Last Chance rang out several times before the inevitable dropping of the gavel and SOLD echoed through the Cow Palace room. Someone had made a successful bid of $460,000 on the property I most wanted to buy this last Saturday, April 27th, at the REDC Lender Foreclosure Auction of over 200 homes in the north Bay Area. Add to the auction price a 5% buyer’s premium a successful bidder must pay and the actual sales price became $483,000. The first thing you probably will ask, is this a good deal and my answer is definitely NO. In my humble opinion, this is full retail and with all the Seller’s onerous requirements needed to complete the purchase, especially the one sided sales contract, my maximum auction price was $350,000. Heck the lender had it listed in our MLS for $534,900 for over 80 days.
The home is a 2 year old subdivision home in one of the recently build communities in the City of American Canyon, Napa County and is 3,100 SF with 5 bedrooms and 4.5 baths. It still needed rear yard landscaping, several minor repairs including several fixtures replaces and window coverings, plus for renting purposes, both a refrigerator and washer/dryer. My rough estimate to get it ready to rent was max $30,000 plus the loss of income for 1 month while doing the work. The comparable sales have several similar properties available for sale between from $490,000 to $520,000 and sold comparables from around $460,000 for slightly smaller homes to a high of $550,000 for similar quality, square footage and age homes. I decided to confirm my opinion of there being no great deal at the auction by looking at several other homes in different areas which sold and came to the same conclusion.
Some other things to consider: To investigate everything about the property buyers only had 3 days approximately 1 month prior to the sale when the homes were open to the public. A successful buyer had to start the sales process within 10 minutes of the auctioneer’s saying sold. The deal is an AS IS sale and the buyer must waive everything about the condition of the property. You can’t even go back through the home to confirm the condition is the same as the day you previously inspected, nor do you have a right to withdraw from the deal should something happen to the property after you have entered into contract. The Seller can cancel the deal unilaterally if any of several events happen but the buyer may not and is stuck in this deal for at least 60 days until the Seller elects to cancel or you close escrow. No fun….
In the end, I felt attending this event was a great learning experience and well worth my time. And, there were a few good deals to be had, but only if you did your homework. You needed to investigate many properties, particularly those which needed some work, or may not be in the best areas. You needed to have discipline, a good bidding strategy and most of all expect to spent a great deal of time and energy finding the properties only a few others may bid on. If you did all this, I feel one could make $20,000 to $50,000 on purchasing one of these homes and who knows maybe more if the market ever turns and begins to appreciate again.