California Real Estate Auction Shows Housing Boom Long Gone
“Folks, take advantage of the market today.”
Those were the words of a fast-talking auctioneer exhorting a packed room of real estate bargain hunters Sunday, as reported by the San Francisco Chronicle.
“I have (a bid for) $300,000 now on this condo; do I hear $310? I’ll take $305 if that’ll help you. Who else wants in? Raise those bidder cards.”
The bidding was furious, and the three-bedroom condo in South San Francisco sold for $425,000 - not a tidy California mortgage, but certainly enough to qualify for a bargain in this region.
It was among 88 foreclosed properties, mostly in Alameda, Contra Costa and Solano counties, auctioned at the San Mateo County Event Center.
The auction was visible proof that the slumping California housing market and subprime loan fiasco have had an impact on the Bay Area. It was the first large-scale foreclosure auction in the region in a decade.
More than 2,300 people flocked to the auction, hoping for discounts on homes being sold by California home loan companies that had foreclosed on them.
If California real estate is a religion, this was an old-fashioned revival meeting, with the frenzied energy of a game show.
Tuxedo-clad “ringmen” raced up and down the aisles, urging on the crowd and pointing to bidders. One particularly gung-ho ringman did a chicken dance whenever he saw someone bid.
A half-dozen female “runners,” also clad in black and white, clapped and cheered every outcome, then approached the winning bidder, clipboards in hand, to get started on paperwork.
The attendees included people seeking homes for their families, investors hoping for rental properties or quick flips, and quite a few who said they came just to learn about the process.
Many brought small children who played on the grass outside and lined up at a concession stand for snacks.
“It’s an adrenaline rush,” said Omar Felder of Hayward, who came with his wife, Teresa, and their 7-year-old son, Omar Jr. “I feel I’m getting a chance to increase my future riches.”
The would-be California mortgage loan seeker was armed with a list of homes he had looked over during three days of open houses earlier in the month.
“If we get something at a reasonable price, we could be able to rent it out for retirement investment,” Felder said. “If it’s big enough, we would move the family in.”
Real Estate Disposition Corp. of Irvine, which conducted the auction, has been in business since 1990, but was dormant for the past 10 years while the real-estate market sizzled, said Robert Friedman, its chairman.
“When the market is hot, we’re not,” he said. “When the market is down or soft, that’s when we’re busy again.”
The company sprang back to life this spring, auctioning 290 foreclosed Southern California properties last month. It is now doing a three-day Northern California tour.
On Saturday, 107 properties went on the block in Sacramento, and 47 homes will be auctioned in Modesto today. Next month, the real-estate road show will move on to Atlanta.
“The housing market is on a downward trend and so there are a lot of foreclosures,” Friedman said.
“A few of our clients, who are major financial institutions, have decided to use the auction method to sell their properties. They feel even if they sell for a bit less that a quick sale is better than a slow sale where they have market ambiguity. They’d rather take their loss and move along.”
Quick it was. At this real estate auction, many properties sold in mere minutes. Most had only about four bidders. Some lingered on the block for several minutes while the auctioneer wheedled for higher offers.
Each property had a published minimum bid and a higher secret “reserve price” - the actual minimum a mortgage lender was willing to accept.
A phalanx of representatives flanked the auctioneers and told them when to accept lower reserves. It appeared that almost every property on the block received a winning bid, but bids below the reserve were subject to possible denial within seven days, according to the auction catalog.
Marjie DeWilde of Mountain View and her husband, David Parker, came to the auction “to make this an educational day,” she said. They weren’t bidding but had inspected and researched some of the properties on the block.
Based on her study of comparable sales (or comps), DeWilde said she thought most properties were going for about 80-85 percent of their current market value. That’s a decent savings for someone who wants to live in a house, but not enough of a discount for an investor.
For example, a four-bedroom, two-bathroom Concord house had a minimum bid of $329,000. According to the catalog, it was “valued” at $651,000, or had been listed, appraised or received a mortgage broker price opinion at that price.
It sold for $500,000.
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