Houses still selling to the lowest bidder
TEXT OF STORY
Steve Chiotakis: It looks like U.S. foreclosure rates aren't going to peak until next year. That's according to the online database RealtyTrac. So more and more people are going to foreclosure auctions, where they hope to get a deal on the American Dream. We sent reporter Sean Cole to one in Boston -- and told him to keep his hands at his sides.
Sean Cole: The auction was in a small ballroom at the Boston Park Plaza Hotel. It was held . . . hang on. Here's the obligatory auctioneering sound:
[Sound of an auctioneer]
It was held by Real Estate Disposition Corporation, or REDC, which travels all around the country helping banks off-load their quote unquote distressed properties. About 200 people showed up to bid on just 36 homes scattered all over New England. One sold for a less than a quarter of its original value.
REDC makes its money from a 5 percent buyer's premium. It's doing pretty well right now. And a spokesman, Rick Weinberg, told me it's gonna do even better next year.
Rick Weinberg: We're already in the process of basically having an auction almost every other day. And we could wind up doing an auction on an average of almost a daily basis.
In the last two and half years, REDC has sold $6 billion worth of property for banks. Despite a little lull this year after banks agreed to temporary moratoria on foreclosures.
Rick Sharga: It was a speed bump on the Indianapolis 500.
Rick Sharga is a senior vice president for RealtyTrac:
Sharga: And we have had nine consecutive months now of more than 300,000 foreclosure actions -- a month since the moratoria were lifted.
Which, of course, is horrible. Unless you're an auction company like REDC.
Auctioneer: Going once twice third and final call.
Or you're one of the bidders getting a great deal on somebody else's loss. For example, at the auction I went to, George and Mary McCloud landed a second home on Cape Cod for $90,000. They hugged and kissed after putting in the winning bid.
George McCloud: I prayed about it. And the good lord.
Cole: You prayed about it?
McCloud: Yes I did I did pray about it, you know. And we said don't go above 80. But then, what the heck, you know I mean . . . always can sell it.
True. Question is, for how much?
In Boston, I'm Sean Cole for Marketplace.