A Look at the Sketchy Practices Inside the Hottest Portland Real Estate Market You’ve Never Heard Of
A workplace injury cost Davee much of his left arm above the elbow. With his disability, he couldn’t do his job as a diesel mechanic. He began struggling to make the mortgage payments on his three-bedroom, 1969 Milwaukie home near Johnson Creek.
Julius Davee (Walker Stockly)
Robbins, 36, is the king of Portland-area foreclosures. He runs Vantage Homes, a California-based company that has bought and sold hundreds of Oregon homes since the last housing market crash.
After Davee went into foreclosure, a Vantage employee called him with a proposition: Robbins’ company would pay him up to $2,500 to sign a few papers before the sheriff’s auction.
Davee, 76, says he’d never heard of redemption rights. And he had no idea those rights, granted by Oregon law, allowed him to "redeem" or repurchase his home within 180 days after it was sold in a foreclosure auction—by paying whatever price the house sold for at auction, plus interest.
Vantage Homes offered him $300 for his redemption rights—and another $2,200 if Vantage bought the house at auction.
Davee signed the deal on July 1, 2016. Eleven months later, a Robbins-controlled company did buy Davee’s house at auction, paying $183,200.
Sean Robbins, owner of Vantage Homes. Vantage bought Davee’s redemption rights, but another Robbins company bought Davee’s home. (Real Estate Investor Stories youtube)
"I haven’t gotten a dime of it," Davee says. "From what I can find out, the guy [Robbins] put it in another company’s name. He’s a shady dealer."
By buying Davee’s redemption rights for just $300, Robbins controlled a home worth at least 600 times that amount for nearly a year, discouraging anybody else from buying it.
As for Davee, he became the victim of a practice virtually unknown outside a tight circle of real estate investors. It’s entirely legal and essential for controlling the supply of foreclosed homes, which has dwindled as the real estate market has soared.
Foreclosure auctions have lately been the largest source of single-family homes in Portland’s red-hot housing market—and in some years, they outnumber the construction of new homes.
What’s never been reported, however, is the murky trade in redemption rights, a market that has exploded even as the number of foreclosures has declined. For Robbins and other flippers, redemption rights are the means of controlling a precious commodity. Recent transactions in Multnomah County have ranged from as much as $20,000 to as little as $200, with the latter figure much more common.
Critics say the market for redemption rights almost never results in the intended outcome—allowing foreclosed homeowners one last chance to reclaim their properties.
"There’s no social utility to the trade in redemption rights," says Ian Shearer, a Portland consumer lawyer. "There’s such an imbalance in knowledge between the buyer and seller. It’s like going to a garage sale and buying a Monet for a dollar. Is the person who buys it a criminal or a genius? I guess it depends on how you look at it."
Potential bidders at a March 13 Multnomah County sheriff’s foreclosure auction. (Sara Danya is seated to the far right.) The rules require successful bidders to pay on the spot with a cashier’s check. (Sam Gehrke)
At the civil process office, Portlanders can do three things: obtain concealed handgun licenses, register as sex offenders, or buy cheap homes. It’s where banks auction foreclosed properties.
Regular citizens don’t have much of a chance there. On a recent rainy Tuesday, Sarah Danya sat scribbling notes at a Formica-topped table under flickering fluorescent lights as a dozen potential flippers congregated.
In a room of burly men in Carhartts, weathered sports fleeces and paint-spattered clothing, the wiry Danya stood out in her bike polo T-shirt and knee socks that read "Fuck Nazis."
Danya, 28, is a health care worker who wanted to learn about foreclosures. She grew up in Los Angeles, in a home her parents bought at auction. She hoped to follow in their footsteps.
Danya and others were there for the auction of a foreclosed home in North Portland. The bidding started at $209,000 and proceeded first in $100, then $1,000 increments to $258,000. Two of the bidders, obvious pros, communicated on phones to money men elsewhere.
