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Foreclosures, going once ...

Hundreds of homes for sale at two auctions, but brokers warn against paying too much

John Rebchook, Rocky Mountain News

Published August 3, 2007 at midnight

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Real estate broker Tom Reed and a group of investors have earmarked about $500,000 to spend on foreclosed homes being sold at two real estate auctions.

About 300 Colorado homes will be going on the auction block, an attempt by lenders to cull the growing stockpile of foreclosed homes in the state and metro area.

Reed and the investors could end up owning 10 or 12 homes that they hope to fix and flip.

Or, if the bidding gets out of control, they could end up with no homes, said Reed of Legacy Real Estate Brokers.

"I've been to auctions before, but not of this magnitude," Reed said.

One of the auctions, by Hudson & Marshall, will be held at the Renaissance Denver Hotel, and the other, by Real Estate Disposition Corp., will be at the Colorado Convention Center.

Just because a home is being auctioned doesn't mean it's a steal, Reed cautioned.

Inevitably, he said, some people attending pay too much.

Anyone buying a home at an auction should have toured the homes first, preferably with a contractor, and should set a maximum price they are willing to pay, he said.

Buying a foreclosed home is not necessarily a good deal, although many people have been convinced they are by info-commercials, books on getting rich in real estate, and people who go from city to city shilling the idea of making millions with foreclosures.

"You can end up upside down" by paying too much, he warned.

Independent broker Gary Bauer has one client who has looked at a house in the auction four times but still isn't certain whether he will bid.

"You can get a good deal if you do your homework, and my client is certainly doing his due diligence," Bauer said.

"My gut tells me he isn't going to bid on this one," he added. "But there will be other auctions. It's a sign of the times."

Colorado was one of the first states in the country to experience runaway foreclosures during this real estate cycle and is on pace to have a record 37,000 foreclosures this year.

While Colorado has been one of the states hardest hit by foreclosures, other previously strong- -real estate markets in other states are now becoming hotbeds for foreclosures.

Broker Bev Meade of RE/MAX Avenues said several of her clients have attended real estate auctions, with or without her.

"Usually, (there are) no great deals to be had," Meade said. "They've generally been available through the MLS for a while now and you could have been bidding on them all along."

Robert Friedman, chairman of Irvine, Calif.-based Real Estate Disposition, better known as REDC, said the three banks auctioning about 90 homes want the real estate off their books.

The homes originally were priced as low as $39,000 with some much more expensive. One 4,000-square-foot home in Golden, for example, previously sold for $890,000.

"Historically, we sell 94 percent of the homes at the auctions," Friedman said. "They do have reserves, but I think considering the market and how motivated our sellers are, people could get some pretty good deals."

He agreed with Reed and Bauer that prospective buyers should thoroughly inspect a house first and know how much it will cost to bring it up to snuff.

"If you haven't inspected the home first, you should be coming for an education on the process, not to bid," Friedman said.

Bargains on the auction block

Two auction houses are holding sales this weekend in Denver to try to liquidate the growing stockpile of foreclosed homes in the area. The homes are all over Colorado and range in price from $17,000 to $1 million. Some houses on the auction block:

14844 FILLMORE WAY, THORNTON

Starting bid: $289,000

Valued: $510,900

Year built: 2003

Square footage: 2,908

Number of bedrooms: 3

208 S. CORA AVE., MILLIKEN

Starting bid: $29,000

Valued: $107,900

Year built: 1954

Square footage: 768

Number of bedrooms: 2

615 RUDD AVE., CAÑON CITY

Starting bid: $59,000

Valued: $133,000

Year built: 1908

Square footage: 1,017

Number of bedrooms: 4

4455 PENNSYLVANIA ST., DENVER

Starting bid: $49,000

Valued: $132,000

Year built: 1902

Square footage: 912

Number of bedrooms: 2

25025 E. PARK CRESCENT DRIVE, AURORA

Starting bid: $229,000

Valued: $418,900

Year built: 2000

Square footage: 2,810

Number of bedrooms: 3

889 SADDLE RIDGE CIRCLE, GRANBY

Starting bid: $269,000

Valued: $479,000

Year built: 2004

Square footage: 2,669

Number of bedrooms: 3

Hudson & Marshall's Saturday auction

• When: Saturday

• Where: Renaissance Denver Hotel, 3801 Quebec St.

• Time: Starts at 1 p.m.

• Web: hudsonandmarshall.com

• Rules: You need to register for each auction event and bring a $5,000 cashier's check made payable to yourself in order to bid at any of the auctions. Winning bidders need 5 percent of the winning bid amount.

Real Estate Disposition Corp.'s weekend sale

• When: Saturday and Sunday

• Where: Colorado Convention Center, 700 14th St.

• Time: Registration begins at 8 a.m. Auction starts promptly at 9:30 a.m.

• Web: ushomeauction.com

• Rules: In order to bid you must have a photo ID and a personal or business check, cash or cashier's check for a down payment of 5 percent (high bid plus 5 percent buyer's premium,) or $2,500 - whichever is greater.Note: The Homes Pictured On This Page Are From The Real Estate Disposition Sale.

or 303-954-5207