CLIPBOARD : HOW TO: BUY A HOME AT A REAL ESTATE AUCTION
What do you get when you mix a passion for homeownership and property-starved bargain hunters with a rush of adrenaline and the excitement and frenzy of a live sale? Real estate auctions.
During the mid-1980s, when the Orange County real estate market was generating land-office business, it was not uncommon to see long lines of eager buyers waiting for a chance to participate in new-home lotteries. But with the recent downturn in the market, developers had to get creative. Enter real estate auctions. They are to the ‘90s what lotteries were to the ‘80s.
Over the past few years, real estate auctions have become an ingenious way to please both buyers and sellers.
“It’s a win-win situation,” said Susan Stevens, president of Auction Marketing Services in Irvine. “It gives the seller a known sale date. Instead of having to carry interest on construction loans for an unspecified time, he sells all of his property in one day and can afford to pass that savings on to buyers. As for the buyers, it gives them the opportunity to set the value of a property in an open market instead of having to deal with a ‘suggested retail price,’ if you will.”
Here’s a list of hints, procedures and what-to-expects for buyers who may want to try an auction.
BEFORE THE AUCTION
Finding out about real estate auctions is fairly straightforward: watch for ads in local newspapers, though occasionally auction companies will also run radio or television spots. Also, companies generally place signs in and near the tract to be auctioned. * Obtain a catalogue on the property by calling the appropriate auction hot line number (listed below) or dropping by the auction site. * Thoroughly inspect the property and review all documentation; do not be afraid to ask questions. * You must be registered in order to bid on a property. Complete the bidder registration form in the catalogue and mail it back before the deadline. The type of information that may be requested on a registration form includes Social Security number, driver’s license, banking information and your approval to run a credit check. * In a few days, you will receive a bidder acceptance letter.
THE AUCTION * Check in early and obtain a bidders card. * Since successful bidders will have to begin escrow that day, you must have with you: -- A cashier’s check made out to yourself for between $1,500 and $5,000, depending on the value of the property. It will be endorsed to the escrow company should you be the successful bidder. Because a 5% deposit is normally required, you may also need a personal check to make up any difference the cashier’s check does not cover. -- Two years of tax returns. -- Two months of bank statements. * When the auctioneer calls your property, simply raise your bidder card to be acknowledged. * Remember: You are at a live auction. Have a very clear idea in your mind how much you’re willing to spend and do not exceed it.
AFTER THE AUCTION * If you are the successful bidder, you will be asked to sign a bid confirmation form (listing the property and your successful bid amount) and will execute a purchase and sale agreement and complete a loan application. * If you are not successful but are still interested in a property, fill out a Backup Buyers Card and turn it in at the end of the auction. If a property becomes available, you will be notified.
UPCOMING ORANGE COUNTY AUCTIONS
* Saturday, July 13, Huntington Beach Development: Vista Catalina Address: 1516 Pacific Coast Highway, 112 Details: 30 luxury condominiums; one- and two-level homes with two bedrooms and up to 2 1/2 bathrooms Minimum Bid: $195,000 Auction conducted by Kennedy-Wilson Inc., Santa Monica
* Saturday, July 20, Santa Ana Development: Emerald Terrace Address: 1000 N. Parton St., B Details: 14 attached town homes; 2 bedroom, 2 1/2 baths Minimum Bid: $79,900 Auction conducted by Real Estate Disposition Corp., Santa Ana
* Sunday, Aug. 18, Orange Development: Prado Woods Estates** Address: 4411 E. Cerro Villa Drive Details: 11 luxury single family residences; 4 bedrooms or 3 bedrooms with den and up to 3 1/2 bathrooms Minimum Bid: $419,000 Auction conducted by Lange Financial Corp., Newport Beach
AUCTION HOT LINES
Auction-marketing periods are short and concentrated--usually four to six weeks. A periodic check to an auction hot line will make buyers aware of what is currently available in Orange County, Southern California or anywhere else in the country. * Auction Marketing Systems, Irvine (800) 677-7772 * Kennedy-Wilson Inc., Santa Monica (800) 522-6664 * Lange Financial Corp., Newport Beach (800) 966-0660 * Real Estate Disposition Corp., Santa Ana (800) 266-4444
** The Prado Woods Estates auction office will not be open until July 17.
Source: Kennedy-Wilson Inc.; Auction Marketing Systems; Lange Financial Corp.; Real Estate Disposition Corp.
