RSS Feed
Print Story
E-mail Story
Real estate auctions roll into Bakersfield
| Sunday, Apr 13 2008 12:00 PM
Last Updated: Monday, Apr 14 2008 9:21 AM
As home foreclosures pile up, real estate auction companies are rolling into town.
BAKERSFIELD.COM HOT TOPICS:
Loading Stories
Advertisement
All foreclosed homes hit the public auction block, on City Hall’s steps, as part of the legal foreclosure process.
If no one bids, ownership transfers back to the lending bank.
Some homes end up being put up for auction again, by private companies hired by the bank.
There are some good deals at those initial public auctions, said Bakersfield auctioneer Mike Grigg.
But there’s a major catch.
“They require the full purchase price,” Grigg said.
Private auction companies typically permit bidders to obtain financing.
• Inspect the property. Review any available documentation, such as previous inspections, appraisals and seller disclosure statements.
“Do your due diligence,” said Bakersfield auctioneer Mike Grigg.
• Bidders should arrange financing before the auction.
Many auctions require a sizeable non-refundable deposit from successful bidders. Fail to qualify for financing to match your bid, and you could be out thousands.
• Research properties in the area and determine how much you’re willing to bid.
• Understand the terms of the auction.
Most auction companies require bidders to bring a cash down payment, either a set amount or a percentage of the sales price, the day of the auction.
And most charge a “buyers premium” — perhaps five or 10 percent of the winning bid — on top of the sales price.
“Be very sure that you know of any add-ons that are going to be in addition to your bid price,” said Tommy Williams, founder of the national auction company Williams & Williams.
• Check out the auction company.
Ask for references. Call the Better Business Bureau.
• Find out if your bid will be final.
In an absolute auction, the highest bid gets the property.
But many real estate auctions involve “seller confirmation,” where the seller can reject a bid it thinks is too low.
• If you’ve never bought a home at auction, consider attending one as an observer before you start placing bids.
• Buyers can find dates and locations for upcoming real estate auctions through advertisements and various Web sites, including www.auctionmls.com.
• When in doubt, ask the auctioneer. Auctioneers should be available in advance of the auction to answer bidders’ questions.
Source: National Auctioneers Association, Californian research
To view video for this story
please update your Flash player
Photos:
Connie Waddell, a professional auction ringman, helps take bids on a house up for auction at 3930 Pontiac St. in Bakersfield.
With his 11-year-old daughter, Emily, by his side, Antonio Rodriguez watches the bidding for a 3-bedroom house at 3930 Pontiac St. with great interest. He had come from Newhall to learn about houses up for auction in Bakersfield. At the end of bidding he had not made a bid, but he said with home prices at $340,000 for a similar house in Newhall, he said he planned to be back. The winning bid on the house on Pontiac Street was $116,000.
Before the start of the auction, Mike James looks over details of a house up for auction at 3930 Pontiac St.
Related Stories:
On Tuesday, Irvine-based Real Estate Disposition Corp. will put about 80 homes up for bid at the Kern County Fairgrounds.
For lenders saddled with a slew of repossessed homes, auctions offer a shot at offloading a heap of costly-to-hold property at once. And with some serious preparation and a level head, buyers might bid themselves into a good deal too, auction and real estate professionals said.
“All rides on the shoulders of the buyer,” said Tommy Williams, the founder and board chairman of Williams & Williams, a national auction company based in Tulsa, Okla.
Do your homework, Williams said. And there’s a lot of it.
Potential bidders should check out a home being sold at auction as they would any other, figuring out what they can afford, where they want to live and if the house is in the right neighborhood and school district.
Visit the house, and make sure it’s inspected, he said.
Home shoppers should also inquire about the auction company — ask for references and check with the Better Business Bureau — just as they might do before hiring a real estate agent, he said.
And then there’s understanding the rules of the auction itself.
In many auctions, bids are subject to “seller confirmation,” meaning a high bid can still be rejected if the seller deems it too low.
Auctions also typically charge a “buyers premium.”
Real Estate Disposition Corp., for example, charges 5 percent of the winning bid, according to its Web site, which would tack an extra $12,500 on to a $250,000 sale price.
Curiosity drew Bakersfield real estate agent Young Trieu to attend a recent auction of bank-owned homes in Fresno.
Trieu wouldn’t advise first-time homebuyers to go the auction route, but he said it might work for more experienced investors. Emotions run high, he said.
“You only have two seconds to make a decision,” Trieu said. “You raise your hand, you’re committed.”
And while there may be bargains at auctions, they’re not necessarily better than the prices on bank-owned homes being sold the old-fashioned way, Bakersfield broker Scott Tobias said.
But a number of deal-seekers turned out Friday for an auction held on the front lawn of a freshly painted, three-bedroom, two-bath south Bakersfield home.
The home, which was not a foreclosure property, was sold in minutes by Elite Auctions, a Bakersfield company.
The winning bidder paid $127,600 — including the 10 percent buyers premium — for the 1,302-square-foot house.
That was a very good price, according to Becky Cordova, a local real estate agent who came to watch.
“The comparables, even for short sales, are $159,000,” Cordova said, referring to the foreclosure-skirting transaction in which a lender accepts a lower sales price than what is due on the mortgage.
Regular resales in the neighborhood, located about a half-mile west of South Union Avenue and north of White Lane, are being listed for $229,000, she said.