Eager buyers flock to city auction of vacant properties

BARGAINS, WITH BASEMENTS INCLUDED

May 13, 1993|By Eric Siegel | Eric Siegel,Staff Writer

Baltimore's auction of vacant and abandoned houses yesterday drew hundreds of people who packed a meeting room at the Convention Center pursuing dreams of property ownership -- or profit.

The bidders included potential homebuyers looking for their first bargain-basement houses, prospective entrepreneurs hoping to turn a quick buck and seasoned real estate executives trying to expand their holdings.

There were so many bidders that only about a quarter of the 1,500 available properties were auctioned yesterday. The auction will resume May 18 at 9 a.m.

A few of the properties went for the lowest acceptable bids of no more than a couple of hundred dollars -- an amount equal to the city's $85 per house administrative costs plus any unpaid state taxes. To make the houses more attractive, bidders were not required to pay any city-held liens on the properties -- including tax liens.

Most of the houses went for between $1,000 and $10,000 -- upsetting some auction-goers who had hoped to pick up houses for only a few hundred dollars.

Paul Smith, a 29-year-old truck driver who lives in an apartment in Northeast Baltimore with his wife and two children, bought a house in the 1600 block of West Baltimore St. for $1,500. He picked out the property as one he wanted to buy from "a bunch" he looked at Tuesday and said he hopes to renovate it and move in with his family.

"It's right about where I was hoping it would be," he said of the price. "Buying it this way, I can save a few dollars."

Patrick Downing, 27, who lives in Rosedale in Baltimore County, bought three houses for $2,500. Mr. Downing, an accountant for an advertising agency, said he plans to renovate the houses and rent them out or sell them with the help of his brother.

"We're going to take a shot at it. For $2,500, you really can't lose," he said.

Daryl Conner was one of several real estate professionals who attended the auction. He had his list in a loose-leaf notebook, with the properties he wanted highlighted by a yellow marker. He bid on dozens of houses by coolly standing in his aisle seat, and by the midday lunch break said he had bought 36.

"I'm going to fix them up and rent them out to folks," said Mr. Conner, president of Unique Properties, a downtown company.

What drew bargain-hunting buyers of all stripes to yesterday's auction was the fact that -- because of new legislation passed this year by the General Assembly -- the prior property owners and not yesterday's buyers are responsible for back city taxes that in many cases total thousands of dollars.

In fact, yesterday's auction does not confer property title to the successful bidders. It only entitles them to file a foreclosure suit against the current owners in Baltimore Circuit Court. Those lawsuits cannot be filed before mid-July and will cost the bidders an estimated $1,000 in legal and filing fees. If the property is not redeemed by the prior owner, the court will transfer title to yesterday's bidders.

The bidders are also required to seek judgments that will enable the city to collect back taxes from the prior owners.

Zack Germroth, spokesman for the city's Department of Housing and Community Development, said the large turnout made the auction "a huge success at this point." But he cautioned that the "individuals doing the bidding must go forward from here and find ways to rehabilitate these properties."

Mr. Germroth said that the department's preference was that the properties be bought by people who plan to live in them.

But purchases by real estate investors and speculators still provide "a tremendous step forward from having a vacant house deteriorating," he said, adding that the prices were "market-driven."

Walter Gibson, a construction worker and homeowner, came to the auction looking for a house for one or more of his grown seven children and went away empty-handed. He said he was "disappointed" by the high prices.

"They're not like what I thought they'd be. I figured they wouldn't go past the [lowest acceptable bid]," he said.

Yvette Jones, 27, a clerk for the state Department of Social Services, successfully bid $11,000 for a house in the 200 block of N. Carey St. in West Baltimore -- about twice what she intended to pay.

"I thought I could just come in and get the house cheap. But they have so many people from real estate companies here bidding the prices up," said Ms. Jones, who lives at home with her father in Northwest Baltimore.

"But I like the house. It has something about it. I'm excited," she said.

The auction had its lighter moments. One woman, who declined to be interviewed, bid $5 million for a house in Reservoir Hill. Her bid drew gasps from the crowd but was thrown out by city officials who considered it ludicrous.

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