Thursday, March 19, 2009
My office partner Christine Kim and I attended a live home auction on Tuesday in San Jose off of Capitol and 680. There were some 25 bidders in attendance with down payment cashier's checks in hand. Three properties were to be auctioned - all three were open for public viewing over the last few weeks. A small starter house in the 7 Trees area started at $50,000 (an obvious teaser price if I ever saw one) and sold for $207,000. The second home which was in a similar area with additional square feet sold for $280,000. The bidding depth was light. There were only a few serious bidders - or perhaps after the $50,000 price was blown up, the other bidders quickly became quiet. The interesting thing about this auction was that the winning bid was not contractually binding - it still had to be presented to the bank (REO department) for their approval of the price. The bank could easily reject the offer as too low and the deposit money would be immediately returned. This is the background of why many REO listings on the MLS had previously been offered at auction. Yes, there is always a winning bidder, and no, that does not guarantee that the home will sell. More definitive of a market is when there is no "strike-price" and the auctions are "absolute". Then the true market value is more easily achieved. Worth the effort - yes - we suggest the drive through at In and Out Burger prior to the auction to keep you content through the process.