Banks offer 28% discount to O.C. foreclosure shoppers

August 17th, 2008, 12:01 am · 8 Comments · posted by Mathew Padilla

ForeclosureRadar reports banks tried to lure investors with an average 28% discount in Orange County at foreclosure auctions, known as trustee’s sales, in July. That compares to 26% in June and a tiny 3% discount in July 2007.

Discounts are not on the value of the property but on money owed to the bank, including the unpaid balance of the mortgage as well as interest and fees.

As an example, a typical O.C. house with a $500,000 mortgage would be offered at auction for $360,000.

The company said last week Merced had the biggest discount of 45% and San Francisco the lowest at 18%. Statewide the average was 33%. (Orange County was not ranked.)

Although ForeclosureRadar did not explain why the discount in Orange County has gone up, experts say banks need to entice buyers at trustee’s auctions because of the slow housing market and because properties are sold “as is” and “sight unseen.” The only way to look inside a property before an auction is to ask the current resident to let you have a peak.

And in related news…

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Foreclosure shopper says:

August 17, 2008 at 7:43 am

That is great news for people looking to buy, but does anyone on this blog know the process you have to go through to buy a home at a public foreclosure auction (i.e., “on the courthouse steps?”? Do you have to pay for the property at the time of the auction or can you take out a mortgage? If you don’t have to pay for it in full, how much do you have to put down? How long after the auction closes is it yours?

We are a family looking to buy a home, but cannot figure out the process — we have not been able to locate any websites or books that specifically speak to the process in OC. PLEASE if you know how to do this or know any resources, we would love a response!! I read this blog a lot, so I know there is a lot of expertise on here! THANKS~~

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Buy Houses Now! says:

August 17, 2008 at 8:41 am

There’s no shadow inventory, I’ve been told by psychotic blog commenters that there is none.

Also, these discounts don’t exist–same source.

provider says:

August 17, 2008 at 9:14 am

If this story had anthing to do with shadow inventory, your comment would still be worthless. Most people do NOT buy properties with cash, especially when the liens and condition are unknown.

August 17, 2008 at 9:15 am

Oh yeah, “average” discount. ‘Nuff said.

Netteligent says:

August 17, 2008 at 10:54 am

Drop 50% and make offer Buyer cannot refuse. Housing is a worst investment. Save your money as much as you can. The worst has yet to come.

real estate investor says:

August 17, 2008 at 4:04 pm

It’s all cash at the trustee sale auction. You have to show your cash (cashier’s check) to the person handling the sale to be allowed to bid You inherit all defects on title (if any) and handle evictions if the property is still occupied. That is the reason for the discount because the buyer takes all the risk. Almost 0 chance to check out the property in detail before bidding

August 18, 2008 at 6:53 am

THANK YOU REAL ESTATE INVESTOR! THat is what I feared, but was hoping that was not the situation. No wonder nothing sells at auction. I do not think the average OC family has $500K laying around in cash, but maybe I’m wrong…Thanks for the info, though!!

no_vaseline says:

August 18, 2008 at 7:46 am

I read only like 3% of the homes that go to auction actually get sold to somebody other than the bank. I don’t have any hard data on this, but I have spoke to several people who have attened auctions in Santa Ana and in Placnecia and tell me the 3% number is reasonable.

Orange County Register