At city auction, trying to protect neighborhoods - The Buffalo News
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At city auction, trying to protect neighborhoods

Warnings are made before the bidding starts.

All property is sold as is.

Know what you’re bidding on.

All code violations must be corrected within six months.

For three days this week, the city tried to sell more than 2,400 delinquent properties in a large room in the Buffalo Niagara Convention Center, auctioning off vacant lots, single-family homes, doubles, apartment buildings, even churches.

The warnings are there to protect neighborhoods, and the city, from unscrupulous bidders who are interested in making a quick buck, and not much interested in improving the neighborhood.

“Be knowledgeable, know what you’re buying,” Joy McDuffie of the Western New York Law Center, tells bidders. “You’re buying in a neighborhood.”

She is not subtle.

“Good luck. Choose wisely,” she says. “We will be watching you.”

McDuffie specializes in distressed properties, and has seen the toll investors looking to make a quick profit can take, but said there are some legal protections to prevent flipping.

“The ‘in rem’ sale itself is destabilizing,” she said later. “This sale can devastate a community if it’s not controlled.”

The properties on the list represent broken dreams for some families that could not keep up with their property tax bills, or in some cases, a calculated decision to walk away, and let the city deal with it.

“I never like the foreclosure auction,” said Council Majority Leader Demone A. Smith. “I really don’t.”

At first look, properties seemed to sell for more this year, but Smith said that’s partly because houses were occupied and valuable, which isn’t good.

He sends letters to his Masten District constituents to let them know their house is on the auction list, but sometimes people don’t settle their debts.

In many cases the houses are paid off, so the owner is losing a fully paid asset. And when owner-occupied housing becomes rental housing, especially when it’s owned by an out-of-town investor, a street can change for the worse, Smith said.

By the end of Thursday, the last day of the auction, it was not clear how many properties sold, because every sale will take weeks to close. But at least two houses on the West Side appeared to have sold for more than $100,000, and there were stronger-than-normal sales on the East Side.

During the auction, bidders crowd into a large room in the convention center, a list of properties to be auctioned off in one hand and a bidding paddle in the other.

Nearly 1,600 bidders registered for this auction, and it is standing room only.

There are well-known developers, smaller investors, or people looking for their first house, police officers who provide security and many City Hall employees to register bidders and process their purchases.

It is a diverse crowd. Some bidders come from down the street, and others from downstate. They are ethnically diverse as well, with members of the city’s Arab community, and white, black, and Southeast Asian bidders.

After the warnings, City Treasurer Michael Seaman starts the bidding. Though bidders have been admonished not to artificially inflate sales, bidders were kicked out on all three days for doing just that.

On Thursday, a bidding war erupted for a property on Goodyear Avenue on the East Side, rising to $43,000, far more than what properties in that area go for.

The crowd starts murmuring, and Seaman tells the bidder to pay immediately, likely because he suspects that games are being played. He is correct. No one stands up to pay. The next lowest bidder is asked if he wants it, for $42,000. He does not. The bidders’ paddles are pulled and they are escorted out by police.

If someone doesn’t pay for a property at the next break, it goes up for auction again.

Investor Marcus Brown, who was looking to add to his portfolio of 12 residential properties in the Kensington-Bailey neighborhood, has noticed the higher prices this year.

“Not only is there higher prices here, but there seems to be a group of people trying to get legitimate developers here to spend more money,” he said.

As the prices climb, buying property at the auction, gets riskier, he said.

It’s nearly impossible to know what kind of condition a property is in, because bidders aren’t allowed inside before the auction. A good indicator of whether a property is in decent shape is whether it has people living in it.

“You do as much due diligence as you possibly can,” Brown said.


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