When the winner, Hector Hassen, stepped to the auctioneer’s lectern with a cashier’s check for the full amount, one of the losing bidders issued an ominous warning: "We own the rights to that house," he told Hassen, meaning his company had bought the redemption rights earlier and could take the house away from Hassen any time in the next 180 days.
Hector Hassen (in blue) outbid the two auction regulars (to his right) for a North Portland home on March 13. The lender opened the bidding at $207,578.84. Hassen paid $258,000.(Sam Gehrke)
A fastidious semi-retired gas station owner, Hassen, 69, has bought "a few" foreclosures over the years. He says he refuses on principle to buy rights, even if that means waiting six months to begin renovations—to see if speculators will decide the house is valuable enough to exercise their redemption rights.
Hassen says flippers have made redemption rights a business, often acquiring them for a few hundred dollars then trying to get foreclosure buyers like him to pay 10 times that amount—or more.
Foreclosure auction (Sam Gehrke)
As the housing market stayed strong, more flippers entered the trade for redemption rights, expanding the market from a few transactions in 2013 to hundreds in Multnomah County alone last year.
And he’s not shy. "Vantage is known for paying top dollar to homeowners who are in a position to sell their redemption rights," his company’s website says.
In the email, Robbins says the market for redemption rights provides an indisputable benefit. "The sale of redemption rights gives homeowners who otherwise want to walk away from their homes a chance to get some money out of an already terrible situation," he writes in the email.
Bill and Tammy Linn (Walker Stockly)
A youthful photography aficionado, Linn, 51, built a public relations career defending the makers of violent video games, including Grand Theft Auto. A couple of years ago, he sold his business and a 33-acre gentleman’s farm near Eugene and moved to Portland. He and his wife, Tammy, 52, don’t think of themselves as flippers, but they enjoy fixing up houses.
The Linns bought the property at a sheriff’s auction for $185,000. "We thought, ‘Hey, we just got a hell of a deal,’" Linn recalls.
At a sheriff’s auction, Bill and Tammy Linn got a home (above) and an education. “The redemption rights process screws sellers and totally games the system,” Bill Linn says.(Courtesy of Bill and Tammy Linn)
(Courtesy of Bill and Tammy Linn)
"He said, ‘The rights cost me $500,’" Linn recalls. "’If you give me $5,000 [for those rights], you can start work tomorrow.’" Otherwise, Linn would have to wait 180 days because Robbins could exercise his redemption rights during that time and keep the value of any improvements Linn made.
(Courtesy of Bill and Tammy Linn)
Then, nothing happened. Reilly wouldn’t start fixing the house up because Robbins’ company owned the redemption rights. Finally, records show, 171 days after the auction, Robbins’ company exercised those rights, taking the house away from Care. (Had Reilly invested, say, $25,000 in remodeling the house, Robbins could have bought the house for the auction price and paid nothing for the improvements Reilly had made.) Flippers would generally prefer not to exercise redemption rights because doing so restores any pre-existing liens, such as property taxes or second mortgages, that otherwise get wiped out in a foreclosure auction.
The owner, Mathilde Danzinger, had paid $207,400 for the condo in 2006. Now, it was headed to a foreclosure auction.
Foreclosure auction (Sam Gehrke)
But just seven days after recording the purchase of Danzinger’s redemption rights, records show, Vantage sold those rights to another company for $10,000—a 50-fold return on Vantage’s investment.
That flipper profited as well, buying Danzinger’s condo at auction for $151,000 in September 2017 and selling it for $235,000 just four months later.
The girl’s step-grandfather, Paul Allman, 72, says he began negotiating with Vantage Homes. "We were talking about something in the $15,000 range," Allman recalls.
Julius Davee thought he was getting $2,500 for his redemption rights. He got $300. (Walker Stockly)
There are two common types of property foreclosures: judicial and nonjudicial. During and after the great recession that began in 2007, foreclosures skyrocketed because many homeowners had taken on mortgages they could not pay, a problem that worsened as property values tanked.
June 23, 2017: Vantage legally transfers the redemption rights to Sean John, so Sean John will have clean title to the home.