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$150,000 for a $1.5 million home?

Sure, as long as you've got a ton of time, major cojones, and nerves of steel.

Illustrations by Peter Oumanski

Allen and Jenny (they prefer not to use their real names), have been renting in the Inner Richmond for more than 20 years, and truth to tell, it’s not exactly that the couple couldn’t afford a home. He’s a web entrepreneur and she’s a consultant, but Jenny was simply offended by the insane local prices. Finally, though, Allen managed to convince her that in the current market they could buy without troubling her populist conscience.

That’s how, one afternoon in mid-May, Allen ended up on the steps of city hall at a foreclosure auction. For weeks beforehand, he had scoured an astonishing 100 available foreclosed-on homes in the 94118 and 94121 zip codes and had eventually targeted a traditional brown shingle near 16th and Geary. He hadn’t been able to get inside—most foreclosed homes are sold sight unseen—but he’d done some research to determine a reasonable price and showed up that Thursday ready to rumble.

The bidding ticked up in $100, $1,000, and $5,000 increments, until he finally got the house for $150,000 (which he paid with several cashier’s checks) and a $600,000 outstanding first mortgage. (The house was worth $1.3 to $1.6 million, according to several real estate websites.) He actually enjoyed the process—“It’s like a poker game,” he says—but things got sticky when he had to get the owner who had been foreclosed on out of the house.

Allen initially said the man and his family could stay until June 30, and offered him several thousand dollars to get out. But that date came and went. The police were scheduled to show up with a locksmith on September 1, the formal eviction date, but the night before, the man called, obviously distraught and begging for more time. Allen didn’t want to be a hard-ass, so he agreed to two more weeks.

The family kept that deadline, and Allen and Jenny and their two kids decided to launch their new digs with a picnic. But after 10 minutes in the house, Jenny was so upset that she had to get out. The family had left a lot of stuff behind—clothing, football awards, toys, and more—and she says it made her sick being able to picture their lives. But now she’s trying her best to focus on what it will take to make the place livable, and on whether it makes sense financially.

In the meantime, Allen is checking out other properties in the area. “There’s just so much foreclosure inventory,” he says, smiling.

Other Extreme Real Estate stories:
The big squeeze
Foreclosure, a love story
Downtown, the new suburbia
Best laid-aside plans
The last housing boom standing
Shameless movers & shakers