SAN DIEGO - More than 3,000 people flocked downtown Saturday looking for deals on foreclosed homes. Few found them.
It was standing-room only at the San Diego Convention Center as the Real Estate Disposition Corp. auctioned about 200 bank-owned properties. But auction veterans said few of the homes or condominiums sold at significant discounts.
"It's just a sprinkling of deals," said Brian Crisp, a broker with Active Finance Group in San Diego. "The problem is you have no negotiation here. It's take it or leave it. And unless you visit these properties before, you have no idea what you're getting."
Sammuel Mireles was able to snatch one of those sprinkles. He placed the $170,000 winning bid on a two-bedroom Chestnut Street home in Escondido. The real estate corporation hosting the auction adds a 5 percent premium, so Mireles can buy the 850-square-foot home for $178,500 -- a savings of 44 percent off the original listing price of $319,900.
But the bank that owns the property has the option to refuse bids it considers too low.
Mireles, a carpenter, said he plans to fix up the home and possibly add another bedroom to accommodate his wife and three kids. He currently rents an apartment nearby.
"We've been looking to buy a house for two years, but prices were too high," Mireles said. "Now, I'm satisfied. It's a house for under $200,000 in Escondido."
He bought the home without his wife present. She was less than thrilled about his decision because of the home's quality, Mireles said, leaving him hoping she will warm to the idea after he starts renovating.
For every deal, there seemed to be three or four auction sales that investors said were at or even above market value. And considering the 5 percent buyer premium, a lot of buyers would do better working through a real estate agent where they can negotiate with the seller, they said.
Just two items after Mireles' purchase, a three-bedroom home in Escondido sold for $305,000 without the buyer premium. The home also carried a $110-a-month homeowners association fee. About a week earlier, a similar-sized home in the same ZIP code sold for $294,900.
"There's 3,000 people here. You don't have this buyer remorse you do in the regular market. You want it, he wants it, she wants it," said Joseph Minder, president of Creative Commercial Investments in Solana Beach. "Buyer remorse here is 90 percent less."
Other than investors like Minder, the convention center was packed with strollers as young families looked for their first homes.
Robert Castaneda, 22, held his 7-month-old son, Joel, as he and his wife waited for Oceanside and Vista homes to come up for auction. He said they had a ceiling of $300,000.
"We're starting a new family and we want more space," Castaneda said. "The market is going down, so we figured why not buy a foreclosed home for cheap."
Other families and investors said they attended the auction just to get a feel for the market and had no intention of buying a home.
Rick Komisars, an Arizona resident who is looking to move or invest in San Diego real estate, said he expected the housing market to keep falling so he plans to wait at least six months.
"This is just information and entertainment," Komisars said. "There's a Jerry Springer feel to the whole thing."
The real estate corporation employed spotters who ran up and down the aisles, looking for interested buyers out of the sea of attendees. When a placard went up, the spotters sprinted to the buyer and gesticulated wildly to the auctioneer at the front of the room, indicating the buyer's bid. The spotters whooped and hollered when one of their buyers secured the winning bid.
There was little slowdown throughout the day. Vats of coffee placed in the center of the massive warehouselike room and at the corners kept buyers buzzed as auctioneers rattled off home descriptions and started the bidding, averaging about 30 auctions an hour with no breaks.
For first-time home-buyers looking for a discounted foreclosure, veterans said doing so at an auction is all in the homework. Otherwise, a buyer could end up owing more than the house's market value, a situation often referred to as "upside down."
"You see people bid up to the previously sold amount," said Colleen Curtis, a San Diegan who has been to several auctions. "But those previous numbers are often from the peak. So they might be moving in and already be upside down."
Contact staff writer Zach Fox at (760) 740-5412 or zfox@nctimes.com.
