Monday, March 9, 2009

NJ Foreclosure Auction Part 1 with Update

This past weekend there was a foreclosure auction at the New York Jacob Javitz Center. Auctioned off were 375 properties from the metro area. The auction was a good deal for those that were looking to pick up properties. In this first post we will look at the deals that were had. An article titled At Foreclosure Auction, Houses Sell, in a Frenzy from the New York Times illustrates some local bargains. Lets take a look -

In rapid-fire speech that resembled a horse-race announcer’s, an auctioneer introduced the first of the day’s 375 properties: a seven-bedroom, five-bathroom home in Roselle, N.J., with an estimated value of $565,000 and a starting bid of $129,000. (Final sale price: $245,000.)

...

The properties included a weathered two-family home in Jamaica, Queens, offered for $500 and sold for $125,000; and a two-bedroom, one-bathroom house in Hampton Bays, on Long Island, offered for $89,000 and sold for $185,000.

...

Beth Kaplan Bongar, 54, a writer and performer who also works as a real estate agent, bought the Hampton Bays house with part of the money she received in the sale of a loft in TriBeCa that she had owned for 30 years, she said.

Ms. Bongar said that she visited the house on Saturday. She noted that it had a fenced-in front yard, where her two dogs could run free, and that outside of windows that had to be replaced, it did not require substantial repair work.

“I need a place to call home,” she said. “And in the long run, this will cost me a little more than the storage bin I have down in Jersey, which is costing me $300 a month.”

The attendance at the auction has been listed varies with different news sources - AP reports 1000, the above article lists 1500 people, CNN has a story (which we will focus on below) that in one paragraph lists 2000 and lower down in the article states 1400.

Now lets look at the CNN article that features the story of someone looking to buy a family home. The article is titled For one man, foreclosure is his shot at his housing dream. Lets take a look -

Victor Guevares rented apartments and saved money for 12 years, hoping eventually to buy a home for his family. Now, the foreclosure market might make the New York man's dream come true.

...

Guevares did his homework before the event, checking out three foreclosed houses listed in a catalog. But he really had his heart set on one of them, which is not far from his father's home.

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It's a two-story, three-bedroom house in the Queens neighborhood of Woodhaven. Less than a year ago, it was listed at $527,000. Now, the auction house was asking for an opening bid of $89,000.

...
The bids climbed. They went past $100,000, and eventually $200,000.

Guevares looked shell-shocked, but he ended up with the winning bid: $230,000.

Although he put down about $12,000 in cash, he's not the home's proud owner just yet. He might have to bring the house up to code before he can apply for a loan. He has 30 days to seal the deal, and the clock is ticking.


And here is the video version of the story from CNN to see what it really looked like -




The above property was listed for $527,000 in 2008. Wonder what the peak price would have been? Probably well over $600,000. Lets hope these homes do not return to the auction block any time in the near future. They were probably someone else's dream home in the not to distant past.

The auction had bargains for those who could buy. The auctioneers, like pawn shops and repos, are the few areas that are money makers during these hard times. But not everyone was happy with the auctions and bargains. In our next post we will look at those the protesters outside.

Update - Here is another article from the Metro International (whatever that is) titled Foreclosure homes a steal for bidders that gives us more NJ sales info -

A home in New Rochelle once valued at $460,000 sold for $310,000; a house in Irvington, N.J., previously $390,000, went for $80,000.
...

“Just when you thought you had to give up the American dream ... you can get into a house at yesteryear’s price,” said Andrel Lawson, 50, a first-time homebuyer scouting a $100,000 house for himself or two $45,000 homes — one for him and one to rent out.


Wow - that was some bargain in Irvington - almost 80% off of peak price! Devastating for the neighborhood! They have a teeny tiny picture in the article of this property. It's the one circled below -

2 comments:

JM said...

I find the language surrounding this crisis rather interesting: it's "losing my home to foreclosure", not "I didn't pay my mortgage" or "I signed a loan I didn't bother to understand" or "I thought prices only went up". The root of the problem is shifted from the individual and on to a faceless entity. Always easier to blame someone else than to take responsibility for one's own actions I guess.

NJHH said...

Hi JM! Thanks for stopping by.

Part of the problem is that the mortgages changed so fast and so many people remained in the 30 year fixed rate mindset. I remember warning people about ARMs and Neg AMs to no avail. People seemed to forget that interest rates were at historic lows. But so many people were short sighted and really believed they could just refinance or sell and everything would be fine.

There is also the people who believe lenders would not have given them the mortgage if they could not afford it. Not realizing that they could afford the first set of payments but there were no calculations on the resets - since the rates were unknown.

The lenders were just as short sighted and blinded by the green as well. Giving more equity than the house is worth - either through HELOCs or Neg AMs - was never a good business model. Either lenders did not what they were doing or did not care. Probably a bit of both.