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Auctions Of Foreclosure Properties The New Reality

July 17th, 2010

We have either been to a real estate auction or know of someone who had. The buyers are looking for a great deal, not just a deal. So they lowball every offer and every bid. Recently foreclosure properties have been selling at a frantic pace.

On August 7, in Phoenix, there will be an auction of 135 foreclosure houses. The sponsors are Freddie Mac, New Vista and REDC. And the organizer is the State of Arizona Department of Housing. The goal of this event is to boost first time homeownership. The auction will support the Federal Neighborhood Stabilization Program. Buyers who are eligible will receive downpayment assistance, help with closing costs and a 2 year warranty.

This is a good partnership. Freddie Mac has access to the inventory of houses and a network of realtors.  The realtors will be focusing on open houses to allow bidders to look at the houses. New Vista works with a network of over 100 non-profits across the nation. And REDC is the largest real estate auction house in the country.

But what about the neighborhoods where these auctions occur? Many opponents of this type of real estate sales claim that this process devalues the other houses in the area. These events could get about 1,000 registered bidders, and might seem like a carnival to homeowners in the neighborhood. Opponents realized that the foreclosure houses must be sold. But they would prefer to see smaller lots being sold off.

Proponents point to the fact that empty and boarded up house are an eyesore. They harbor people engaged in unlawful acts. There is widespread vandalism and several communities have a serious problem with squatters. Those in favor of the auctions also say that the quicker the houses are sold the faster the county or city can collect property taxes.

At the end of the day both camps have some valid points.  There are no investors at the Phoenix auction. Owner occupied housing bonds the community and makes it wholesome. Other auctions have investors. Their objective is to get a house at a cheap price. Sell the house. Make a profit. There is no commitment to the neighborhood.

We believe that the real issue is not how the houses are sold, but who buys the houses and will they live in the house.

For a first time homebuyer the Phoenix auction is a great opportunity to get into the market. There is no risk, no tenant to deal with and evict, no taxes and no liens.

Go for it and good luck!

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• Foreclosure Sales Through New Vista Asset Management’s Multicultural Real Estate Broker Network Top $1 Billion (eon.businesswire.com)
• Foreclosure could claim more than 1 million homes in 2010 (usatoday.com)

Entry Filed under: foreclosure