Whether home sale prices have hit their rock bottom yet or not, auction companies like Irvine, California-based Real Estate Dispositon Corp. (REDC) say sellers looking for a good buy are flocking to REO auctions to shop for bargains.
This past weekend, REDC sold hundreds of homes located in the California counties of San Diego, Los Angeles, Ventura and Orange. Jeffrey Frieden, president and chief executive officer of REDC, says 90 of 91 San Diego properties were auctioned off and sold, while the remaining lenders and holding companies managed to offload the majority of the 140 properties listed in the remaining areas.

Frieden expects buyers—who are now noticing a slew of new deals—will only grow in their desire to purchase REO properties at auction.
“We expect ’08 to be probably our largest year ever with sales,” he said. “Our projections are a couple of billion dollars for just us. So, some of our clients feel that this is the way they really choose to dispose of their REO assets ... almost with some of our clients it’s as much as 40-percent of their portfolio going to auction and 60-percent stays in their retail platform.”
As far as the popularity of the format, Frieden points to San Diego alone, where 1,700 people showed up for auction. In Los Angeles, 3,000 people attended. And, with most buyers getting a 5 to 7-percent discount, Frieden predicts the auction format will continue to lure buyers, especially with the industry predicting more foreclosures related to resets on adjustable-rate mortgages.
“We think when these loans reset that there’s going to be even more problems, more foreclosures … therefore, the need for more auctions,” Frieden concluded.