Money Money To The Auctions

“Stand in one line. One line….” The bailiff in charge of executing court auctions started to speak hurriedly. The moment the bailiff finished his announcement of cautionary notices related to the auction, people rushed up to him in order to receive bidding tickets. There is usually no need to stand in line, but this day people stood in line for around 30 minutes to receive bidding tickets. Although this was just before the Lunar New Year holidays, the bidding court of Seoul District Court was crowded on February 3. The 200 seats inside the court were already full before the auction started at 10 a.m. By the time the bidding ended at 11 a.m., more than 600 people had come, eventually crowding the corridors as well. Kang Eun-hyun, director of the Real Estate Business Department at Sanha, a judicial affairs office, said, “Until last year, the average number of participants was only around 200. I have never seen this many people here.”

People Rushing to the Auctions-

A 35-pyong apartment in Cheongdam-dong, Gangnam-gu, Seoul that was appraised at 620 million won started the auction at 496 million won, but because 61 people entered the bid, it exceeded the appraisal price and was finally accepted at around 636 million won.

Most of the people who came to the auction were first-timers. Some housewives had come with their children and many middle-aged women came with their friends.

Kim Kyung-ran (alias, 45) said, “I heard of the auction so many times, so I came with my friend just to see what it is. I am planning to participate in the auction myself after taking some lessons on this.”

The unusual crowd this day caused the auction process to end at 2 p.m., which is one hour later than the usual time.

People rushed to the auction at the Sungnam District Court as well on February 7. Park Min-yang (42) said, “Over 600 people arrived before the Court even opened, resembling a crowded subway.”

According to Digital Taein, a company providing real estate auction information, 38,134 people participated in auctions in January 2005. Compared to last January’s 20,357, this is twice as much. Auction sales increased 52.4 percent, from 30,185 to 46,017.

Signs of Increases in Real Estate Prices are a reason-

One reason of the increased participation in auctions is the high increase of auction sales due to the depression.

Last January, 6,772 apartments were put up for sale at auctions, but this year there are 12,334 up for sale. Since apartments are commonly sold and it is easy to recognize their value, they are relatively easily approached by auction first-timers.

In addition, apartment costs are on the rise, especially on reconstruction areas in Gangnam, Seoul, and experts explain that there are certain movements to secure stocks beforehand.

The fact that there are few sufficient areas to invest in due to low interest rates, and that the court auction process has become simplified are other reasons people come to the auctions. Director Kang said, “Recently, big investors who had not found a place to invest in have been seeking auction consultation.”

“Lotto Psychology” Approach is Dangerous-

Lee Young-jin of Digital Taein said, “Seeking a fortune from high-risk auctions is taboo. To avoid a fiasco, there should be a precise analysis of not only rights, but also of the value of the real estate in question.”

Lee added, “People seem to be rushing to the auctions in search of high profits because they think the real estate market is ‘at its lowest’ now,” and warned, “However, the rise is only occurring in certain areas and therefore it might actually be a loss.”

Jin-Suk Huh jameshuh@donga.com