Foreclosure auctions gain steam and draw bargain hunters
The auctioneer’s voice rang out above the murmured conversations with a staccato, “Going, going, sold!” A whack of his gavel signaled the sale of somebody’s foreclosed house to a new owner, and the next round of speed-talking began.
Concerns about botched paperwork that caused some major lenders to recently halt foreclosures in progress didn’t dampen the enthusiasm of buyers gathered Sunday in a drab meeting room at the Ontario Convention Center to bid on bank-owned properties.
Several hundred bargain hunters filled the rows of chairs in the high-ceiling room.
Bob Tweeten had come to bid on a two-bedroom Riverside fixer-upper that he had seen online.
“I’d like to find a house to refurbish as a new primary residence,” the Fullerton resident said.
Sales such as this one are being carried out throughout the state, despite the foreclosure freezes. That’s because the homes up for auction were foreclosed on months ago, and the banks in turn sell them through real estate companies that specialize in auctioning off distressed properties.
Now those properties are being sold, not on the proverbial courthouse steps but in utilitarian hotel ballrooms and elsewhere.
There was a 20% drop in the volume of foreclosed properties available for sale through county courthouses during the period this month when Bank of America Corp., JPMorgan Chase & Co. and GMAC Mortgage imposed temporary halts to foreclosures, according to ForeclosureRadar.com.
But economist John Burns of Irvine-based John Burns Real Estate Consulting Inc. said the moratoriums have not been long enough or widespread enough to make a difference in the overall housing market.
“The whole notion that there are all these problems is just absurd,” Burns said, referring to banks’ documentation errors.
Sunday’s auction of about 100 houses, condominiums and residential lots in Riverside County, one of the areas hardest hit by the housing crisis, was the second held over the weekend by Real Estate Disposition’s Auction.com. At a similar event Saturday near Los Angeles International Airport, 118 properties sold for a total of $15 million. The firm will hold another auction Monday evening in Palm Springs.
Bidders came armed with cashier’s checks and personal checks for $5,000 to cover the 5% premium charged by the auction company. A central projection screen indicated whether a property was being offered with financing available, by an all-blue background, or would be an all-cash purchase, via a green starburst, just in case they couldn’t make out the auctioneer’s rapid-fire chatter.
“Why can’t they speak clearly?” asked first-time auction attendee Sandip Desai of Riverside. “It sounds like gibberish.”
He came with his broker, Mohammad Ashrif, in tow, hoping to pick up a deal on a four-bedroom house in Moreno Valley. Desai was looking for an investment and had been out to see the single-family house, which had sold in 2005 for $435,000.
Bidding opened at $69,000 and quickly escalated as tuxedoed bidding assistants scurried through the aisles checking with buyers to see whether they were willing to go higher. After several bids, Desai dropped out and the house sold for $155,000.
Holding foreclosure auctions in businesslike environments at convention centers or fancy hotel ballrooms came into vogue during the housing bust of the 1990s. Real Estate Disposition reintroduced them in Southern California in mid-2007. Since 2008 the Irvine company has auctioned off more than 12,000 properties in Southern California.
On the low side of the day’s price range, bidding on a 1,728-square-foot triplex in Highland started at $1,000 and ended at $20,000. “Fixer” would be a generous term to describe its appearance on two large screens at the front of the ballroom. Most of the bidding ended in the $100,000 range, although a handful of properties exceeded the $200,000 mark.
As the drone of the auctioneer wore on, Tweeten ducked out empty-handed. The house he hoped to buy went for $90,000.
“You can get a house in that neighborhood for $110,000, and this one needs work,” he said. “It was too much for me.”
