375 foreclosure properties on auction block
February 23, 2009 01:15PM By Alex Ulam
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Get out your auction paddles. At the Jacob Javits Convention Center next Sunday, California-based real estate auction marketing company Real Estate Disposition Corporation is auctioning more than 375 foreclosure properties from northern New Jersey, northeastern Pennsylvania, and the New York City metropolitan region.
Opening bids are quite low. On REDC's Web site, the starting bid for a two-bedroom house at 118-41 153rd Street in Jamaica, Queens, that was previously valued at $220,000, is $500. And the starting bid for another Jamaica home at 145-22 106th Avenue is $69,000. The property was previously valued at $555,000. All properties are available for inspection before the auction. According to REDC, about 65 or 70 percent of the properties are in turnkey condition whereas the other 30 percent need some degree of work.
The glut of foreclosures is spurring banks and mortgage servicers to explore new ways of unloading foreclosed properties, according to Jeffrey Friedan, CEO of REDC, which auctions foreclosed properties for a 5 percent commission on the final sales price.
"With the flood of foreclosures and decline in home values, the lenders came to the realization that a volume model was needed to move this inventory faster," Friedan wrote in an e-mail, adding, "The financial community previously viewed auctions as a last ditch effort."
While a sense of doom and gloom is pervading much of New York City's residential real estate market, business in REOs is picking up. REOs are foreclosed properties that have been repossessed by the bank when they fail to sell at mandated court foreclosure auctions. Before the downturn, many foreclosure properties were sold at court auctions where mortgage servicers generally attempt to recover the amount of the mortgage in addition to mortgage interest and lawyer's fees.
However, with the fall in residential real estate prices, business has been relatively slow at the courtroom auctions and mortgage servicers are increasingly selling foreclosed properties at discounts either through brokers or at commercial auctions such as the one that REDC is holding.
In New York City, REO brokers say that they too are selling houses at a brisk pace. Brian Silvestry of Long Island City-based BSRG Realty says that he has been selling about six to eight REOs a month for mortgage servicers at prices that he says are typically 15 percent cheaper than market rate.
"Two years ago, we were selling properties for mostly retail buyers and sellers," Silvestry said. "Now 100 percent of our business is foreclosures -- there is just not a big incentive to work for regular retail sellers because they have to be able to price at an REO price to sell in today's market."
Other REO auctions take place solely online such as the ones run by the Oklahoma-based auction company, Williams & Williams, which last year sold 66 REO properties with a total value of more than $14 million in the New York City metropolitan region.
According to Dean Williams, chairman and CEO of Williams & Williams, one of the major advantages of selling properties at an REO auction is that it allows sellers to get the highest and best offer in a depreciating market, where the traditional approach of setting an asking price and waiting for it to sell through a broker has become a riskier proposition.
The broker price appraisals "are all over the board" whereas "this give you real-time solid value," Williams said. "For an individual buying it makes sense to buy on the exchange because you know what everyone is willing to pay -- it is more valid and more sustainable."
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Comments
so uhm TRD is now basically shilling for infomercial type events?
Comment #1 Posted By: 02/23/09
Anonymous
>The starting bid for a two-bedroom house ... is $500. That's cheaper than Cleveland.
Comment #2 Posted By: Anonymous 02/23/09
Anonymous
I haven't read the fine print, but my guess is that like so many other of these "auctions" the houses have a reserve price. Sure the "starting bid" is $500, but that doesn't mean if you bid over $500 and are the high bidder you get the house. Most often there is a secret reserve price and unless you bid over that amount you don't get the house (even if you are the high bidder). That's why so often at these auctions most of the houses go unsold.
Comment #3 Posted By: Anonymous 02/24/09
Anonymous
..."which last year sold 66 properties with a total value of over $14 million in the New York City metropolitan region..." Doesn't sound like buyers are rejecting a reserve price. This is the market, kids- better learn how to play it- now, or six months from now. Very scary.
Comment #4 Posted By: Anonymous 02/24/09
Anonymous
For REOs and short sales, I've just discovered private money for flips that is worth a look at. I joined as a member to have access and have been really impressed with their training Webinairs (Mon-Wed at 8pm EST), informational courses and one-on-one support. It's at www.AllCashAtClosing.com if you want to be active in this market and have been scrambling for funds to get deals done.
Comment #5 Posted By: Anonymous 02/24/09
Bernie R.
At this point, your best bet as a buyer is to low ball everyone - prices will continue to drop.
Comment #6 Posted By: Bernie R. 02/24/09
Anonymous
Anyone who buys real estate off of an "asking price" alone is playing with fire - traditional real estate sales practices are 100% speculative - no one knows why they're paying what they are - at least at these emerging open auctions we can start to have some transparency as to real, sustainable values instead of just hype.
Comment #7 Posted By: Anonymous 02/25/09
Anonymous
after buying numerous properties at foreclosures sales auction it is the bidders that over bid and get caught up in the whole hype
Comment #8 Posted By: Anonymous 03/03/09
Anonymous
The way i look at it is simply UShomeauction last year sold 83 home for a gain of 16 million that averages out to approx 192,000 per home. The average person don't have 192,000. So wheres the bargin!!!
Comment #9 Posted By: Anonymous 03/07/09
Peter
Please notify me of the next foreclosures sale
Comment #10 Posted By: Peter 03/08/09
Anonymous
whens the next auction in new york?
Comment #11 Posted By: Anonymous 03/10/09
Westy
This article is obviously biased toward REDC. The following statement itself paints the picture establishing a true market value, but fails to inform us about 1) reserve prices - the initial bid is not the lowest amount the lender will accept. There is an undisclosed reserve amount that is the lender's actual minimum; 2)REDC represents the Sellers. Unlike public auctions on courthouse steps where the auctioneer is simply facilitating a transaction, these USHomeauction.com auctions have agents for the lenders planted in with the bidders and will bid properties up; and finally, 3) Winning bids are not final. The seller has up to 15 days to reject the winning bid or make a counter offer. So be careful and read the fine print before you participate in one of these auctions. And don't believe statements like this: The broker price appraisals "are all over the board" whereas "this give you real-time solid value," Williams said. "For an individual buying it makes sense to buy on the exchange because you know what everyone is willing to pay -- it is more valid and more sustainable."
Comment #12 Posted By: Westy 03/24/09
Bellini
No one knows where the market is and these "auction" houses are really cashing in on a hopeful exit strategy for the lenders. Has anyone done the math? Bank takes back property, Bank owns and manages and pays taxes on property. Bank loses money on defaulted debt and cash out expenses. Bank pays for the auctioneers marketing, plus its own "asset management". And if sold at auction, betcha Bank loses 70% off there original debt. Also, of the 400 homes auctioned off, 100 came back in a subsequent auction. I just wonder how many were sold? And how much of a haircut the Bank took and is taking? Or are they thinking Mr. Obama will make them whole?
Comment #13 Posted By: Bellini 03/31/09