"If you're looking for expediency to get people back in homes, un-board neighborhoods, clean up the rats, this is it," says Pamela McKissick, 62, president of closely held Williams & Williams. Banks, brokerages and government-sponsored mortgage finance companies such as Fannie Mae hire the company to sell houses one at a time or to liquidate entire portfolios.
Auctions are resetting real estate values at the neighborhood level, while President Obama tries to find a way to limit foreclosures and revitalize the worst housing market in decades. Bargain hunters such as Parkin, a 50-year-old aerospace engineer who is shopping for a personal residence, aren't waiting for federal aid.
They are buying foreclosed properties for as little as 10 cents on the dollar. Lenders seized 9,787 houses a day in December, or almost seven a minute.
Auctions are the best way to determine the true value of real estate, says Dean Williams, 47, owner of the auction house that bears his name. Sales through agents promote the owners' asking prices, while lenders emphasize the affordability of monthly payments, he says, during an interview in Tulsa, surrounded by shelves of books including "Intellectual Freedom Fighter" and "Radicals for Capitalism." His lip is scarred from a barroom brawl 28 years ago.
Auctions exacerbate the crisis, says Ira Rheingold, executive director of the National Association of Consumer Advocates, a non-profit legal group in Washington.
"They are just furthering the depressed market, because what they are doing is selling properties really, really cheap," Rheingold says. "I don't know that it does anything for the market except make some greedy speculators rich."
Foreclosures and liquidations accounted for 34 percent of the residential market in Los Angeles last year, 30 percent in Phoenix and 27 percent in Washington, according to New York-based Radar Logic Inc.
Buying properties for 10 cents on the dollar. There are some huge write-offs being taken somewhere. Nice portrayal of the two sides of auctioning properties - allowing people to buy properties buy pushing down the prices even more. But at least someone is doing something - better than arguing over conferences tables in D.C.
But auctions are not limited just to foreclosures anymore. On the first page of today's dead-tree Business section is an article titled Luxury homes bank on auctions (
A new Franklin Lakes chateau that went on the market for $3.5 million a year ago is to be auctioned Sunday for a minimum bid of half that - $1.75 million - reflecting the slow demand for luxury real estate.
"It's a steep discount," said Richard Malt of the auction firm David R. Malts and CO. Inc. of Plainview N.Y. But he said the builder, Andrey Epshteyn, "needs an expedited way to sell the property."
Auctions have become more popular as builders in the region and nationwide seek to unload their properties in the slowest housing market in decades. The federal Commerce Department recently reported that new home sales have fallen to their lowest levels since the government began tracking them in 1963. Many potential buyers are hanging back, because they think prices may fall further. they can't get a mortgage, or they're afraid of losing their jobs in a deepening recession.
"Almost every spec house that's being sold today is being sold at a loss," said John Kuhn, an agent with Re/Max Real Estate Enterprises in Franklin Lakes.
Dumping property at loss - not just for lenders anymore. The builders have to do it too. Too many houses with high carrying costs are weighing down the books. The builder in the above article bought the property for $999,000 in 2006 - between the carrying costs, property taxes and the cost of the new house we wonder how much the loss will be. While the original asking price was $3.5 million the article states the current estimated market value for the property is only $2.2 million. Wonder if someone will buy it for $1.75 million this Sunday?