CNNMoney reports that there is a growing boom in real estate auctions, fueled by the growing number of REOs, new developments that have gone bust and distressed homeowners who are tired of watching their home values continue to decline while awaiting a sale.
The National Auctioneers Association notes that real estate auctions have increased by 14 percent in the first three months of 2010. One of the biggest attractions for sellers is speed: the entire process can take less than 10 weeks.
From the CNNMoney.com report:
There is such a huge volume of REOs on the market — 92,000 homes were seized in April alone — that banks are anxious to turn the properties over quickly. Rather than waiting for the local housing market, they turn to auctioneers.
Another boost to the auction market has come from new developments gone bust. Big tracts of single-family homes and, especially, condominium projects planned during the boom didn’t get finished until after markets nose-dived. That left developers with huge loans on properties they could no longer move.
Price declines have added urgency for ordinary people, too. Today, sellers are resorting to auctions after watching their homes languish on the market for months.
Often, they’re disillusioned by brokers who have been over enthusiastic about the prices their homes can fetch. When markets were bubbling, even badly overpriced homes were selling, and buyers were rescued by soaring market values. It’s a different story in the downturn. As overpriced homes languish on the market, the gap between asking prices and market values only balloons.
Plus, sellers have little leverage these days. Buyers are filling contracts with contingencies that enable them to seize on any shortcoming to renegotiate, or back out of, deals.
Selling through an auction avoids that. Sales are quick and clean. “People appreciate the purity,” said one auctioneer.