Auctions are Coming to the Rescue of the Banks to Offload their Inventory of Foreclosed Houses

Auctions are coming to the rescue of the banks to offload their inventory of foreclosed houses. Rates are being drastically cut but there are risks attached.
A house on Shelby Avenue in East Nashville was up for auction among 30 others. The auction was being conducted by Bob Parks Auction – the company being on a fast tour of the area disposing of houses. The house had been renovated with top class hardwood floors, fireplaces ringed by exposed bricks and a kitchen with a fresh coat of paint. The tax authorities had listed the house at $297,300. But a bidder won the house of $166,000. Even the buyer, Stewart Levine who was representing a local investor, Lane Wallace, was surprised and said, “I’m surprised it didn’t go for more. In this market, things are just down.”

Auctioneers are opining that auctions of bank repossessed homes are increasing as the banks are facing pressure to get rid of their huge inventories of foreclosed houses. Meanwhile the developers and owners of the units are drowning under jumbo debts. With no or less income there is very little hope in front of them.

For the lucky bidders some are real deals but the investors together with the auctioneers warn that it is better to play the game after knowing the rules. There are potential pitfalls in auction bargains.

Dale Hire has been purchasing and refurbishing houses for the last two decades. He opines that these auction deals are a sort of gamble. For those with ready cash and luck in their pockets there are many opportunities to snap up. Across USA in 2008 the number of auctions went up by 1% calculating to $17.1 billion in gross-sales-revenue. This is as per the findings of National Auctioneers Association.

Locally the sale of plots and houses fell by 29% in 2008 from what it was in 2007. Meanwhile auctions are becoming more and more popular. In Nashville over 100 auctions were recently listed.

Charlie Montgomery of Comas Montgomery Realty and Auction of Murfreesboro said, “It’s across the board that a lot of companies are seeing an increase.” He explained that this increase has been due to an increase in the number of foreclosures and the desperation of owners to dispose of them as quickly as possible. On an average it takes a listed house to be sold within 87 days in Nashville as in July as per the observations of Greater Nashville Association of Realtors.