Preliminary Auction Results are In
The Oregonian reports on the Auction:
“Roger Pollock said he wanted to sell a lot of homes at his two-day auction this weekend — and he did just that.
Pollock said he sold 141 homes for a total of $65 million at the Oregon Convention Center in what was one of the largest real estate sell-offs in Oregon history.
Pollock’s Buena Vista Custom Homes had advertised more than 240 homes to sell at auction. By comparison, Real Estate Disposition Corp., the Irvine, Calif. auctioneer, had never done a home builder’s auction larger than 60 homes.
Pollock turned to the auction when the housing market slowed this fall and his sales turned to a trickle. Rather than pay interest on his construction loans for a year or more until the homes sold, Pollock opted for the auction.
Westside homes in Beaverton and Hillsboro sold best, Pollock said. None of the 29 Bend homes sold, and homes that are now rented didn’t sell well, either. Pollock said the sales also will generate about $250,000 for charity.
Although the homes looked especially attractive with super-low starting bids, some brokers were concerned that the homes had a higher, undisclosed “reserve price” that was the lowest Pollock was obligated to accept. But Pollock said about 96 percent of the homes he sold went for below the reserve price. The reserve price, he said, was equal to his costs.
“We didn’t make any money on these homes,” Pollock said. “We lost money.”
“There’s been this perception that this wasn’t aboveboard,” said Pollock, noting that each home has a one-year warranty, standard for Buena Vista’s homes. “But I think the results speak for themselves. I did what I said I would do.”
About 1,900 people turned out for the auction. “
– Ryan Frank for The Oregonian
Average Price: $461,000
Not much of a deal in my book. Roger Pollack is not in the business of giving houses away, I suspect he’s pretty happy with the results. He could still reject bids this week. His comments to the Oregonian are nothing but PR work. And we will see some fall-out due to buyers not understanding the REDC sales process, and getting cold feet. But don’t worry about Rog, nearly $900,000 in earnest money isn’t a bad grab either.
December 17th is a long ways off from January 18th.
Folks are starting to share their experiences at the Portland Housing Blog .
Opinions expressed in this article are the opinions of author, and not to necessarily the opinions of Meadows Group Inc.
All rights reserved on all original content, non-original content is given credit | Michelle Berry | 2009
The Oregonian article said homes with renters didn’t do well.
I don’t understand this. If you’re an investor, wouldn’t you want renters if you couldn’t sell right away? Or does it take away your flexibility to flip the house. Does this imply the house auction was attended mostly by owner occupiers, and not by perhaps more sophicasted investors? Thanks for your thoughts in advance.
#1 - I suspect that there were investors present, but the prices weren’t low enough to pencil out reasonably. 1900 people present, only 141 bought. I’m sure there were a few investors there…..
#2 - I believe that Countrywide, the preferred lender, is not offering non-owner occupied financing at this time. So the investor would have to bring their own financing or cash, which brings more risk to the transaction. Earnest money becomes non-refundable.
#3 - There was no previewing opportunity for the occupied properties; even investors don’t always like to buy something without seeing it first.
“Does this imply the house auction was attended mostly by owner occupiers, and not by perhaps more sophicasted investors?”
You may have hit the nail right on the head here…my personal feelings are that this auction, unlike foreclosure auctions, was geared (and marketed) to more unsuspecting, less experienced folks.
Depending on the type of lease, the lease goes with the property. So if you buy a property 6 months into a 12 month lease, the tenant usually stays 6 more months (the property can be vacated, but it involves some hassle). If the lease is month to month, which I suspect is the case here, then you can ask that the seller vacate the property, depending on your intended use. So, yes, it can affect your near future options. If an investor bought a rented property to flip right away, for the most part, tenants are not usually very cooperative with a sale, especially if there is not rapport with the new investor/speculator landlord.
I can’t think that any of these homes were got at a price that would bring about a successful flip; not with current market conditions being what they are. And projections for ‘08 are not looking very promising either.
Michelle,
Thank you for your information on the REDC auction! I live in Sacramento, CA where REDC is having an auction of condominiums. After visiting two complexes and talking with the representatives at each office, I was left thinking something wasn’t right.
At one condo complex the sales people did not know information such as when the condos were built, percent of owner-occupied units, number of units in the complex, property tax rates, etc. At one point, I was asked “Why are you asking these question, anyway?”
Also one condo complex was remodeled recently, yet had furnaces from 1982 and the appliances were new but the cheapest price/highest energy use.
The two complexes I visited did not have copies of the HOA CC&Rs and budget, yet the REDC marketing materials said “for details about the HOA and assessments visit the on-site information office”
These experiences led me to do more research which is where I found your information. Your suspicions/findings seem to support my experience - auctions by REDC (and possibly others) are probably are too good to be true. Thanks for the information and saving me from what could have been a stressful disaster.
Hi Dennis,
Thank you for your comments. I live within walking distance of one of the auctioned developments. Many of the auctioned homes are back on the market, being flipped by whomever bought them at the auction, and a handful are being sold by Buena Vista, Roger Pollock, and a such and such “properties” company, that was renting out some of the homes. They are all sitting, with few selling, and some are short sales. I did not hear many horror stories about the auction and people losing their earnest money or anything of the like, but I feel that the last chapter has yet to be written. We will hear more as these homes re-sell and the auction buyers turned sellers will have to start dealing with issues that should have been dealt with in their purchase.
One of my officemates did some research, and overall there was a 10-20% savings; but for the “flippers” that margin is quickly being eaten up by mortgage payments, insurance, and utility cost while on the market, not to mention eventually paying a realtor.
Oh, and they hire temps, not professionals to man their sales offices….