The Manu Mele St. foreclosure was held today, 1-10-24. This was the property that had only the shell of a house and a private lender.
There appeared to be many folks in attendance for the auction, but only one party was bidding against the private lender.
Although in most cases, the banks typically only send a representative with one bid, this private bidder started the bid at $780k and ran the 3rd party bidder up to $879k. I found this interesting for two reasons:
1. It was risky! I don't believe the private lender wanted the hassle of dealing with this property, and with every bid above what he was owed, he could have pushed the 3rd party bidder out.
2. Only $850k total was owed on the property. There was no reason for the private lender to bid above this amount and yet he did, three times! Every increment above $850k was a risk that the other bidder might drop out and also, every cent above the total owed goes to the borrower in the default! The private lender just earned $29k for the borrower by running the bid up. Very interesting.
As you know, I love these interesting ones with their twists and turns. On 10-14-23 I posted the foreclosure notice for 76-6247 Kupuna St., and you may have noticed that on 12-19-23 I posted it again with a new auction date.
This is a really unique one! The home is a burned-out mess with squatters. There are cars and trucks everywhere and people coming and going all the time. It's so scary that I didn't even want to get out of the car to take a picture. These photos and video are from a quick drive by!
Kupuna is one of the main drags to get from the highway down to Alii Dr. so I'm on that road often and was very familiar with this house. Because of the burned out condition and all the squatters, I was absolutely not interested in pursuing this at auction so I didn't do my usual research on it. I had no idea what was owed. However, I was curious, so on November 16th, I attended the auction. I had expected there would be many bidders, but only 3 third-party bidders and the bank showed up. There was another agent there representing a buyer client and she and I got to talking. She told me only $18k was owed! What?! I rushed over to the commissioner and asked to see the Findings of Fact and Conclusion of Law. Sure enough, the bank was owed $495,633.67 but was holding an escrow account of insurance money from the fire worth $486,842.01 so their net amount owed was only $18,061.23. I was kicking myself for not doing the research sooner and was trying to remind myself that even at $18k, I didn't want to take on this burned out mess of a home with squatters in it, but the deal was sure enticing!!
However, when the bidding started, the bank shocked everyone by bidding way up in the $400s. None of the third party bidders outbid the bank, and the commissioner closed the auction. While the other agent was squawking about how crazy it was that the bank would bid so high when they were only owed $18k, I quietly asked the commissioner how the bank was able to credit bid that much. If they are only owed $18k, that is the amount of their "credit", which is their 10% that everyone else has to bring in a cashier's check. If the bank's credit was only $18k, their max bid would be $180k. They bid well over that. The commissioner looked flustered and said it was for the court to decide, but I think he realized he should not have accepted the bank's bid. I emailed him later that day to ask to be informed of when court confirmation was - since I wanted to hear if they would get away with their bid - and he responded that the bank messed up their bid and it would likely be reauctioned.
So the court scolded both the bank and the commissioner and it has been re-advertised for auction. I still haven't pulled a preliminary title report because I'm still not interested in this property at any price, but the 2nd auction could be very interesting. The bank could still bid well over $180k if they send their representative with a cashier's check for the difference of their 10%. I wonder if the insurance funds in the escrow account remain in limbo if a 3rd party bidder takes the property. It seems there is a 2nd mortgage and it is possible the insurance funds cannot be touched because they are also tied to the 2nd mortgage? If those funds were easily releasable to the lender, you would think they would just write off the additional $18k and be done rather than potentially take on this nightmare property, so I don't think it is that simple. I suspect those insurance funds will be tied up in litigation well after this foreclosure is complete. This will be a fun one to watch, but definitely one to stay far away from.
The auction for 75-6082 Alii Dr. #A102 was held at noon on September 24th. This was a vacant condo in an ocean front complex in Kona in decent condition. Besides the bank representative and the commissioner, there were 6 registered sets of bidders and two groups of observers in attendance. The amount owed according to the fact sheet was: "As of September 30, 2020, there was due and owing .... TOTAL: $176.004.07[.] The total sum, plus interest at $14,36 per day from/after September 30,2020 ..."
I expected the bank to bid around $181k.
The bank bid $181,332.53. The first private bidder far outbid the bank, starting at $190,000. Bidding then volleyed between bidders 2 and 3 until bidder 3 bid $205,000 and bidder 2 dropped out. Bidders 1 and 3 then went back and forth a few more times until bidder 1 placed the final bid of $210,000. The remaining registered bidders did not bid.
Condos in this complex have recently sold for $265k and up.
The auction for 73-4359 Hau Nani St. was held at noon on September 8th. This was a vacant single family home in Kona. I did not attend the open house so condition is unknown. Besides the bank representative and the commissioner, there were 4 registered bidders* and 4 observers in attendance. The amount owed according to the fact sheet was $650,347.96 as of August 1, 2019. The bank bid $576,400. A private party bid #576,500. This was the final bid.
*There were two auctions held by the same commissioner and 4 bidders registered. I could not tell who registered for which property.
The auction for 75-5681 Kuakini Hwy #118 was held at noon on September 8th. This was a tenant-occupied condo in Kona in poor condition. Besides the bank representative and the commissioner, there were 4 registered bidders* and 4 observers in attendance. The amount owed according to the fact sheet was $168,237.55 as of September 30, 2019. The bank bid $214,507.91. No one bid against the bank.
*There were two auctions held by the same commissioner and 4 bidders registered. I could not tell who registered for which property.
The auction for 92-9022 Tree Fern Lane was held at noon on August 16th. This was a vacant house in Ocean View in decent condition. Besides the bank representative and the commissioner, there was one bidder and one observer in attendance. The amount owed according to the fact sheet was, "$128,605.28 ... Interest continues to accrue on the Note ad the rate of 5.875% per annum of $16.71 per day." The bank bid just under $167,000. I expected a bank bid around $150k. The bidder did not outbid the bank.
The auction for 77-181 La'aloa Ave was held at 10 am on Aug. 24th. There were 5 bidders in attendance, plus several people who were there to watch but not bid. The amount owed according to the fact sheet was "$613,138.66 as of June 12,2020 with per diem interest continuing at 4.0000% per annum for each day." I expected a max bank bid of around $650k. Apparently so did everyone else because when the representative from the bank bid $699,900, the commissioner immediately said, "going once...". None of the 5 bidders in attendance had brought enough to show 10% down that would beat the bank's price.
