In all of my years as a Realtor, I never actually went to an auction of homes on the courthouse steps until today. That isn't to say I wasn't curious. It's just that our attorneys are always warning us to avoid these types of sales like the plague because of the pitfalls. For example, you probably won't get title insurance, you have to pay cash and unless you really do your homework ahead of time, you could inherit a bunch of nasty liens and judgments along with your winning bid. I have also been told that even if you win an auction you may not get the property because you don't meet the bank's reserve.
Nevertheless, these economic times seemed like the perfect opportunity to find out what really happens at the courthouse. So, my group and I, agents from Palos Verdes and Redondo Beach piled into the car and drove to Norwalk where many of the sales take place in Los Angeles county. When we got to the courthouse I was amazed to see the sale really DOES take place right on the steps!
This is my interpretation of what happened there:
There was a small group of about 25 people crowded around a Title Representative who was reading a list of homes that had been scheduled to be auctioned but were being delayed or canceled. He read a list of about 100 properties that were delayed by "mutual agreement" (the bank and home owner agree to postpone to a later date.), or BK (Bankruptcy which stops the sale) or canceled which means the liens were paid off. A fellow bystander explained this to me. The properties are read very fast and you have to list very carefully to hear about the ones you may be interested in.
After about 30 minutes the Title Representative started the bidding on the properties that were still going to be auctioned that day. Of the 10 or so properties he mentioned, none were bid on. He reads off the address, the legal description and the minimum bid the bank will accept. I learned from my fellow bystanders that if you want to bid on the properties, you must have a cashier's check for the entire amount of the price. Most people carry a pile of additional cashier's checks in incremental amounts (made out to themselves) in order to outbid others. Even though I didn't see any properties successfully auctioned, I sure did see stacks of cashier's checks!
In Norwalk, this happens almost every day of the week at 10:00 am, 10:30 am and 11:00 am. It is held in three different locations on the steps according to which representatives are doing the auctioning. It was a really interesting experience and I was happy I didn't have a pile of cashier's checks on me or heaven knows what I might have been tempted to buy!
Since the temperature was about 90 degrees in the shade, I think the next time I go, I will take a folding chair, wide brimmed hat and a cooler of drinks. But, I will definitely go again to see the excitement of the actual bidding.
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