As lenders become more desperate to avoid the growing number of foreclosures, I see another good use of auctions.
Typically a homeowner facing foreclosure contracts with a real estate agent to sell their home. If the homeowner has equity, they have a better chance to sell fast by giving a discount.
However, if they don't have equity they are forced to try and sell their house at or above market value so they can pay closing and agent fees. This leaves them in a tough situation which usually ends in foreclosure.
Fortunately, some lenders will consider a "short sale". A "short sale" is when the lender agrees to take less than what is owed so they don't have to go through the foreclosure process and take the house back. Lenders do this because they do not want to own property.
If a lender is willing to consider a "short sale", it would be a great use of an auction. You can market the property through an auction for 2-3 weeks and make the high bid subject to lenders final approval. Then you can take the high bid and present it as an offer to the lender. When you present it you would also explain how you marketed the property. You could provide stats such as number of people who visited the property, number of bids, number of people bidding, etc. I think most lenders would seriously consider accepting an offer presented in this way.
Saturday, January 26, 2008
Auctions good for short sales?
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