Student Reports on Non-Judicial Foreclosure Sales
"I attended a foreclosure sale on October 28, 1998. Looking at the notices posted in front of the court clerk’s office, I thought only one sale was to happen on that day on a property located at 3837 Gardie Place in San Jose. The opening bid by the creditor was to be $203,146.55. Instead, numerous properties were scheduled to be sold that day. I found this information out by talking to one of the possible buyers of another property.
"She told me that she just started in the business of buying homes in foreclosure and re-selling them for profit. She stated that she found out about the other properties up for bid through a publication called a "bluesheet" which lists every foreclosed property, not just those listed on the court clerk’s bulletin board. She also verified that a bidder [must, prior to the commencement of a sale, show the auctioneer the total amount that the bidder has available to bidlling] [and] said she was only bidding on a cheaper property with an opening bid of $15,000.00.
"Unfortunately, no sales actually occurred. There were four people there ready to bid on various properties, but the auctioneer gave notices of postponement for a variety of reasons. For example, the property I came to see sold was postponed via a "mutual agreement", while the lady’s property I spoke of was placed "off calendar." While talking to the auctioneer, he told me that few foreclosures, around 10%, actually ever go to sale, and that he hasn’t conducted a sale in over two weeks. He also reiterated that while the parties can postpone a sale via a mutual agreement as many times as they wish, even up to three years, postponements for other reasons such as a "beneficiary’s request" can only be postponed a maximum of three times.
"Overall, it was a very informal experience. One wouldn’t even know a foreclosure sale was happening unless they knew of or were looking for one. People who buy these properties know the faces of the foreclosure auctioneer, and when he arrives, the buyers merely walk over to him and the procedures begin. There is no auctioneer’s podium, microphone, or declarations that a sale is to commence like one would see on television or in the movies. Finally, although few sales actually occur in the long run, it seems by looking at some of the low opening prices for these properties in conjunction with the boom of real estate prices experienced in the south bay, it’s a question why not more people come out to bid and perhaps find a good deal on a home." (Dimitri Dalacas, Fall, 1998)
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"The sale began with twelve people and the trustee's agent. She started by postponing or canceling about twelve sales for various reasons including bankruptcy, T.R.O., and process of law. As the postponements went on, many of the potential bidders departed, leaving only three for the [one] actual sale at the end of the process. After those sales were postponed or canceled, she began a sale of a commercial property on Monterey Steet in Gilroy. The property was apparently a small building built in 1924 on a small lot. She began by reading off a list of conditions including that no warranties applied to the sale. After that, she said that she was authorized by the beneificiary to place an opening bid of $342,000. She asked if there were any other bids. There were none. Going once, going twice, sold to the beneficiary for $342,000." (Gene Hansen, Fall, 1998)
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"The foreclosure sale that I attendend was rather uneventful. There was one representative present who was conducting the sale. There was a small number of potential bidders there as well, approximately 5-6. All the buyers seemed to be somewhat acquainted with each other, talking and shaking hands before the representative gathered the buyers to begin the sale. Once gathered, the representative briefly went over the sales procedures: the bidder must have enough to cover the bid at the sale, and a bid may only be cancelled by a subsequent bid that is higher. The representative indicated that he would be conducting a trustee sale for some mortgage company (he was speaking rather fast and quietly, considereing the traffic on the nearby street, so I couldn't quite hear all of what he said). All of the bidders had what appered to be print-outs of some sort and they were all scanning their sheets as the representative went over a long list of cancelled or postponed sales. Many of the postponements were due to bankruptcy, but there were a number which the represtative indicated were due to mutual agreement, reinstatement, and opeation of law. As it turned out there was only one sale conducted after a number of delays.
" The first delay appeared to be due to the representative calling to verify the cashier's checks of one of the bidder's. Before the bidding commenced, the representative went through each bidder's series of checks. He also verified some identification or license for each bidder. (Does one need to be licensed in order to bid at a non-foreclosure sale?) and then wrote down the amount of each check. This whole process took a little while, and then the rep announced a short delay while he apprantly checked on the status of a property. Once the selling finally commenced, only one property was auctioned for sale. 3562 E. Hills Drive in San Jose was sold on an "as is" basis with no warranty. The opening bid was $145,632.23 and only one of the bidders bid that amount. There were not any subsequent bids, and after calls for subsequent bids, the representative declared the property sold." (Andrew Telles, Fall 1998)
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" . . . At 11:00 A.M. I joined a group of 14 people outside by the courthouse steps. The first nine properties that the Trustee described all had their sales postponed; some of the postponements were due to bankruptcy and some were caused by the debtor making a payment to bring their account current. In addition the GTrustee announced she still had not heard the status of one of the properties. Since the Trustee had a cell phone and pager, she kept calling the mortgage company and asking whether she should go ahead with the sale.
" . . . [T]wo bidders I spoke with said they invest their life savings in these properties and after evicting the debtor they rehabilitate the property while they live in it as their residence. One woman I spoke to considered herself lucky that her debtor was easy to evict and she did not mind too much that he stuck her with a broken gas meter and broken water meter. The house had not had power for months and the neighbors were running an extension cord over to it because the man had three small kids. Personally it sounded like a horror story. She even let him live in the garage for a few weeks while he found a new place to live, even though she had moved herself already.
" [Following a description of bidding on a property] . . . the winning bidder went up to the Trustee with shaking hands and signed his cashiers checks for the proper amount. The Trustee informed him his deed would be in the mail. The sale was over and everybody proceeded their own separate way." (Amy Cella, Fall 1998) [Follow this link for a description of software available to assist those desiring to invest and profit from purchase of properties in foreclosure]