The Best Game in Town

Speculators revel in high-stakes, high-adrenaline county foreclosure auctions.

Although Bay Area homes often sell for more than all but the finest works of art, you’d never mistake an Alameda County trustee’s sale for Sotheby’s. There are no plush velvet seats, no patiently quiet bidders, no dainty bid paddles. Instead, you’ll find a dozen slightly unkempt men sitting around circular picnic tables or pacing back and forth between them. Just before the auction, potential buyers are phoning associates and assistants, scrambling to find the latest information on the next house up for auction. They come prepared: In their pockets are hundreds of thousands of dollars’ worth of cashier’s checks.

This scene plays out every Tuesday starting at noon behind the downtown Oakland courthouse, where bidders compete to buy the foreclosed homes of Alameda County residents. There are three possible outcomes for each of the scores of properties offered: 1) It goes to the highest bidder; 2) nobody bids, so it reverts back to the lender, who arranges to sell it by other means; or 3) the homeowner stalls the sale at the last minute by declaring bankruptcy or “curing” the foreclosure. The high bidder, however, must pay immediately, and in cash.

Pickings were slim at one mid-July sale. “It’s really tapered off big-time. I don’t think I’ve sold a place in a month,” said Ray Kime, the 12:30 p.m. auctioneer, or “crier.” Kime is a sales and posting agent for Fidelity Investment Services, which means he splits his time between crying auctions and tacking the trustee’s sale notices to each foreclosed home. A lackluster auction doesn’t affect him much, though; he gets a flat fee no matter how many houses are sold.

Kime used to work for United Airlines, but when the company filed for bankruptcy in 2002 — just as he was nearing retirement — he lost his job and half of his pension. So he began a new career as a crier, a job he enjoys because he routinely gets off work by two o’clock. “It’s good hours, no stress, a little bit of driving around,” he said. “But the pay ain’t squat.”

After the auction, sale veteran Robert Kramer took a break from chatting with a colleague about nightmare tenants and collecting rent. “We are a little bit gun-shy about advertising ourselves because foreclosures have gotten a bad name,” he explained after watching several attendees decline to talk to a reporter. But Kramer, who has been attending these sales since 1984, believes any stigma to his vocation is unwarranted. “The little old lady that gets kicked out? I’ve never done that. I’ve never seen that.”

Kramer does, however, accept another label. “Yeah, I think you can call us opportunists,” he conceded. “If I’m not there to buy a property that’s going to auction at 50, 60, 70 percent of market value, somebody [else] will buy it.”

A wholesaler, Kramer buys not just for himself but also for a small cadre of clients. He attends trustee’s sales five days a week in six Bay Area counties and estimates he hears various criers tout about one hundred homes per day. He’s looking for that diamond in the rough: a home with lots of equity, a compliant tenant, and not too many repairs needed. But with less than an hour on average to research each property that interests him, it can be a risky game.

“It’s speculation at its highest level,” Kramer said later at his Grand Lake office. “Here, we only have literally 45 minutes to do our research, work, and inspections — or whatever we call inspections — whereas a typical retail buyer has 45 days.”

Perhaps contrary to what one might think, the recent spate of defaults on subprime loans has made Kramer’s job more difficult. That’s because so little of the principal has been paid on these mortgages that the lenders typically demand far more than he or his clients are willing to pay. Every so often — maybe twice a week — he finds a property worth buying. “I don’t want to sugarcoat this, and yet this is a real adrenaline rush,” he said. “It just gets in your blood. I don’t think it’s about the money anymore — we’ve made a lot of money in this business. It’s the adrenaline rush of buying something immediately that you didn’t know existed the day before.

“There is nothing like it,” the speculator added. “This is the best game in town.”

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