Foreclosures And Auctions

A couple of weeks have made a lot of difference to Mel Schell who had offered to buy a foreclosed house for $180,000. But the bank had wanted $210,000. Three weeks later Schell came to an auction out of curiosity when he heard that the house was listed among 60 others scheduled for auction on Thursday at Stockton Grand Hotel. He succeeded in making the top bid for $180,000! He is satisfied but thinks that it could have been even less.

It was the first auction of foreclosed units conducted by Hudson & Marshall, in the Stockton region and was attended by more than 300 people. Most of them did not leave till the sales were over. The properties had been sitting idle for quite a few months. There was no limit to the low bids but there was the option that the banks could reject if the bids were too unreasonable. No bank personnel were present. Within a week the buyers are told if their offer has been accepted or rejected.

Bids started from as low as $40,000 for an abandoned house measuring 1,128 sq ft. The highest bid was $350,000 for a house in upbeat Discover Bay area with a boat deck and measuring 1,668 sq ft. The top bids were 40% less than the current prices. The banks allow most of the top bids but in this particular auction the bids were way below expectation and Hudson & Marshall had their doubts if the banks would accept these that were 15% below ratings. Most probably only 2 or 6 of the top bids would be given the green signal. It means only half will be suitable for the banks. The units under consideration are in a sorry shape and need plenty of renovation work to be done.

Another hopeful gainer is Travis Campbell of Lodi who offered the highest of $150,000 for a fourplex unit measuring 2,600 sq ft. Two years ago it had been bought for $450,000. He is just waiting with his team to take over and renovate it as soon as the bank accepts the offer.

Till now the banks have been adamant in their attitude. But with more houses tumbling in on the foreclosure list the banks are doing some rethinking. Something is better than recurrent loss. Moreover there are signs that the real estate market might slide further.