Going once, going twice: Auctioning off a foreclosed home
on February 20, 2009
By Elise Craig and Melanie Mason/Oakland North
Upstairs, cell phones are charging. In the kitchen, snapshots of kids in football jerseys plaster the fridge. And in the living room, auctioneer Danny Green is selling this family home to the highest bidder.
Green’s voice ping-pongs across the room, a jumble of syllables and numbers that mark that characteristic auctioneer dialect, albeit one lightly seasoned by his Texan twang. There are elements of the soft sell – “lot of house for the money!”- and sometimes a harder sell — “you’re missing the chance of a lifetime!” — all the while, cajoling the bidders for another five or ten thousand dollars. His team surveys the living room, scanning for bidders, assuring that a raised hand was indeed a bid and not some nervous flutter. And after a few short minutes of verbal gymnastics, the bidding peters out and a winner is determined. “Boom!” Green says. “Right there!”
Then he does it all over again.
At Monday’s auction in Hercules, five properties were sold in the span of 22 minutes. That’s actually slow for Green and his team–he usually averages about three minutes per property.
Green works for Williams & Williams, a real estate auction company based in Tulsa, Oklahoma. While many businesses are struggling in this economic downturn, Williams & Williams is thriving, doubling in size every year for the last five consecutive years.
According to Amy Bates, a senior vice president with the company, Williams & Williams auctioned off 15,000 properties in 2008. She anticipates over 25,000 properties will be sold in 2009.
Much of that business is driven by the increase of foreclosures and vacancies nationwide. Bates said 90 percent of the properties Williams & Williams sells are foreclosed homes.
Auctions are a way to sell property fast, an attractive option for banks looking to unload foreclosures.
“Some properties in California sit on the market for as much as a year,” said Chris Longly of the National Auctioneers Association. “The holding costs become exorbitant. Banks try to get rid of a property as soon as possible. They don’t want it on their books.”
On today’s auction route, from Reno to Sacramento to Hercules, Green and his team have sold 13 properties. Their record is 30 properties in a single day.
The style and condition of the houses varies from the pristine condo where the auction was held to run-down houses in drug and violence ridden neighborhoods. But Green and his team have never even seen most of the houses that they auction-they’re just the frontmen, a fact that Green takes care to remind his bidders.
“The four off-site properties, we have never seen,” Green says before the auction begins. “I can’t tell you a thing about the condition of them.”
This comes as no surprise to the home auction veterans in the crowd, of which there are quite a few. One couple comes to auctions so often that Junious Lockette, a local Williams & Williams employee, makes a point of saying hello when they come in. Another man, who has purchased property at auction before, is just here for the spectacle.
Contractor Angel Rodriguez, who lives in Hercules, is looking for another bargain like the condo he bought in Concord a year ago. It took him only 15 minutes to buy it, and 45 days to take possession.
“If I can get a good deal, I’ll buy it, whatever it is,” he said. He currently owns six properties, and rents out most of them.
But there are other attendees, like the families with toddlers in tow and the newly married couple, who are novices to the real estate auction. Green, who has been an auctioneer for 41 years, mostly in the auction-savvy world of purebred horse sales, takes care to make the proceedings accessible to these first-timers.
To a newcomer’s ear, the action is quick and tense, but Green actually slows the tempo of his auctioneer’s voice to one-third speed so that he doesn’t bewilder his bidders. Sometimes, he pauses to clarify terms of sale or to convince the prospective home-buyers that if they stop bidding, they are missing out on a bargain.
“You have to remember, the majority of these people have never been to an auction of any kind,” Green said. “When I just stop and say something, it gives them time to take a breath and remember what they came here for.”
One of the first-time bidders is a nurse from Hercules who walks away with a contract for a three-bedroom home on Oakland’s 34th and Market streets. He plans on surprising his parents with the new home, which he had never seen prior to the auction.
“It’s such an adrenaline rush, just because you don’t know what you’re getting into,” said Thanh (we’ll keep his last name hidden, lest we ruin his surprise purchase). “You have to use whatever instinct you have.”
Thanh said the house would likely need some repairs, and that he’ll turn to his brother’s contracting business to fix the house up. But for buyers like Thanh, the auction offers the benefit of being a quick way to score property for cheap.
“Three bedrooms for $78,000,” Thanh said. “It’s not a bad deal.”
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Recently I purchased at a Williams and Williams auction. There was one other person bidding on the same property. After each of my bids this person quickly bid a higher amount. AFter I said I was done bidding, the other person withdrew their last bid, leaving me as the high bidder. I am certain the other bidder was working with Williams and Williams in order to drive prices up and increase thier commissions. Be careful when dealing with this company. They have a lot of hidden fees as well (closing costs were astronomical).
March saw that house prices increased for the first time since October 2007, however some are cautioning that investors should not be expect an immediate change in the market as lenders will be increasingly more cautious going forward. http://www.telegraph.co.uk/finance/personalfinance/investing/5119055/House-prices-Is-it-time-to-go-back-into-property.html
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