As Markets Slump Auction Of Foreclosed Houses Increase

March 18th, 2008 | Tags: Foreclosure House

If one is lucky one can snap up a bank owned property for something affordable as $35,000. The picture is grim with real estate prices plummeting as foreclosures increases. The banks are overburdened with repossessed houses and want to sell them off fast. On Sunday the auction was being held in Doubletree Hotel in Ontario and 600 prospective buyers joined in the fray. There were 120 bank owned properties waiting for a new owner.

For a three bed roomed unit in Barstow the bid began with $35,000. A four bed roomed house started off with a bid of $390,000. A week before the auction those who were interested could inspect the houses thoroughly. The auctioneers, Kennedy Wilson were optimistic about ‘exceptional inventory clearance’ and ‘incredible’ deals. The firm holds regular auctions across US and is now managing at least one per week. There are thousands of foreclosed houses in the market and many are seeing these auctions as a chance to change their fortunes either to set up a home or as an investment opportunity. Three years ago people did not give much importance to auctions, says Rhett Winchell the president of Kennedy Wilson’s auction division.

Houses go into foreclosure when the borrowers cannot carry on with mortgage repayments or when the value of the house falls below the loan amount. The banks then take over the property. Today the banks have so many units at hand that they drastically reduce prices to be free of them. These houses are a dead loss for the banks.

Apparently the auction seems to be a good way to buy a house but the buyers are warned about researching on the properties. Everywhere there are tempting signs about sale prices being cut by 20% to 50%. The question to ask is the discount is off what? Today nobody can be sure about the price of a house – it varying from day to day. The real price seems to be whatever it can be sold for. The average price of a house in South California last month was $408,000 – down by 17.6% from the previous year and by 19.2% peak reached then. In this region 33% of the houses sold in February had been foreclosed upon from January 2007. The numbers waiting to be sold has risen by 3.55 from the previous year. There is a tendency for housing prices to fall further.