Wednesday, May 30, 2007

242 Homes on the Auction Block

From sacbee.com:

Home loan lenders, stuck with rising numbers of repossessed homes, will auction 242 houses next month to bidders in Sacramento, Modesto and San Mateo.

It's the biggest home auction in Northern California in the wake of a five-year housing boom...Irvine-based Real Estate Disposition Corp. will auction 107 Sacramento-area bank-owned houses on June 23 at Cal Expo. Auctioneers will sell 88 repossessed Bay Area homes the next day in San Mateo and 47 San Joaquin Valley houses in Modesto on June 25.
Updated story from the Sacramento Bee:
First it was individual homeowners who turned to the auction block to sell fast at a discounted price. Then home builders. Now come the banks...The auction especially signals a new sales rival to home builders, investors and individual sellers: the banks.
...
Robert Friedman, chairman of REDC, said the homes belong to a handful of financial institutions. "I can't give names," he said. "We have confidentiality agreements. But I can tell you they are very large lenders."..."It's just a business decision. You sell them quickly and take your hit," Friedman said. "In the long run they do it better by taking this route."
...
Keith McLane, who runs a separate Carmichael-based home auction firm, said the sheer number of houses being auctioned next month "illustrates the quantity of foreclosures that are out there."

Foreclosures.com reports that banks owned 661 homes in April in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties. That's up from 92 in April 2006.

26 comments:

Diggin Deeper said...

Maybe we ought to wait until the State Fair opens and hold the auctions then. We could bring in properties from all over and let the carnival barkers do the auction honors. For attendance hype they could get the Fat Lady to sing and David Lereah to be be Master of Ceremony. Even then I doubt there'd be many buyers.

Patient Renter said...

This is pretty significant. Now I'm wondering how these houses are going to effect neighboring prices/values.

Diggin Deeper said...

Patient Renter...I wonder how many of these home will acutally sell or go back to the bank....
If past figures hold true, unless they really dump the prices, sales probably won't exceed 15% of the total and that might be generous.
Unless MLS doesn't report these sales a comps, one has to believe that any sale will pressure neighborhood prices down.

Cmyst said...

Is there any agency that has to release a list of these homes so that potential bidders can view them, as was alluded to in the article? I don't really want to pay Foreclosures.com for this info, which must be available to the public somewhere, right?
(I want to see if a couple of the homes that went inactive off my list after over a year "for sale" are now REO, and be able to track what they might sell for).

Cmyst said...

Answered my own question:

Here is the page for looking up properties online and getting address info, registering for the auction, etc.
http://tinyurl.com/34k3me

Diggin Deeper said...

After a very cursory look, prices start at basically half off. This auction ought to be critical as it will get hyped, and homes will likely sell. Because there's so many area home, the levels they sell at should be a good indicator of where general prices are in the Sacto area as of today. It should also indicate just how strong mentality is at this time.

I still think many of these homes will go back into inventory unless there's no reserve placed on the opening bid. If there are no reserves, somebody is going to get a pretty good deal but, imho, better deals will be made by waiting.

mopar777 said...

Hey diggin what's this about our esteemed realtors withholding recent sales from the MLS comps in order to falsify market conditions?
And how long will it be before the MLS and these realtor jerks lose all credibility because ploys such as this. They are already cooking the numbers enough as it is!

If I were interested in such information I would go directly to the county records instead of buying into such lies. How eeeeeasy it is these days with the net and relatively inexpensive online services.

Do you have link to that recent CBS story about Redfin that had realtors all over the country pulling out what little hair they had left? Thanks!

Diggin Deeper said...

Mopar777...I'm just wondering if these sales will show up on the comps. Would be interesting to know. Maybe Sippn could help here. I'm not saying they are playing with these numbers but they do manipulate the listing dates to advantage.

You're absolutely right, though, county records will be a much better source for current pricing than anything out in public. I'd wouldn't be surprized if there's a great disparity, neighborhood by neighborhood, in what is reported on MLS, and what we'd find at the county level. That said, I don't want to accuse anyone of wrongdoing without further information.

I don't deny a good agent his job, I only ask that he/she do it with the buyer and seller foremost in mind. In this market, I've got believe that getting tougher and tougher to do.

smf said...

Realtors are gonna get caught between a rock and a hard place. It is better for them to sell something than not sell at all, and soon the lower price will be what moves houses.

And some, IMHO, will try to make up the lower commissions due to lower prices with volume.

Let's all remember that there will be plenty of dead cat bounces on the way down.

AgentBubble said...

I saved all the Sac area homes in an Excel spreadsheet and will post a follow up with sales prices after the auction. Should be interesting...Anyone care to guess how many of the 71 Sac homes will sell? The prices are pretty good, most around $100 a sq ft, so I think all will sell. Time will tell.

Sittin' Out This One said...

A/B, make that the "opening bid prices" are around $100/sf. Yes that may get people interested at that "price", but it is unlikely to be the final number.

