Notes from the Foreclosure Auction
February 24, 2008
So yesterday I took several hours out of my busy schedule to go to the foreclosure auction up in San Mateo, at the event center. I’d turned my brother on to the foreclosure auction some weeks ago, and he’d actually taken the time to drive around to quite a few of the properties on offer, to verify their condition, at least visually. I was going because I wanted to see how much the six properties in Santa Cruz county would go for.
I went with my wife, and we got to the San Mateo Event Center around 11 AM. The auction was already in full swing, and they had several halls packed with potential buyers and lookie-loos. There were thousands of people there. All of the properties were numbered, and that day they started with number 627 (the auction ran for multiple days). The properties my brother had been interested in (mostly in San Jose, Daly City, South San Francisco) had mostly been auctioned off in the first couple of hours. All of them had sold a fair bit over his maximum bid price.
Of course, his bid price was set at the maximum price he could pay and be cash-flow neutral on the properties were he to rent them out. It’s a tall order to get a property that cheaply in California, where you can put just 10% down and get it to be at least cash-flow neutral. Really, this was a retail auction. I don’t think there were a lot of professional investors there. There may have been a few flippers out there, but most of the excitement seemed to come from nicer homes in the nicer Bay Area neighborhoods, and people were looking to get into the market for a bit less than full retail value.
Yeah, the death of the Bay Area Home Market is pretty exaggerated. There is still a lot of demand for real estate out there. It didn’t look to like the Bay Area homes were selling all that cheaply - especially not considering that the buyer has to pay a 5% commission on top of the auction price. Really, the prices seemed to be about the same as the MLS/REO price (I think all of these properties were previously for sale on the MLS as bank-owned real estate).
It’s hard to generalize, but I’d say that most properties went for at least twice the opening bid. The more desirable properties sometimes went for as much as three times the auction price. Factoring in that five percent add-on, and I’m not convinced that the average buyer was really saving all that much money going the auction route.
Unfortunately, I didn’t stick around til they made it to property number 789 - the first one in Santa Cruz county. We calculated that it wouldn’t be before 7 PM that they would get to that property. Maybe a lot of other people ended up losing patience and wouldn’t have been around towards the end of the auction, and could have picked up some of these Santa Cruz properties for a song. I’m going to make a note on my calendar to check the sale price of these properties in six weeks or so, to see what they actually ended up selling for. I’m really curious to know.
I took some video of the California Foreclosure Auction - if you’re curious, check it out!
Posted by SantaCruzBroker at 3:22pm
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A New Way to Get Locked Out
February 21, 2008
I showed a townhome today to some clients . “What did the listing agent tell you about this place?” they asked. “Nothing,” I replied, “he didn’t call me back.” That’s not too uncommon, I explained - listing agents have a habit of not calling people back, at least 10-20% of the time. Often times, it’s because there’s already an offer in on the house, or it’s about to be withdrawn, etc. But in this case, I think I can guess. Stuck to a couple of windows, I found this sticker:
A nice service representative from Fidelity National Field Services, Inc. had dropped by to change the locks. Actually, they only changed one lock, the side door - they removed the dead-bolt, and added a second door knob in its place (weird, didn’t get a picture of that). There was also a slip of paper on the entry way floor saying that the field rep had come by, and that the owner should contact Washington Mutual.
Well that’s a fine “Welcome Home” isn’t it?
Actually, the townhouse was vacant, so I don’t think anyone’s going to get the message. But this explains why the listing agent didn’t bother to call me back - it’s probably not really his listing anymore, but it’s still on the MLS. Looks like there’ll be another REO foreclosure listing hitting the MLS in a few weeks or months. Sigh.
Posted by SantaCruzBroker at 8:03pm
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Santa Cruz Real Estate Investment Club
February 19, 2008
Today I had the honor and privilege of making a presentation at the Santa Cruz Real Estate and Investment Club. They hold weekly meetings, every Tuesday at 6:30 PM at the 41st Avenue office of Santa Cruz Title Company. They also have a Santa Cruz Real Estate Investment Yahoo Group on-line.
I cobbled together a PowerPoint presentation, about 20 slides or so, about some market statistics and the opportunities that are there for investors in Watsonville who want to buy short sale or REO real estate. I had 30 minutes to talk, it actually ended up being closer to an hour because there were a lot of questions from the people who were there.
It’s kind of amazing how much opportunity there is for investors down in Watsonville, but there’s so few people right here in Santa Cruz who know what’s going on down there. I think it kind of speaks volumes about the schism in our beautiful little county here.
Anyway, I had fun doing the presentation, and I’m going to try to do some more such presentations at other investment clubs in the area. I’ll keep you posted.
Posted by SantaCruzBroker at 10:57pm
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A Sign of the Times - Foreclosure Auctions
January 22, 2008
Yesterday I was out and about, checking on some listings down in Watsonville. I drive into one condo complex that has been especially hard hit by foreclosures and short sales - there are over a dozen units for sale in a complex that probably doesn’t have more than 75 units in it. Right as I drove up the main road, what should my wondering eyes should appear, but this sign, nailed to the garage door of the unit:
Wow. That is something you definitely don’t see every day. It’s a sign of the times, that’s for sure. This unit had previously been on the market for some months, listed as an REO. When it first went on the market, it had an OK price, but the lender/owner (your good friend and mine, Countrywide) did not cut prices quickly enough to keep it competitive in the market, and now it’s on the auction block.
Well, being the Internet-savvy Realtor that I am, when I got back to my office I hopped on the web site, to see what the scoop was. It seems that this auction company is holding a huge auction on February 23. They are auctioning off six properties in Santa Cruz county, and hundreds more from other parts of northern California. Here’s a link that shows what they’re selling in Santa Cruz County:
US Home Auctions - Santa Cruz County
There are a number of details (that’s where the devil lives!), of course - but they are all explained on the web site, just hunt around. Some details are that you need a $5,000 cashier’s check to bid, and you must bring your checkbook because you will need to put down a 5% cash deposit.
I was talking to a colleague of mine about this at our Tuesday office meeting, and he said he knew about this because he saw a similar such sign posted on one of the other properties they are auctioning off. He said he had been to one of these auctions previously, when one of these very same properties did sell, but the deal must have fallen apart, because here it is back at auction again. He also said that the winning bid was about 4 times higher than the opening bid.
It certainly is an exciting time to be in Real Estate!
Posted by SantaCruzBroker at 1:22pm
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