The very concept of a sale on the courthouse steps sounds dramatic. I've been hearing about these sales for years but never managed to find the time to attend one of these sales. The first problem I faced was finding the steps. Our Sonoma County administration complex has many building, some with steps, some the courthouse, but the fabled courthouse steps turned out to be a flat plaza in front of the administration building. If you've seen the sculpture near the intersection of Administration Drive and County Center Drive, you know where this spot is. What can I tell you. The reality was already diverging from my expectations.
I got there in plenty of time. I could have called some of the phone numbers available online to see if specific sales were going forward that day, but I just wanted to watch some action, so I didn't really care which homes got auctioned off, as long as I got to see something. It's a good thing I wasn't picky, because almost 85% of the scheduled auctions didn't happen. The big majority were by mutual agreement of the parties involved, but there were half a dozen properties where a bankruptcy proceeding blocked any sale of the property. By the end of the routine of postponements and bankruptcy cancellations we were left with 7 properties that were going to be sold.
This process had taken perhaps twenty minutes and the crowd moved in a little closer as the auction master started reading off the formal information about the sale. She covered the debt, the recording number of the underlying document, and the date of recording. She rattled off the proceeding number, the tax ID number and street addresses for the property as well as some incantations from the State of California. The final sentence was the declaration of the opening bid amount. In the first five cases, the opening bid was more than anyone wanted to overcome, and the request for an open bid...three times...was followed by a declaration that the deed was being returned to the beneficiary.
Finally, on the sixth try, we got an active auction going. The opening amount for this property was only $62,000 and a series of four bidders made their way to the auctioneer to demonstrate their financial bona fides and provide their names. I should mention the auction master made it clear that cash or cashier's check were the only legal tender for the auctions and that even though she might say "sold" to a high bidder, until the money was in her hands, the bidding was still open.
The auction was a leisurely affair. I'm used to "goods" auctions with a fast, furious pace that is designed to extract the maximum money from your wallet by ginning up excitement and enthusiasm. This was more like watching paint dry...but not as active. The normal pattern would be for a bidder to propose a number. Let's say $65,000 for example. The auctioneer would record it and repeat it for the record and the next bidder might (would) say "plus 100". The next guy might say "plus 100 more" and then maybe if the drama didn't cause a fainting spell, the original bidder might say, "$66,000". There would be a long pause, much talking on cell phones, wandering back and forth on the plaza and then the fateful words, "plus 100". This went on for about an hour at which time the winning bidder (pictured with the phone to his ear (also the main Mr. Plus 100)) got the right to pay $128,000 for the property. I think that was probably a good deal, but several bidders had stopped at around $115,000, so maybe the deal isn't as good as I thought.
A couple lessons to pass to you newbies out there.
- Wear a hat and sunscreen
- Bring a chair
- Do your research about what will be sold
This is not a market for the timid or poor. You have to pay cash. You don't get any do-overs or timeouts. You don't get any inspections you haven't already done. You don't get to say, "Oh, I thought that was a first loan." when you figure out you bought a house...and a mortgage. In other words, only bid if you know what you're doing. That being said, it was a moderately entertaining lunch hour with real money changing hands. If I would have been smart enough to bring a lawn chair, umbrella, and a cold beverage I would have been set. Maybe I'll see you there next time.
If you want to follow the latest trends in Sonoma County real estate, check out the Altos Research chart on my real estate home page.
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