Foreclosure Auctions Failing to Attract Buyers

foreclosures increaseLackluster turnouts at courthouse foreclosure auctions are becoming common place from the court house steps of Los Angles scattered across the country to New York City, according to attorneys who attend the auctions to bid on properties for mortgage lenders.

The poor turnouts represent a major shift in the way foreclosures are being bought and sold in times of increasing economic uncertainty.

Amid the downturn of the housing market and deflating home prices, courthouse auctions are becoming viewed as a lesser avenue by which to gain a bargain. The prices for homes aren’t being slashed on the courthouse steps. Instead, buyers are going to web sites on the Internet to make their bids to buy properties. Homes posted for sale or to be auctioned-off online sometimes sell in a few hours, but most often times are scheduled weeks ahead of time.

They’re also buying properties directly from lenders foreclosure departments in increasing numbers. The foreclosure epidemic has topped 3-million units since its beginning with housing deflation increasing at a rapid rate.

“Last year, there would be tons of bidders,” said Vincent D’Antonio, a Plantation, Florida attorney. “This year, there’s barely anyone.” The majority of lenders are retaining most of their foreclosed properties because few bidders are offering enough to buy the homes. Many have minimum bids at double the current market value of the property.

Buyers in Los Angles have stopped attending the auctions for the most part except the pros, according to attorneys. “The same people come and they are only buying the steals, which are few and far between,” said Brian Shoals, who represents banks at the events. “Most banks lent too much on these places and nobody wants them at the price they’re offering them for.”

The change in the way the public views the auctions marks a new turn in the real estate crisis. Lenders often wait months for an offer to appear after listing them on the open market with real estate agents before slashing prices as an attempt to satisfy lien holders, who are hoping for higher prices.

In California’s Central Valley, heart of one of the worst foreclosure areas in the country, the majority of homes selling are foreclosures. Few other homeowners can afford to sell their properties at the reduced prices, which have fallen by as much as 60%.

Banks are turning to investors to take over many of the properties, but investors leery of the markets future are balking at the higher prices, which will have to be reduced further in order to entice many investors back into the marketplace.