Going, Going, Gone--O.C. Houses Sell Like Hot Cakes

“Going once, going twice,” auctioneer Mel Giller roared at a canopied crowd of 1,000 people gathered on a sunny hillside here Sunday for Orange County’s first large-scale new house auction since 1981.

“Do I hear 3-45?,” Giller asked in a sort of half-Texan, half-New York twang. “We’re not selling chopped liver by the pound here folks. Look at what you’re getting.”

Surrounded by his family, Chaslav Radovich, owner of Newport Beach-based Best Electronics, which markets computer chips, nervously held up his bidding card for a spanking-new four-bedroom, three-bath, 2,420-square-foot house.

It was one of 39 Mediterranean-style, tile-roofed houses in the Pacific Shores development auctioned-off Sunday by Santa Clara-based Dividend Development Corp. All this in the midst of a housing sales slump affecting even this South County region of desirable, coastal-view properties. The houses here were originally advertised at prices ranging from $371,000 to $596,000 at a time when the county’s median price of new and used houses is $252,300.

Douglas Watson, Dividend’s president, had used the auction technique before in Northern California, but this was the first large-scale auction of homes in Orange County since Eagle Ridge was sold off to bidders on a nearby hill nine years ago.

Watson’s stated goal Sunday was to sell all 39 houses in order to get out from under the big construction loan he was carrying at a time when demand for homes in this price range has almost dried up. But Watson said he uses auctions even when the market is hot. “This is the optimum form of a free market,” he said. “And it works very well.”

Across the tent from the Radoviches, John Izbicki, a hydrologist for the U.S. Geological Survey and his wife, Becky, a computer programmer, combed over the list of houses cheerlessly. Their 12-year-old son Jeff, clad in a blue Memphis State University sweat shirt, looked on.

“We just moved from New Hampshire two weeks ago,” said Becky Izbicki. “We’re living in a hotel in Dana Point. We need to get a house desperately.”

But the prices were going too high for the Izbickis.

“Sold for 3-45,” Giller shouted. Baba Radovich shrieked with joy. “It’s my house!” she said. She kissed her son Chaslav, who was buying the house for her. “Isn’t he a nice son?” she said. “He wants me to live in style.”

The crowd overflowed from under the big canopy to a grassy knoll. But those sun worshipers, as Giller called them, simply weren’t bidding much. Indeed, out of the 1,000 people attending, fewer than half had pre-qualified financially as required for Sunday’s auction. The rest were the curious, the hopeful--those who said they decided to come at the last minute in search of their dream home, only to be disappointed.

“I came to get a steal, I can’t steal a house here,” said Arnold Jaspers, an Anaheim aerospace engineer. Visibly disgusted with the proceedings, Jaspers simply got up and left.

So did Danny and Maria Miller of Buena Park, who brought their 2-year-old daughter Tanya and a stroller packed with blankets and food. Before the bidding opened, the Millers said they were not willing to go above $200,000 for any of the Pacific Shores houses, even though a move to South County has been a dream of theirs for years.

“For these prices, we ought to get houses of at least 3,000 square feet,” complained Danny Miller, who works for Pacific Bell. “And these lots are smaller than I expected.”

Still, there were bargains to be found. Partly as a marketing strategy, the auction started with the models, which Giller said had about $100,000 worth of upgrades and ranged from $473,000 to $596,000, pre-auction.

But instead of generating high bids, the models--decorated with areca palm trees, framed museum posters and landscaped with pink geraniums and white alyssum, went for deep discounts--$420,000 in the case of the biggest, top-priced model home, and $335,000 for the smallest.

“That’s lower than normal,” said one of Giller’s eight or so bidding assistants, most of whom are former cattle auctioneers from Texas. Known as ring callers because they encourage and spot the bids in the audience and shout them up to the podium, they were all dressed Sunday in turquoise shirts, white slacks and white tennis shoes.

After the models went, the bidding intensified. Giller was selling houses at the rate of one every two minutes.

Among the successful bidders:

* Russ and and Frances Berberian of Pasadena, who paid $410,000 for a house originally listed at $496,000, a savings of $86,000. “It’s sure exciting,” said Frances Berberian. “We want to spend our summers here.”

* Glenn and Cheryl Nieberle of La Habra Heights, who plunked down $322,500 for a house that was supposed to sell at $406,000. “I think the prices were inflated to begin with,” said Glenn Nieberle, a certified public accountant. “We went over our $300,000 limit, but it was still attractive. Without the auction we wouldn’t have been able to buy anything here.”

* Terry and Margarita Holt of Manhattan Beach, who bought a house listed at $393,000 for $342,500. “I think I got it under market,” said Terry Holt. “I really took a chance because the original prices seemed to be inflated.” Holt, a Culver City firefighter, said the couple have invested in several properties in recent years and rent them out. They planned to do the same here. “We’ll probably keep it for at least five years,” he said.

* David and Ranaazahar Ali of West Covina, accompanied by their son Asad, 2, bid $405,000 for a house listed at $503,000. A self-employed mechanical engineer and consultant, David Ali said he was not worried about the long commute to work because he can adjust his work schedule. “This is all very impressive, very well organized,” he said. “They obviously want your money.”

Sunday’s auction pulled in $13,669,750, or about 74% of the aggregate list price of $18,041,000, for the houses, according to auction officials.

Before seeing the figures, Giller had predicted that the final tally would be between $13 million and $14 million.

“It went about as well as expected,” said Giller, whose auction firm stood to gain a 3% to 6% commission. Watson, Dividend’s president, was unavailable, but Giller said Watson had been pleased with the results.

“A good auction is where everyone walks out a winner,” said Giller. “This was a good auction.”