Va. houses going to highest bidder Sunday

DATACENTER: Foreclosed properties auctioned on Sunday

Looking for a bargain on a foreclosed house?

John Farnor may buy one for rental property in Henrico County -- if he can get it cheaply enough.

He'll be among 400 to 500 people expected at an auction of foreclosed houses Sunday at the Greater Richmond Convention Center, beginning at 9:30 a.m.

About 75 foreclosed houses in Virginia -- including 25 in the Richmond area -- are to be sold to the highest bidders. The houses are located from Norfolk to Wise County and from Spotsylvania County to Mecklenburg County.

"It's hard to know if I will have enough nerve to raise my arm up and bid," Farnor said. "The auction allows you to at least dream of getting a really good deal."

He has had good luck buying used cars at auctions, he said, but has never attended a real estate auction.

Farnor checked out an open house on the auction list at 8706 Gladewater Court last weekend. The starting bid is $59,000.

"It's such a strange house -- oddly laid out. Everything is in a state of disrepair." Still, if he can get it cheaply enough, he might go for it, he said.

Properties sold at auction typically sell for as much as 60 percent off the previous high values of the houses, said Rick Weinberg, spokesman for Irvine, Calif.-based Real Estate Disposition Corp., which will conduct the auction.

The values are determined by lenders who have repossessed the houses because borrowers were unable to make the mortgage payments. They are based on previous sale or listing prices, Weinberg said.

All houses will be sold "as is, where is and with all faults," according to auction terms. Moreover, some properties may be occupied and sellers will "endeavor, but will not be obligated" to evict the occupants.

The houses were open for inspection. However, the last open houses were last Saturday. At this point, potential bidders can drive by the houses and look at the exteriors, Weinberg said.

The starting bid for each house is listed here, along with the address, square footage and previous high value.

Take, for example, the starting bid on a 3,680-square-foot house at 9073 Pinehill Road in Mechanicsville. It is $59,000 -- the same as the oddly shaped 1,692-square-foot house in Henrico.

Unlike the other one, which was previously valued at $228,000, this one was apparently worth $680,000 at one time.

No one knows whether the banks will accept the highest bid. They make that determination within 15 days of the auction.

"Banks have been accepting most of the bids," Weinberg said. "They need to alleviate the massive inventory of foreclosed homes."

These houses were on the market for 60 to 90 days and did not sell, said Brian Liggan, principal broker and owner of Virginia Capital Realty in Richmond, which specializes in selling foreclosed houses.

"Selling at auction is a strategy that some lenders are trying." If the houses don't sell at auction, most go back to the listing agent, Liggan said.

Sometimes, no one bids on a house, the buyer doesn't meet the minimum price set by the lender or the bidder is unable to meet the terms and conditions of the loans, Liggan said.

Auction purchases require cash or cashier's check deposits, and most need to close within 45 days.

The auctioneer's fee is 5 percent or $2,500, whichever is greater, and is tacked on to the purchase price. The buyer also pays escrow and closing fees, property taxes and insurance.

"If a person has never attended a home auction, they need to sit back for the first half-hour and digest what's going on," Weinberg said. "It's very fast-paced."

Contact Carol Hazard at (804) 775-8023 or .