Ron and Stacey Burke couldn't contain their excitement. They had just won the auction for a 3,500 square foot home on five acres of land in Spring Valley for $405,000. "My crazy wife just had to get a bigger home,"said Ron as the couple laughed. It was their first property auction.
The two said the bigger house would allow the in-laws to move in with the couple and their children. When asked it they got a good deal, Ron proudly said, "Yes, Stacey knows the price of every home in Spring Valley." Their purchase price was over $200,000 less than the price listed on Zillow, a website which some real estate agents say is a reliable estimate off market value.
They purchased their home at an auction held by the Real Estate Disposition Corporation at the San Diego Convention Center on Saturday. Some 1,000 people attended the event which offered the opportunity to bid for approximately 150 homes in and around San Diego County.
While the Burkes found a good deal, other buyers were not as fortunate. One 443 square foot condo in Downtown sold for the approximate market price. It was the same for others houses in different parts of the county. "Are they good prices? Not really, 'cause these guys talk so fast. If you don't pay attention they can get you real good," said Antonio Contreras who purchased three investment properties at a similar auction earlier this year. Contreras says there are many more people at the auction than the one held in May and that could be driving up the price. "They don't really know what they're doing," he said.
Others criticized different parts of the system including the loan and escrow companies who are on-site after buyers win the auctions. Carl Whisler, an investor from Imperial County said he purchased three houses at his first auction. "They told me they would waive all the fees and charges. Later, they said I had to pay two points for the loan. I couldn't back out because I'd lose the deposit," he said. He also said escrow fees were much higher than the regular market rates. "All I wanted was to pay the normal prices anyone else would pay. But they will inflate the fees on all the stuff. The little stuff that you haven't even heard about," said Whisler.
However, Rick Weinberg of the Real Estate Disposition Corporation took strong exception to Whisler's comments, "We go to great lengths to make sure the public knows every detail, small or large, in the auction and purchasing process. We pride ourselves on it. We disagree with Mr. Whisler’s contention that escrow fees from our assigned escrow firm are higher than market rates," he said. Wienberg also said REDC has reviewed Whisler's settlement statement and found no fees out of the ordinary. Editor's Note: After the original article was posted, REDC contacted NBCSanDiego.com with this official statement.
But the opportunities for lower prices keep Whisler coming back. He looks continues to look for good deals in a depressed housing market. "I never thought I could afford to buy in San Diego, but the lower prices now make it possible," he said.
Contreras was another investor who made a purchase, buying a relatively new 3 bedroom 2 bath home in Encanto for $150,000. The estimated price for his home on Zillow.com was over $300,000.
Whether these properties are sold for a bargain or above market price, the result is foreclosed home taken of the market. That reduces the inventory of homes available for purchase, which analysts have said is vital to bringing stability back to this battered housing market. Auctioneers eagerly tout the benefits. "We give an opportunity to put these properties back on the market, get 'em sold and stimulate the economy of the local area" said Trent Ferris of the Real Estate Disposition Corporation.