People should be careful here. I remember Kennedy Wilson had an auction in the early 1990's on some condos downtown, near 4th & P Streets. The auctioneer was a master at taking the prices up in very large increments at the start of the bidding. "I have $200,000, do I hear $400,000. I have $400,000 do I hear $600,000..."

Ask yourself this: Is it more likely housing values will go up or down in Sacramento during the next 12-24 months? I believe much better deals will be offered and obtained in the darkness of winter. And even better deals in the winter of 2008. Patience is a virtue here.

The auctioneer's first priority is to get the bank happy so they can do more of these deals with the banks. The irony is you (the bidder) pay the 5% add on fee! So Agent Bubble, make the opeing prices already $105/SF....

lexi said...

The opening bids are not the reserve price... I was getting
kind of excited till I read that.
I think they put the opening bids
low to attract a lot of bidders with the hopes of getting someone
who will bid high enough to meet the reserve. I'll be curious
to see the sold prices from agent
bubble.

AgentBubble said...

lexi, I didn't catch that part about the opening bids not being the reserve prices. Now it makes perfect sense! I'm hoping to make it to the auction so I can see firsthand the circus acts that take place.

lexi said...

Agent Bubble... you are right.
Looks like it will be qute a show.
I re-read the conditions and besides the reserve price not being the same as the opening bid
price the The Auctioneer may open bidding on any Property by placing a bid on behalf of the Seller. The Auctioneer may further bid on behalf of the Seller, up to the amount of the Reserve Price, by placing successive or consecutive bids for a Property, or by placing bids in response to other bidders. If no bidders meet the Reserve Price, the Seller is under no obligation to sell the Property.
I hope everyone who goes read all
this so they know what they are
getting into.

Gwynster said...

Well, it sounds like it's not even worth dealing with.

Sippn said...

Only 107 Sac homes at auction? not very much to confirm the huge foreclosure numbers I'm also seeing here.

MLS will not show anything but properties listed by Realtors. I can't see any motivation by an agent to withhold a sale from the stats, unless they really like to pay fines.

Leave for a day and you guys go crazy.

Gwynster said...

It was the media's fault! I didn't start it _this_ time.

lexi said...

Yes, these numbers are not big...
going to auction YET. I remember
last time houses sitting for
MONTHS foreclosed with dead
grass. So the process takes a while. Don't let the small numbers fool you. This is just the tip of the iceburg. Oh, and lots
of houses bought in speculation
are hitting the market here where
I live. Speculators are starting
to wise up (amateurs who are probably half the reason for the bubble and the other half loose
lending)and realize it's better to
cut their losses now.

AgentBubble said...

From my May sales stats post on the Sac Real Stats blog...

20% of homes listed in MLS are either REO or short sale (I'll have my May report up in 1 week).

31% of homes in Elk Grove meet this criteria

I would not expect to see excessive inventory at an auction. Why? The banks know you have more exposure in MLS and your "potential" buyers are all bargain hunters.

Sippn said...

Thanks, AB the blood is in EG. If you take out EG, Natomas, Lincoln xing, anitolia, whats the rate for normal places - something less than 20%.

AgentBubble said...

Good question sippin...Here's what we have:

12,747 listings
2,373 short sales or REOs

18.6%

Cmyst said...

Ok, so to follow up on Sippn's question and your response:

What "normal places" is the 18.6% figure based on?
(I suspect that Oak Park and Del Paso Heights, and some of South Sac, would be significantly higher, and Land Park and East Sac almost non-existant, with Fair Oaks and Carmichael lower than 18 % and Citrus Heights/Foothill Farms/Arden probably close to the 20%.)

AgentBubble said...

Those numbers are for everything but Elk Grove, Rancho Cordova, Lincoln and Natomas.

Some other areas:

Carmichael/Fair Oaks
# listings - 591
short sales/REOs - 64
10.8%

Folsom
# listings - 414
short sales/REOs - 41
10%

El Dorado Hills
# listings - 483
short sales/REOs - 40
8.3%

Oak Park
# listings - 312
short sales/REOs - 82
26.3%

East Sac
no short sales or REOs

(Congrats to Elk Grove for having more short sales and REOs than Oak Park!)

Sippn said...

Thats probably normal for Oak Park. Had an investor/fixer/flipper drive me through in '05 when the market was hot and he still was finding FSBOs and sellers in trouble. I passed for a "lead free" area.



East Sac - amazing and also part of low # months inventory in those areas.


Thanks for the demo!

norcaljeff said...

Sippin preaches the same lines my home owner friends in the bay area say, "we're different, it's all about the location. bay area RE prices will never recess." Sound familar? The NAR President said the same thing, then they ran him out of town. Don't believe the hype.

Bill said...

There will be many many lenders at this auction. It's because you do not have to be prequaled to bid. So...65% of those people at the auction will fail to qualify for the home they bid on. So...those homes will now count as SALES AGAIN [they already count as sales, all foreclosures do] and then they will fall out again, to go to auction afain to be counted as a sale again.

Stupid people will pay far far too much for the homes, just as they did previously. The potential buyers are not any smarter, and the auctions are ran like a circus so the sheeple get caught up in the atmosphere.