Wednesday, August 19, 2009

Home auctions increasingly help banks shed foreclosures

A small crowd gathered for the auction of a Shelby Avenue home in East Nashville — one of about 30 properties repossessed by a bank and being sold by Bob Parks Auction Co. in a whirlwind tour this week.
The historic home's renovations were nearly complete, including immaculate hardwood floors, exposed brick around the fireplaces, a new kitchen and fresh paint. The county tax appraisal listed the house as worth $297,300.

After the auction, someone walked away with it for $166,000. Even the buyer thought his winning bid seemed too low.

"I'm surprised it didn't go for more,'' said Stewart Levine, who won the bid on behalf of a local investor, Lane Wallace. "In this market, things are just down."

Auctioneers say bank-owned property auctions are on the rise this year, as banks are under increasing pressure to unload real estate repossessed from foreclosures, and as builders and homeowners struggle with outsized debt and less income.

Although there are deals to be had, investors and auctioneers alike warn that it pays to know the rules of the game and the potential auction pitfalls.

"It's kind of a gamble," said Dale Hire, who has been buying and renovating homes for almost 20 years. For those with cash on hand and a good deal of chutzpah, there have been plenty of opportunities to buy. Nationally, residential real estate auctions last year ticked up 1 percent to $17.1 billion in gross sales revenue, despite slower real estate sales overall, according to the National Auctioneers Association.

Locally, even though sales of homes and lots fell 29 percent here in 2008 from the year before, auctions have shown surprising popularity. On Tuesday, more than 100 auctions were listed in the Nashville area alone.

"It's across the board that a lot of companies are seeing an increase,'' said Charlie Montgomery, an owner in Comas Montgomery Realty and Auction in Murfreesboro. He attributes the increase to a rise in the volume of foreclosures and owners hoping to sell as quickly as possible.

The average home listed took 87 days to sell in the Nashville area in July, according to the Greater Nashville Association of Realtors.

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