house in La Jolla for auction by the city?

[cantab]

Does anyone know anything about the house at 5439 Westknoll Drive in La Jolla? It will be auctioned by the city of San Diego on June 29. I know this only because I called the number on a sign on the property. AFAIK the city has not advertised the property in any way. The official I spoke to promised to email me details, but three days later, he hasn’t yet.

All in all, this seems like another example of the city failing to protect the interests of the public.

By searching the city web site, I found the minimum bid is $1,330,000. This may or may not be reasonable, but the city has authorized itself to sell the property privately for less if the minimum bid is not achieved.

It seems to me that only insiders will know about this auction, and it is likely the house will sell to someone for much less than true market value. Even if the auction were publicized well, most potential buyers won’t bid, since auctions are not customary in San Diego. It is not clear whether or not the city will pay a commission to a buyer’s broker; if not, the pool of informed buyers will be even smaller.

[powayseller]

Auctions and foreclosures are not good deals yet. The minimum bid is the market rate.

My landlord, who is a RE mogul for 20 years and has investments all over the country (and Mexico too), said foreclosures are “nothing”.

In auction deals, you cannot inspect the property. What if it is trashed? What is the foundation is unstable, the roof leaking? How will you know? Can you at least get the tax lien, mechanics lien status? Get a title report?

Why does a city auction a house? Wouldn’t a lender do it? Does the city have an unsatisfied lien on it?

I’m sure they are required by law to advertise it in the paper within a certain timeframe prior to the event.

[Bugs]

I don’t have any idea if this is the home, but didn’t the city have to buy a home up there as a result of geologic and foundations problems?

[mycroft]

It seems to me that only insiders will know about this auction, and it is likely the house will sell to someone for much less than true market value.

I think it’s unlikely that *only* insiders are likely to find out about it. I gathered you found out about it by seeing a for sale sign on the lawn and calling on it. I did a quick search of the city web site and found:

http://apps.sandiego.gov/bcweb/getOneItem.do?subCatDesc=Sales&subCatCd=2&catCd=4&bidId=REA052606

1. The city council authorized the auction at its public meeting on May 16th.

2. The Real Estate Assets department published the sale on May 26.

3. The city was bequeathed the house by a woman who directed that the sale proceeds go to the Library Department. [side note – Thank you, Jane Cameron! Libraries are a cause worth supporting.]

4. There’s a 3 page document with the terms of sale available for download. I would imagine that this is the only document that the City will provide on the property.

5. The property will be open for inspection 3 times before the final auction on June 29 to be held at the property.

Like you, I don’t know if a million-three is reasonable. I have followed results of other public agency real estate auctions and it seems like the final bid amount is generally pretty near, or even higher than, market value. It doesn’t look to me like the City is failing to protect the public’s interest by selling the property in this manner. Just on a quick glance, I didn’t see the part about the City selling the property for less if the minimum bid isn’t acheived, but I don’t see any problem with it. If it can’t sell at open auction for what they think the market value is, they obviously overestimated the market value and they’ll need to go to plan B, which in this case is a private sale. I don’t know the details of how they conduct a private sale, but it seems to me that they would need to advertise the property and negotiate with a buyer. In short, just like any property selling his house on the MLS.

[Author]

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