Good deal? Or steal?

By Vicki Mabrey

Jun 8, 2009 10:43am

Today it's Philadelpha, Saturday it was Boston, but yesterday it was New York.  About 1000 people packed the ballroom of the Hyatt Hotel at Grand Central Station in Midtown Manhattan on Sunday, all trying to snap up a bargain on one or more of the 120+ houses up for auction. The houses on offer were   from all around the metro New York area — upstate, Staten Island, New Jersey, Connecticut.  (Nothing in Manhattan, though — which would surely have been a sign of a real estate Apocalypse).  It was the second auction in this area for the auction company REDC, which previously sold more than $18 million worth of real estate in the NY area (about 200  homes) at auction in March.  It was my first time at a real estate auction, and it packed as much drama as a Broadway play.  There were vocal protestors outside, organized by Bail Out the People (Bail Out the People – Not the Banks! is their motto…bailoutpeople.org).  Spokesman Tony Murphy said they want a moratorium on all foreclosures and evictions.  "These auctions are promoted as a good deal, as a way to put people in houses," he said.  But what about the people who were living there already, he asked?  "The media often writes that 'one person's misery is another person's gain,' but we say that an injury to one is an injury to all."  "Nobody likes to see foreclosures, they're an unfortunate event," agrees REDC's president, Jim Corum.  Standing outside the circus going on in the ballroom, Corum tells me that all the homes being auctioned on Sunday are vacant, have been for at least 90 days, some for as long as two years.  And from the pictures projected in the front of the room, the houses appear a forlorn lot.  But buyers were snapping them up.  The tuxedoed bidding assistants were running up and down the aisles, flashing hand signals like  a catcher.  One caught my eye and winked — it's amazing they can keep up with everything going on in their section — the nods, the hand waves, the slight smiles that indicate bidding (did I mention that NOBODY raises their assigned auction number?  Too obvious, I guess).  "Sell it!" they yelled.  "That's a lot of square footage for the dollar!" said the auctioneer, inbetween his almost-impenetrable price patter.  "Time to take advantage!" said another.  "What goes down always comes back!"   From his lips to God's ear.    In the bare bones brochure, the properties look like wildly good deals — bidding starts on some as low as $500, but within the space of five seconds (I timed it) they'd usually risen to $50,000 or $60,000.  And that's where some stay — a sad-looking frame house in Elizabeth, NJ went from $1k to $60k in three seconds flat — but there it stalled, selling eventually for $70,000, though its previous value was listed at $260k.  Hard to know if that was a recent value, or overheated pricing leftover from the go-go days of the market bubble. Corum said most of the buyers were end-users — about 80%, he estimated.  Purchasers were sent to one of two places after their winning bids — investors stayed in a roped-off area inside the ballroom (the better to be near the action), while those buying only one property were sent to a separate annex nearby.  The annex was much busier.  Anita Walker from East Orange, NJ came to see what would happen to a vacant property near her.  It sold for $42,500, despite being what she described as "trashed."  "I have dual feelings," she said.  "I feel bad for some families who lose their homes, but there are some really irresponsible people out there."  One winning bidder who agreed to talk (but not give his name) was a slight man, also from New Jersey, who paid $300,000 for a house he said was worth about $100,000 more than that.  "My heart was pumping, my face got red, I was nervous," he told me of the bidding process.  The house was an investment, he said.  And though he's owned other investment properties before, he said this is the only one he'll have now..  "I try not to be greedy," he laughed, as he headed east on 42nd Street. 

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