On tonight’s newscast, Gene Cubbison at our news partner, NBC 7/39, reports on a foreclosure auction coming our way in a couple of weeks. Click here to watch the piece and here to read the full story.
In the piece, I passed along a bit of what I’ve heard about our current foreclosure cycle — that banks are way more reluctant to let go of houses at fire-sale, 50-cents-on-the-dollar prices as they once did in the 1990s.
When the Real Estate Disposition Corp. threw one of these auctions in San Diego a couple of months ago, I spoke to that company’s principal, Rob Friedman. He and REDC website’s fine print let some of the air out of the I’m-gonna-get-a-steal balloon.
Friedman … said he hasn’t yet seen the market fall as far as it did last decade. Then, foreclosures often resulted in bargain-basement prices, halving neighboring homes’ values.
“If it’s gonna be like that, I haven’t seen it yet,” he said. “This downturn is not going to be nearly as deep as that one. That’s the vibe I’m getting.”
Lenders are more interested, and have a greater ability now, to sell the homes for closer to what they’d go for under regular market conditions, he said.
Despite the dramatically low starting bids listed in REDC’s ads in the local newspaper and on television, it’s crucial to remember that the company has “reserve prices” that must be met for each property. That’s an unpublished, minimum selling price below which a property can’t be auctioned for.
The auctioneer knows that price and waits for a bid to pass it before turning the property over. (And before adding a 5 percent auctioneer fee to the purchase price.)