At a packed house in Temecula, first-time home hunters and savvy investors were hoping to buy one of the roughly 80 foreclosed homes on the auction block. All are bank-owned properties.
At this auction, the winning bidders were required to put down five percent of the purchase price in cash, or $2,500 -- whichever is greater. The deal must close within 30 days.
"These have been on the market for a while, it sells to the high bidder. Although banks do have to approve the offers, by selling a lot of property in a short period of time they're able to sell a lot less than in the traditional real estate market," said David Webb, an auctioneer for Hudson & Marshall.
Banks must approve all winning bids at the auction, and the properties are sold as-is, so there's no guarantee about their condition.
"We decided to do some upgrades, like designer paint and crown moldings, and some things you don't normally see in houses this little," said Colleen Rutledge, who bought a foreclosed home.
Rutledge of Fallbrook bought a two-story Perris home as an investment at a foreclosure auction for $250,000, plus a $12,000 commission. She spent about $25,000 more fixing it up, putting in granite countertops, a hardwood floor and stainless steel appliances.
With similar properties selling in the low-to-mid-300s, Rutledge thought she'd make a quick profit. She initially listed it for $369,000 when it was the only foreclosed property on the block. Now the home next door, and several others on the block are in foreclosure, and prices continue to fall.
She's lowered her price several times and now has it listed for $274,000. She says she'll be lucky to walk away with any profit.
Rutledge admits she got caught up in the foreclosure auction frenzy.
"You really do have to know your numbers, know what your maximum bid is, and you're done when you're done," said Rutledge. "And you got to know what you're getting into or you'll lose a lot of money, unfortunately."
Many experts are predicting prices will continue to fall, so a foreclosure bargain today may not seem like a great deal tomorrow if the housing slump continues.
Foreclosure auctions are held frequently in Southern California.
For more information on foreclosure auctions:
PEMCO, Ltd. is the real estate management company contracted to administer the property management and sale of all HUD Homes.
Hudson & Marshall
The auction schedule for Hudson & Marshall.
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RealtyTrac's database of properties includes thousands of bank-owned homes, foreclosure auctions, VA foreclosures, trustee sales, HUD foreclosures as well as pre-foreclosures.
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Premiere Asset Services
Premiere Asset Services (PAS) has helped more than 30,000 homebuyers nationwide realize their dream of homeownership through the purchase of foreclosed properties.