First Hand Account: My Visit to a Home Auction
Earlier in the month, Susan wrote about the huge home auction event being facilitated by Real Estate Disposition Corporation (REDC). Before her blog, I had already set my sight on a foreclosed and very small one bedroom condo, just around the corner from where I live. It had been on the market for quite some time for about $275,000, with obviously no takers. The starting bid: $139,000.
Prior to going I had done my diligence by attending the open house and visually “inspecting” the property. Given that I live around the corner, I knew it was a well maintained complex. By doing some Google and other property website searches, I also learned that the bank owned the property, most likely winning the 1st foreclosure auction for around $247,000 and the assessed property value was just over $200,000. My max budget: $170,000.
Held at the Oakland Marriott City Center, the auction was an all day event, starting at 9:30am. The property I was eyeing was pretty far down on the list and it was recommended to arrive by 3pm. Very courteus of REDC to provide these guidelines so bidders didn’t have to loiter around all day. I arrived pre-reigstered with all the other required items (cashier’s check for $5,000 and blank check for the balance of the 5% winning bid) and got a handy dandy number. The auction was in full swing with folks from all walks of life. I wasn’t sure what type of crowd to expect, but it was just an international smattering of folks, from people who looked like they were looking for a home on the cheap to investors willing to renovate some of the fixer properties.
I had never participated in a live auction before, but after watching a few, I got the gist of it. Each property had a starting bid and a previously valued to price, to give bidders an indication of what the property was once either sold or valued for. However, this was a deceiving number as it reflected the highest price the home peaked at, at the height of the bubble. The current value is probably nowhere near that now. As evidenced by the property I was interested in. It was previously valued to $400,000. Ha. And it didn’t sell recently when it was listed for $279 something.
Overall, there seemed to be good deals. Most homes went for under $200K. Just a couple of examples:
2020 57th Avenue Oakland – Sold for $135,000
119 Silver Ave Richmond – Sold for $65,000
More than a handful of properties came back for “2nd chance.” Not sure what the circumstances were (maybe the winner didn’t qualify for financing) that brought these homes back, but even better deals were had. As the day went on, many bidders left, so when the 2nd chance homes came back, there was less competition.
This house in Richmond first went for $260,000. It then came back for a 2nd chance and the next winner probably had some remorse, as it then went for $285,000. Surprisingly, in the last 20 minutes of the auction, probably a good 1-2 hours after the 2nd winning bid, it came back on the block again. Two bidders went at it and the final price: $215,000. Good for them, too bad for the bank.
As my property came up, my heart did start to race. I didn’t want to get caught up with the whole fervor of the auction. The auctioneer and the folks working the floor were definitely professionals. They were animated, charismatic and kept things entertaining and lively.
Unfortunately, I didn’t win. The listing went by quick and I was outbid by $5,000. I must admit I have a tad bit of regret, as in the whole scheme of things, an additional $5000 is not that much relative to a $170,000 purchase price. But I’m proud I stuck to my guns. And now I tell myself, I don’t have to undergo learning to be a landlord.
The auction is going on for a few more days. For those of you in the South Bay, the San Jose area homes are going on the block this Saturday, the 27th. Unfortunately, it’s too late to attend the open houses. But if you are bored, it is worth a visit to see it in action.
