>>This item is part of the May 2010 cover story Tales From the Boom and Bust. To read an excerpt from the article, click here. To read the complete account of the rise and fall of the housing market in Washington, pick up a copy of the magazine, now on newsstands.
Wonder what happens to houses after foreclosure? Welcome to the fast-paced world of housing auctions.
At 8 am on a Saturday, about 100 investors, homebuyers, and spectators gather at the Grand Hyatt in DC’s Penn Quarter. James Brown’s “Living in America” blasts at nightclub decibels.
The auction house REDC has 50 homes on the block, and bids start as low as $5,000. The crowd is hungry for bargains.
Buyers bring cashier’s checks to cover the $2,500 deposit. Some wield laptops to identify comparables at the touch of a button; others come with entourages.
Tisa Clark arrives with her husband, Willie. The couple want a house to use as an office for their property-management and construction firm. Their first choice is a small home in Prince George’s County’s Capitol Heights.
The auction feels like a circus, with the tuxedo-clad auctioneer serving as ringmaster. He directs the show from behind a podium with the flair of a Southern preacher. His assistants, also in tuxedos, roam the aisles, cajoling bidders to up the ante. A nod is all it takes to increase a bid by $2,000, $5,000, then $10,000. In less than two hours, all 50 properties will be sold.
Before the auction, the Clarks visited their first- and second-choice properties, assessed renovation costs—about $20,000 for their favorite—and determined their top price. Now it’s time to close the deal. “I’m nervous,” Tisa says.
The Capitol Heights home is the first on the block. Bids start at $25,000. An information sheet states that the home was once valued at $247,500. Tisa thinks it’s worth $180,000.
In a matter of seconds, the price more than doubles from its starting bid. By the $70,000 mark, Tisa has just one opponent.
“Do I hear $70,000?” the auctioneer says.
Tisa raises her hand.
“Seventy!” shouts an assistant.
“Am I winning?” she asks, and the assistant nods.
Her opponent raises the bid.
“What about 80? Do I hear $80,000?”
Tisa’s hand goes up higher. The auctioneer pauses, surveying the room.
“Eighty thousand dollars—going once, going twice.” Another pause. “Sold!” The gavel falls. In less than two minutes, the Clarks have bought a house.