Bids for $375K home start at $1

Rochester Hills couple rolls dice with auction sale

Joe Menard / The Detroit News

ROCHESTER HILLS -- When James and Gabriela Rudin bought their 3,100-square-foot Tudor on a cul-de-sac in the well-manicured Valley Stream subdivision last year, they expected to spend the rest of their lives there.

The housing market was healthy at the time, and they figured they were spending $375,000 on a solid, long-term investment. But over the last year, the ailing automotive industry pulled Michigan's economy down even further, taking the housing market along with it. The Rudins have decided to sell the home and find their dream in Texas, where they say the economy is more stable.

They want to move quickly. So they're taking the bold approach of putting the three-bedroom, two-and-a-half bath home up for auction with a starting bid of $1.

"Traditionally, houses start out with a high asking price, but most people haggle their way down. If there are 5,000 on the market like that, being 5,001 doesn't really matter," said Gabriela Rudin, who came up with the idea of auctioning the house from her experiences buying and selling items on eBay. "We just want to get it sold. It's going to go to the highest bidder no matter what it is."

It's a risky move -- less than 1 percent of real estate is sold nationally at auction, according to the National Association of Realtors -- but a move more property owners are considering as Metro Detroit's poor economy continues to batter the local housing market. Median home prices in Metro Detroit fell 8 percent in the second quarter of this year, its biggest drop in nearly two decades, and home sales are down while listings continue to rise.

The Rudins aren't alone in going the auction route. Chicago-based Neumann Homes plans to auction 47 Metro Detroit homes and 40 undeveloped home sites in November as part of an effort to reduce its inventory. It is the first time the builder has used auctions in Michigan, and officials say the move is directly tied to the local economy.

"It's a softer market," said Laurie Tarver of Neumann Homes. "It's really just a way to sell a bunch of homes and move a bunch of real estate in one day."

The desire to move their property quickly is what's prompting the Rudins to put their home up for auction. They listed the home with a Realtor earlier this year for $389,900 and had two open houses, but haven't had any offers.

"We didn't want to wait that long and go through the winter and the spring," said Gabriela Rudin, 30, an office manager. She said she's confident the auction will bring in close to the property's market value.

"It's all about faith. I have faith in the process," she said, adding that she has sold more than 300 items on eBay auctions that she starts at a penny. They nearly always sell for what they're worth in the end, she said. "If it wasn't for that, I'd probably be scared to do it.

She admits some people have called her crazy for selling her home this way, and that her husband, a 31-year-old automotive engineer, also was leery.

He has cause to be nervous, said Walter Molony, senior public affairs associate for the National Association of Realtors.

"That's pretty risky. What happens if you don't get anything close to your minimum?" he said, adding that auctions can be attractive because "they can mean immediate cash."

But the Rudins are confident.

"If we have to lose money, whatever," Gabriela Rudin said, adding that part of the motive for selling the house at auction is to avoid paying real estate agent fees she estimates would total about $25,000. "We'd rather see that money go to somebody else than an agent."