Hundreds Energized Houston Foreclosed Property Auctions

The image of hundreds of eager investors and homebuyers competing to buy homes at a forclosed property auction in Houston in May presents two implications: the continued fall in home prices due to continued foreclosures and the reduction of forclosed property inventories.

While pessimists see the frantic bidding at forclosed property auctions as another sign of further economic worsening, optimists see it as an indication of an energized buying and selling activity that would help the housing market recover.

One optimist is Sam Paiz, who was one of hundreds of prospective homebuyers and investors at the forclosed property auction held by Real Estate Disposition Corporation. The Houston forclosed property auction is one of a three-day sales event held by REDC in Dallas, San Antonio and McAllen to sell over 250 foreclosed houses.

According to REDC, it achieved $19.6 million in total sales during the first 2 auction days.
Paiz, who had already bought two foreclosed houses, plans to buy more for resale to first-time homebuyers. He had bought a home valued at $100,000 in Fort Bend for only $60,000 and expects to make a profit from its resale in the next two months.

Jeff Frieden, chief executive of REDC, is another optimist amidst the housing downturn. He said that many bought homes from REDC forclosed property auctions for only 50 to 60 percent of their previous values. He said that auction sales help the economy recover because families that buy homes pay mortgages, real estate taxes, electric, gas and water bills and they also hire painters, electricians and other types of workers.

Frieden added that vacant homes cause loses for everyone while occupied homes add value to the community.

Another optimist seeing opportunities in the foreclosure auctions is Steve Fallin. He said he wished he had more cash because there were many good properties available at bargain prices. He had purchased a townhome at a price much lower than its appraisal. Fallin said the low interest rates and the eagerness of banks to sell their properties created exciting sales at the REDC forclosed property auctions.

Tracie Pursche was also an optimist, but her dream of buying a home in the $70,000 range vanished when she was immediately outbid by a property investor.

RealtyTrac predicted that forclosed property inventories will continue to grow in the next several months before a housing market recovery starts.