Home Auction Likened to ‘Fast-Moving Cattle Herd’
Michael Douglas wasn’t quite sure he was ready, but two hours after walking into a real estate auction he was the proud owner of a two-bedroom condominium--pending verification of his employment and credit history, of course.
The 26-year-old Rialto High School physical education teacher, who last month purchased the condo in the San Bernardino County foothills community of Mentone, says the day “was like being in the middle of a fast-moving cattle herd.”
Several hundred people had registered to attend the well-advertised, March 24 auction and arrived with $1,500 deposits in hand. The bidding, Douglas said, was fast and furious.
“The auctioneer would start the bids at, like, $67,000 for a two-bedroom unit, and a dozen hands would go up and all of a sudden he was saying ‘I’ve got $75,000, $76,000 . . .’ you never heard whether anyone bid at $70,000 and it was like that all day.”
Still, Douglas, whose escrow is scheduled to close Saturday, said he is satisfied with the deal: he paid $72,000 for a unit in the Marabella condominium complex that originally retailed in the mid-$80,000 range.
Douglas said one important lesson he learned was the importance of investigating properties to be auctioned and the market value of similar homes in the same area.
“The very first unit that was put on the block was a three-bedroom that looked out over a storage area. It was probably the worst property in the whole auction and some guy bid $91,000 for it. We couldn’t believe it. The next three-bedroom model that came up went for about $85,000. That poor (first) guy just didn’t do his homework.”
Another bidder, he said, took advantage of an auctioneer’s error to get a three-bedroom condo for $77,000 when the auctioneer mistakingly offered it as a two-bedroom and started bidding at the lower base that had been listed for two-bedroom units.
As is typical in a new home auction, the auction company, Real Estate Disposition Services of Santa Ana, brought in an on-site mortgage broker to provide financing and an escrow company to open escrows.
As soon as a bid was accepted, Douglas said, prospective owners were escorted from the auction room, introduced to the mortgage broker, a loan application was completed and escrow was opened.
He said he sees residential auctions as a way of rectifying the market’s pricing excesses of the late 1980s.
“I got a competitive interest rate on the loan and a good price on the condo. I figure that even if they don’t appreciate very much for a while, I still got a good deal because I paid less than most of the other people who bought two-bedroom condos.
