New York Times Covers Twin Cities Foreclsoure Auction

by Alex Stenback on October 22, 2007

NYT shines the light on the ginormous foreclosure auction held at the Minneapolis convention center this weekend:

In a down real estate market, they came to buy. They came early, they came in numbers and they came with bank checks for $5,000.  By 10 a.m. Saturday, more than 700 people filled a hall in the convention center here for what real estate agents say is the largest auction of foreclosed properties ever in Minnesota, with more than 300 houses or apartments for sale in two days.

Given that 85 percent of the homes on the block sold, we might assume that there is some pent up demand in our market for homes at the right price – which would be a good sign.  Though the 300 or so homes made available represent only a sliver of actual foreclosures, and experts at the auction were circumspect:

Paul Schoenecker, owner of a local franchise of HomeVestors, the people who post the “We Buy Ugly Houses” billboards, said a minority of the sales were true bargains.

Only time will tell whether the new crop of investors at the Auction were savvy buyers who sensed a bottom, or a fresh set of dreamers lured by memories of a hot real estate market from years past. We think most are in the latter group – after all, the stakes are high, and things happened lightning fast:

Buyers were required to provide a $5,000 bank check, along with a personal check to bring their contribution up to 5 percent of the purchase price. Upon placing a winning bid, they proceeded to financing tables in the back — with no opportunity to further inspect the property or negotiate repairs.

The bidding for most houses took less than three minutes.

In a market already flooded with "investor" foreclosures, this does not strike us as a recipe for success, especially for the less experienced.
Buyers Pounce on Deals as Homes go on the Block [NYT]

{ 3 comments… read them below or add one }

Bonnie Erickson October 22, 2007 at 11:41 am

Alex, Did you actually go to the auction? The media coverage fascinated me, but if the deals were so great the properties could have sold on the MLS with opportunity for the buyers to do their due diligence and get a buyer’s inspection. If you did go, I’d be interested to hear your personal impressions.

My experience so far with the foreclosure market (I have several investors that are constantly looking) is that most of the foreclosure listings are selling at today’s market value rather than a discount from today’s market value. Hence, they are not “deals” in the experienced rehabbers eyes.

Bonnie Erickson October 22, 2007 at 11:41 am

Alex, Did you actually go to the auction? The media coverage fascinated me, but if the deals were so great the properties could have sold on the MLS with opportunity for the buyers to do their due diligence and get a buyer’s inspection. If you did go, I’d be interested to hear your personal impressions.

My experience so far with the foreclosure market (I have several investors that are constantly looking) is that most of the foreclosure listings are selling at today’s market value rather than a discount from today’s market value. Hence, they are not “deals” in the experienced rehabbers eyes.

Editor October 22, 2007 at 11:45 am

Did not attend, but I do think your comments are right on the money. People tend to equate auction with “good deal” but this is rarely the case in real estate, especially in those cases where the homes are in good enough condition to be financed via mainstream channels.

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