In the last weekend in January, I went to the Real Estate Disposition Corporation (REDC) foreclosure home auction and builder liquidation at the San Diego Convention Center. They auction homes all over the country and details can be found on their website. There were over 222 homes auctioned and I stayed from 9:30 in the morning until 3:30 in the afternoon. Within the time frame that I was at the convention center, I was able to see over 147 auctions take place. For any home buyer that is interested in a used home, I would very much recommend attending one of these free events to understand what kind of market you’re dealing with. Especially with the kind of uncertainty we have with the housing market, it can only help to understand what foreclosed townhouses, single family homes, and condos are selling for.
Tips for Bidders
– The REDC# is the order that the properties are auctioned off. If you’re looking at the later REDC# auctions, you don’t need to go to the auctions until later in the day. For example, if you went to the SD auctions and you were looking for properties 180-200, then you probably don’t need to come anywhere near the 9:30AM starting time. Like I stated above, 147 auctions took over six hours so if you’re only looking for a particular area and don’t care about the other areas being auctioned off, don’t waste precious hours of your day waiting for your prized properties to come to auction.
– Pay no attention to the starting bid price because the final auction prices end nowhere close to what the auction starts at. It’s like selling a Nintendo Wii on Ebay with a starting bid of $1 or $150 because regardless of what you start it at, the Wii should be getting fair market value.
– Similarly pay little attention to the listed prices that REDC says these properties are valued at. This tends to confuse people and does not necessarily mean that a particular property was recently valued the amount that they stated as being “previously valued to.” Only one piece of property ended up selling for more than the previously valued price (and that was only 2.4% more) so the auction prices should be well below that previously valued price. I will analyze the accuracy of the previous valued prices stated by REDC in another continuation to this posting.
– Make sure to check out the properties you’re interested in before bidding. Bidding based on the square footage or the lot size only takes you so far because there may be underlying reasons why the home is being sold. If you visit a home and it has more damage than previously expected, you might not be so comfortable bidding on that particular property. Purchasing a home is an important life decision and it needs to have thorough research done beforehand.
– Be aware of the buyer’s premium!!! There will be a 5% premium added to the final auction price which is how Real Estate Disposition Corporation makes their money. If the condo you buy cost $250,000, make sure you factor in the $12,500 buyer’s premium for a total auction price of $262,5000. Factor the 5% premium into the amount that you’re willing to pay.
Faults of Auctioning Process
– Occasionally the TV screens (in the auction area) that detail the housing auction number, address, square footage, previous valuation, and other pertinent information would shut off and would not be restored until the next auction that starts (which is immediately after the previous one finishes). There should not be those kind of problems because potential bidders want to have all the possible information before making their bid and non-functioning TV screens will not help their bidding decisions.
– The average time to close a housing auction was not timed properly. The first 30 auctions (Chula Vista) seemed to go on forever and the auctioneer seemed like he was holding the auction longer than was necessary to get an additional $5,000 from bidders. As time proceeded to the city of San Diego auctions (100 auctions deep into the auction), the average time was much quicker to finish an auction and they almost seemed like they were hurrying a bit too much as much of the crowd had left toward the afternoon time. I understand that the higher the auctions sell for, the more money REDC makes, but if people get impatient, potential bidders may leave.
Tips for People Just Interested in Learning About the Auction Process
– Make sure to pick up a booklet at the auction with the details of all the properties so that you can log down how much they actually sell for. This will give you some valuable data to work with so that when you price the market in the future (whether it’s a month or a couple years), you can compare how much houses or condos are selling for at auction so you can get a better feel for the health of the housing market.
– Go get your free coffee. This auction can get lengthy if you stay there for many hours so get some caffeine in your system to keep up your attention span.
– You don’t have to register to attend the housing auction. You only need to register and go through all the pre qualification steps if you actually want to bid on an auction. Registering though will allow REDC to send you a catalog/booklet of their properties before the auction.