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Christina Capecchi: What to pay for a home? Think fast ...

A foreclosure auction offers a great opportunity. Seizing it is the hard part.

By CHRISTINA CAPECCHI

Last update: March 27, 2009 - 9:31 AM

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The stakes were high when my fiancé and I arrived at the Minneapolis Convention Center on a chilly Sunday morning last November: We were after a house. Not just any house -- one particular house with a limestone exterior and cherry wood, rows of windows and a gas fireplace, a screened-in porch, a cubby-holed mudroom and built-in bookshelves.

Over a nine-month period, Ted and I had toured 60 houses and scanned dozens more online. Like many buyers, we had a deadline: our wedding, a month and a half away. It was Go Time.

I couldn't believe it had come down to this. Auctions are for antique mirrors and weekends at Madden's -- decorations for the home and getaways from the home, not for the home itself.

But the starting bids advertised by the firm holding the auction drew me in. They were a fraction of the last sale price. Ours began at 23 percent, leaving room for plenty of bidding that could still end low. Many bids began at $1,000.

There was a chance of making out like bandits.

After doing some research, we and our real-estate agent reached the same conclusion: totally legit, a great opportunity. The house we planned to bid on was one of three foreclosures in a six-home cul-de-sac, a new development whose builder was burned by the subprime mortgage crisis. It had been on and off the market for three years. It made sense to put it on auction. It was time to sell.

And for us, it was time to buy.

Ted and I had agreed on our maximum bid the night before to ensure we wouldn't get swept away in the high emotion and high pace of an auction. It was difficult to determine; we crunched our numbers and drew our line, but we couldn't predict if it would be enough to unlock the front door.

I was filled with nervous energy when we registered, showing our IDs, a requisite $5,000 cashier's check and proof we could cover a total of 5 percent of a sales price on the spot.

I stared at our bidding card, #5590, knowing our fate would rise and fall with that piece of paper.

More than 1,000 people attended the auction.

"Imagine all the hope in this room," Ted's mom said.

It was an eclectic crowd, by age and race, with savvy investors and soon-to-be first-time homeowners sitting side by side. Some brought a list of houses they wouldn't mind buying. Others had honed in on one.

The auctioneer cried at breakneck speed, while four spotters, decked out in bow ties, suspenders and whistles, performed an array of silly antics -- exaggerated fist pumps, maniac battle cries.

Finally our house came up. The bidding was fast and furious; five cards popped up around the room.

Ted began to lift ours.

"Wait," his dad whispered. I was shaking: Our opportunity was passing by.

Finally Ted raised the card and a whistle blew.

"Going once, going twice ..."

Eternity.

"Sold!"

I cried. "Are you alright?" the woman ahead of me asked.

We signed our papers, then snapped a picture for posterity. It shows the elation and exhaustion in our faces.

Buying a foreclosed house requires an open mind. Buying a foreclosed house at an auction demands an additional dose of alacrity and audacity. For us, it paid off. Our house went for $30,000 less than the price the bank had previously declared its bottom line. That made the difference in affordability.

This Saturday, 203 foreclosed properties go on the block at the Minneapolis Convention Center. The drama harkens back to the pioneer days of horse races to stake your land. Aspiring homeowners who don't mind a little stress should saddle up.

Christina Capecchi, a freelance writer, lives in Inver Grove Heights.

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