Everyone loves the idea of auctions. Real estate auctions are no different. From the occasional on-site live auction to the online auction world, the public is intrigued by the thought of good deals. The foreclosure process that we hear about almost every day is also connected to auctions. The last step of a foreclosure is a public sale, traditionally known as an auction on the court house steps. Today is no different than a hundred years ago in that regard.
In Marin, real estate foreclosure auctions are held daily at 1400 5th Avenue in San Rafael, better known as City Hall. Investors are there, the professionals who are ready to grab a bargain to flip or buy for an investment group. Sometimes homeowners are there, tragic witnesses to the demise of their dreams of home ownership. There are wanna-be home buyers as well, taking a chance on buying a property they may not know enough about. The whole process at auctions is a well honed routine as you would expect from any process that has had over a century to develop customs.
Marin Real Estate Auction Results
Every house that comes up for auction has several potential fates. From the investors and prospective home buyers point of view, every house should have a low opening bid and be exposed fully to the market. The accompanying chart (click for larger version) shows just how rare that “sold to 3rd party” outcome is. Instead, banks almost always set an opening bid equal to the amount they are owed on the mortgage. That’s nearly always far above current market pricing, so nobody bids and the auctioneer can call out, “sold to the beneficiary”, another addition to the blue bar on the chart.
People hoping for a great deal at the auction mainly go home empty handed. The banks are soaking up the supply of foreclosed homes. REO buyers can take heart, however. Every home the banks absorb is another home that’s going to be in the REO pipeline. Some sooner, some later, but they’re all going to be sold eventually.