Going, going, gone: Home auctions in San Diego

Another sign of the slowing real estate and housing market is the fact that home auctions are popping up around the nation, even right here in San Diego.

Home auctions tend to come about during slow times to generate an interest in a property. They are not a good option for everyone looking to sell a home, but they are fairly popular amongst more expensive or exclusive properties.

Less than 1 percent of our nation’s real estate is sold through auctions every year, but this fact still does not deter people from trying their luck.

A recent home auction just occurred in San Diego, but with some less than favorable results, so this leaves us to wonder if auctions are going to be gone soon.

An October 22, 2006 article by Lola Sherman of The San Diego Union Tribune, “Home auction brings out bevy of bargain hunters,”

“Twenty people went to an auction of new model homes yesterday looking for a bargain. They were joined by about 80 ‘looky-loos.’ In the end, the potential buyers wanted too much of a good thing, and the auctioneer's hammer never fell.”

“Sixteen upscale homes in the Bressi Ranch development were advertised as up for auction at La Costa Resort and Spa, though 15 were offered because one had been sold before the event began.”

Most people attend a home auction simply because they assume that they will get a cheaper price on the property then going the traditional route.

But many find this is often times not the case, especially if the homeowner or auctioneer has implemented a minimum bid. This means that the property will not be sold if the minimum bid is not reached. This was the case with the auction this weekend in Carlsbad.

This ensures that the property will not sell for too deep of a discount, and the minimum bidding price is usually an undisclosed figure.

“Buyers were willing to pay about $1 million for a home listed at $1.4 million or $1.5 million, and as little as $650,000 for houses priced near $1 million. Many bids fell in the $700,000 range.”

None of the bids were accepted at the auction, a sign that they did not reach the undisclosed minimum bid benchmark. But, the auctioneer, Mark Weitz, said that some of the higher bids would be taken to the homeowners for possible consideration.

“‘The good news from the auction is that the investors did not lower the price and kept the value up for people who live there,’ said Kelly McLaughlin, a Prudential California real estate agent. Indeed, some of the looky-loos were local residents who wanted to see how much people would pay for homes in their neighborhood. They weren't happy with the offers.”

Not only were the home builders trying to get rid of the homes in this development at possible discounts, but they were also following the growing trends of offering incentives.

“The homes, all two-story, were being sold with about $350,000 worth of upgrades, Weitz said. Included were all the landscaping and everything attached to the house, such as patios with built-in barbecues, window coverings and appliances. Movable furniture also was available at an additional cost.”