the bank sets two prices, the low price is called low bid, the high price is called high bid. For example, for a property that is worth $100K, the bank's low bid is $20K. The trustee will announce the low bid first, once there is a third party bidder, the price suddenly jumps to $80K, and whoever wants to buy it has to bid higher than $80K. So in reality, nobody will get the low bid price except the bank, the lowest price a third pary can buy is at the high bid price plus one dollar.

Why does the bank do this? My understanding is that the bank wants to attract more buyers to the auction, and creates a higher demand for the property, and hopefully someone will eventually buy at the high bid.

Beginners may fall into this trap, but this does no work for regulars. I think the bank wastes its time and people's time by doing this, and it should price the property straight at the high bid. The low bid high bid scheme should not be allowed to use at all.

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