Bidders Gamble On Foreclosed Home

Sonya Schoenberger PhotoThe starting bid at auction—$30,487.39—was well below the Clinton Avenue home’s appraised value: $142,000.

One determined bidder would quickly close that gap.

Bids initially crept up slowly as 10, then 15, then nearly two dozen people looked on at a foreclosure auction Saturday for a multi-family house at 290 Clinton Ave., across from Clinton Avenue School.

Keybank National Association had foreclosed on the house after the owner, Ali Haider, defaulted on mortgage payments.

For a while, Luis Jimenez and his teenage daughter Flor went head to head with Matt and Zack Rahman, two brothers who came to the auction to bid as a team. The Jimenezes and Rahmans volleyed back and forth, ratcheting up the price in small increments: $48,000. $48,100. $48,200. $48,500.

As bidding hovered just above $50,000, Fazuk Kader stepped forward and raised the price to $60,000. In the course of a minute the bids went up from $60,000 to $70,000 to $80,000 to $85,000.

Kader was unfazed. “One-hundred thousand,” he said.

Saturday’s auction was a lively, family affair. Some came just to watch and learn; others hoped to purchase the property as a home or an investment.

The Jimenez family came to the auction with the hope of purchasing a second home as an investment. Matt and Zack Rahman were searching for a foreclosed property that they could fix up themselves at low cost, before quickly recouping their investment by renting out the property. Cindy Zhang came to watch the bidding unfold as a way of learning about the auction process, as she plans to bid on another property next week. Fazuk Kader came with his son Raqib Gazi, who was looking to purchase a home.

The pale green house looks at once dilapidated and homey. There are boards behind the glass in the second-floor windows and two “No Trespassing” signs. The enclosed porch displays paintings of roses, a young woman, and a country landscape.

Bidders came to different assessments of the home’s value and the potential risk involved given all of the needed repairs.

The Rahman brothers weren’t willing to pay more than $60,000, give or take. Matt, who is a toolmaker, pointed to hanging wires as a sign that there may be problems with the home’s electric system.

Those who bid at public auctions are unable to inspect the home’s interior, and so winners assume the risk of potentially extensive repairs. Zack explained the pair’s risk averse ethos: “Always assume it’s under-average on the inside.”

Fazuk Kader, however, had reason to believe that the interior wouldn’t be in complete disarray. He had happened to pass the home’s current resident on the street. The resident assured him that the inside was not in terrible shape.

Kader likes the neighborhood; the house is just a block from the Quinnipiac River. Even with the expected costs of improvements, the property struck him as a good deal.

Kader and Gazi’s $100,000 bid sent a hush through the crowd.

Bruno Morasutti, the lawyer appointed by the court to administer the auction, formalized the end of the auction with an obligatory “going once, going twice.” Kader explained that $100,000 had been his target all along. He saw that another house in the neighborhood recently sold for $200,000. Kader estimated that, after paying the liens on the property and making basic repairs, the total cost will still come to about $130,000 — a relative bargain, he said. 

Kader says the home will not belong to him, but to Gazi, his young adult son who now lives and works as a software engineer in Windsor, and who saved up money for the investment. The two may live there together, but haven’t worked out the details. When asked about the their intended living arrangement, father and son smile and say, “we’ll see.”

In any case, they planned to take the whole family out to dinner to celebrate the purchase. 

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posted by: Kevin McCarthy on November 9, 2018  8:44am

The fact that prospective bidders cannot go inside the house depresses the number of bidders and the amount bid. This does not benefit the bank, the city, or the neighbors. Is there any reason the bank or whoever else has the keys couldn’t arrange an open house where prospective bidders could walk through the house? (For my lawyer friends, participants would have to sign liability waivers.) This would not be a substitute for a professional inspection, but would allow bidders to get a better idea of what they are bidding on.

posted by: Esbey on November 12, 2018  12:24pm

Kevin McCarthy makes an excellent point: why are these auctions so primitive?  The city should allow walk-throughs (with liability waivers) and should allow online bids.  Why is the auction conducted literally in front of the house, yet with no access to the house?

It is just weird that this inefficient 19th-century style institution persists. It hurts the city by discouraging buyers.