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I went to a bank-owned home auction run by ValueHomeAuctions.com on Saturday. The event, in downtown Los Angeles, started at 9:30 and it was only half-way done when I got there two and half hours later. They were auctioning off over 140 homes.
Compared to an auction I went to earlier in the year, this one had probably half as many people. And there was no free coffee! This event had cheerleaders though—well they were auction house employees clapping on the sidelines during the bidding to get folks fired up.
Just to make it clear, these are not sheriff’s auctions where people lose their homes to the bank. These are homes that have already been foreclosed on. Typically the bank has tried to sell the property through local Realtors and unable to do that now just wants to get rid of it.
Another thing I noticed about this event was much lower prices. Six months ago homes at the auction I went to were selling for about 60% of the “previous value” which is typically what the bank had last listed it when it was trying to sell it through a real estate agent.
Here are some of the prices I saw:
A five bedroom home in Norco, Calif., way out east of L.A., had a starting bid of $136,000 and sold for $390,000. It was previously valued at $990,000.
A three bedroom, three bath in Menifee, again one of the those far out but still nice Los Angeles suburbs, went for $130,000, twice the starting bid of $58,000 but about one third of the previous value of $431,000.
A four bedroom house in Hemet, again one of those far east suburbs, went for $125,000, twice the starting price of $54,000 but one-third the previous value. You see a pattern here?
Although I didn’t inspect any of the above mentioned properties they all looked like fairly decent houses, built during the boom and bought by people who for one reason or another, couldn’t keep them. That’s the house in Hemet in the photo above.
By the way, today’s Los Angeles Times has an article about how the state is—for the fourth year in a row—seeing more people leaving than moving in. A trend entirely related to what I saw on the auction floor.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.