Home auctioneers are back in action
The adage that every loss is someone’s gain applied to Marcos Zepeda on Saturday.
Zepeda, who rents an apartment in Huntington Park, became a first-time home buyer as he submitted the winning bid for a house in Lakewood at a foreclosure auction that drew about 1,800 people to the Los Angeles Convention Center.
A warehouse supervisor, Zepeda, 33, said he and his wife were eager to share the news with their two young sons. “I can’t wait to show my kids and let them know we’ve got a home,” he said.
A sign of the distressed real estate market and growing volume of foreclosures, the auction of 92 homes, condominiums and apartment buildings in Los Angeles, Orange and Ventura counties was the kind of event not seen in the Southland for more than a decade. In fact, the company that staged the auction -- Real Estate Disposition Corp. of Irvine -- came out of hibernation to do it, said its chairman, Rob Friedman.
A sister firm, LandAuction.com, conducts sales of land, but, Friedman said, Real Estate Disposition last conducted big home auctions during the real estate bust of the early to mid-1990s.
Saturday’s auction was the second of three being held by the company in conjunction with major lenders that pay the firm a commission on each sale. The first was May 12 in San Diego; the third is being held at the Riverside Convention Center today.
The nearly daylong sale in Los Angeles was standing room only with a crowd that packed an auditorium and braved the earsplitting volume of the auctioneer’s chant. Images of the properties flashed on big projector screens, as men in tuxedos paced the aisles, gesturing frenetically to whip up the crowd and point out each new bid.
A Malibu condo of 895 square feet, with a starting bid of $399,000, sold for $570,000. After a starting bid of $549,000, a four-plex in North Hollywood went for $750,000.
A premium of 5% was tacked on to the purchase price. Bidders were required to bring $5,000 cashier’s checks. Winners had to sign them over and write personal checks for the rest of a 5% down payment on their purchases.
Zepeda made a winning bid of $380,000 for a 784-square-foot, three bedroom, one bath home that had been previously valued at $420,000. He said he was prepared to go as high as $390,000. Otherwise, he said, he would have bid on two other homes -- one in Anaheim, the other in Garden Grove.
The crowd was split between first-time buyers like Zepeda, and bargain-hunting investors, many of whom sat on their hands because they didn’t believe discounts were deep enough. Winning bids typically were within 10% to 20% of the previous sale or appraisal price.
Edward Kabateraine, 39, a financial advisor, had come prepared to pay up to $480,000 for a house in Santa Clarita but said he gave up long before the bids topped out at $580,000.
Vagan Chizhikyan of Sherman Oaks had his eye on three investment properties but said the bids were too high. One, a Sherman Oaks house for which he was prepared to pay up to $650,000, sold for $845,000, he said.
The brisk bidding highlighted a paradoxical feature of the real estate market in the Los Angeles area. Sales volume has declined steeply as houses languish on the market, but without a corresponding drop in prices. From April 2006 to last month, the median home price in Southern California rose 6.1%, according to DataQuick Information Services, though growing inventories could signal price declines.
“The market is not nearly as bad as it was back in the ‘90s,” Friedman said. “We’re having a correction. It’s not going to be a major league correction.... People are getting a discount today, but probably not a huge discount.”
Bill Wisner, 41, of Long Beach, said that for him, the lesson of the auction was “you better do your homework, and you certainly better view the property before you buy it.”
Wisner said he and his wife had been interested in a Long Beach property listed as a four-plex, but they found that it was legally a single-family home with illegal additions. The buyer, he said, “could not have looked at this house.”