Arizona Repo Homes Listings a Big Hit Among Investors
Trustee’s sale auctions are becoming popular among investors and homebuyers who want to find bargain properties on Arizona’s homes listings. Since last year, attendance at trustee’s auctions increased five times.
The weekly auctions held outside the Maricopa County Superior Court Complex have become alternative venues for investors and homebuyers who want to avoid the intense competition for bank owned home auction listings.
The bidders’ turnout at trustee’s auctions is low compared with those at bank-owned home sales. William Hampton, a trustee’s sale auctioneer estimated a typical daily attendance of bidders to be between 15 and 40. Hampton said that majority of bidders are professionals who represent multiple buyers.
But the attendance this year is a big improvement from last year’s events which average five buyers, according to Hampton. He claimed that business has grown because of the increase in the number of home auction listings.
Usually, auctioneers worked for different independent contractors hired by trustees. In Arizona, a neutral third party or trustee is involved in every mortgage contract. These trustees are responsible for selling foreclosure houses at auctions. Those that handle trustee work are loan servicing companies, title companies and law firms.
The opening price in every auction is issued by lenders and third-party buyers compete for the opening bid. According to auctioneers, lending institutions use several methods to establish the opening bid but most often choose the lowest of the amount owed on houses or their estimated market value.
On the case of JPMorgan Chase, the bank usually offers a bid for the outstanding mortgage balance and fees and most of the time, its bid is usually higher than the amount a third party considers to pay. Tom Kelly of JPMorgan said that the bank is usually the winning bidder, unless someone offers a bid higher than the mortgage owed to the bank.
For the past several months, about 200 to 250 distressed properties auction have been sold at the courthouse auction daily.
Data from Information Market showed an increase in the number of houses bought by third parties, from last year’s 5 percent to 12 percent this year. One reason for the increase in third party purchases is the competition at auctions for bank-owned repo homes listings where both homebuyers and investors bid for same properties.
