‘It’s Only Money’ Is Battle Cry as Auction Bidders Snap Up Condos

A dozen muscled men dressed identically in tight blue T-shirts milled among the gathering crowd like a team of bodyguards. But they were not there to intimidate any of the 250 people who entered the plastic tent Sunday in the Hoag Memorial Hospital Presbyterian parking lot in Newport Beach. They were there to help them buy condos.

In a few minutes, the men would be racing down the aisles, pointing and shouting “Yes!” to anyone offering tens, in some cases hundreds, of thousands of dollars in hopes of making a deal. Buyers were also encouraged by cheerleaders from Newport Harbor High School yelling “Fight! Fight! Fight!” and by a high-octane auctioneer egging them on: “Don’t miss it for a thousand bucks! It’s only money!”

In all, 35 Newport Beach and Long Beach condominiums, some with ocean views, were up for sale to the highest bidder in a frenzy of real estate consumption. There were no minimum bids. Half an hour into the auction, half the condos had sold--including a one-bedroom with den for $217,500 for which owners were asking $243,000, according to Newport Beach-based LFC Real Estate Marketing Services. The firm conducted the auction for various owners who were interested in liquidating their property quickly, said the firm’s president, William Lange.

Traditional methods of selling a home can take 6 months. “Here negotiations take place in 3 minutes.”

None of the condos was in foreclosure and all could have been sold on the open market, he said.

Successful bidders were pre-screened for ability to qualify for a loan and were required to come with a $2,500 cashier’s check as part of a 5% down payment. They were whisked off by cheerleaders to open escrow in the condo building next door.

Condos sold were in Stoneybrook Villas in Long Beach, and Villa Balboa and the La Jolla development in Newport Beach.

Common in Britain and Australia, real estate auctions are gaining momentum as an alternative sales technique in the United States, Lange said. “The major advantage to the seller is a certain date of sale.”

The advantage to the buyer was less clear.

“You can get properties for under market value,” said Bill Herrmann, 38, a podiatrist who pledged $146,000 for a condo he had never seen. “At least I hope I did,” said Herrmann, who recently moved from Arizona and, unlike some of the investors, plans to live in the unit.

He had not even looked at the La Jolla condominium building, visible across Newport Boulevard from the hospital parking lot. “Impulse buying,” he shrugged.

“I’m a little jacked up,” said Richard Mamet, 34, a computer salesman who bid $195,000 for a one-bedroom condo he had not seen in Villa Balboa. If it’s not what he wants, he said, “I can always back down” during the escrow period. (Some bidders submitted back-up offers in case the first buyer dropped out.)

Hoag Hospital is now constructing its Cancer Center between Villa Balboa and the ocean. But LFC Real Estate Marketing Services told prospective buyers that “in our opinion” the development will not affect ocean views. Buyers should verify that and any other verbal description of the property, according to the firm’s numerous disclaimers.

Under auction rules, owners of the first five homes on the block agree to accept the highest bid, no matter how low. The others have 72 hours to accept or reject the bid.

The auction, advertised in mailers and newspapers, drew investors from as far away as Los Altos as well as young couples hoping to buy their first home, parents guiding their children’s first purchase, and condo owners who wanted to ascertain the worth of their own condos in the same development.

Many attended a “How to Bid” workshop Saturday. Roy Burrell, a Cerritos investor, said he has bought 30 properties at auctions in 17 years and about 20 were good deals. “You’ve got to do it a lot (to make money),” he said.