Here is another interesting article on real estate auctions.
Memphis Business Journal - by Einat Paz-Frankel
Financial institutions seeking to sell a growing number of foreclosed properties in the wake of the subprime mortgage meltdown are increasingly turning to auction houses as an alternative avenue for real estate marketing.
The Memphis metropolitan area has one of the highest foreclosure rates among the nation's MSAs. With 6,239 foreclosure filings recorded during the third quarter, up 38.6% compared to the same period in 2006, Memphis is ranked No. 14 in the nation, according to RealtyTrac, Inc. Tennessee has the 12th highest foreclosure rate among the states, with 12,198 filings in the third quarter. Overall, foreclosures more than doubled in the U.S. during the third quarter this year to reach 635,159.
The mounting properties under foreclosure leave many financial institutions with real estate properties they wish to dispose of.
"There are an awful lot of foreclosures in the area," says Jody Hopkins, vice president of finance and administration for Roebuck Auctions. "Lenders own deeds to properties and as a result there's a tremendous influx of lending institutions that opt for auctions thanks to their speed and sense of urgency."
Professional live auctions, which involve a bidding process, are not to be confused with foreclosure auctions held on courthouse steps. Foreclosure auctions were held recently in Memphis for Matthews Brothers Builders LLC properties foreclosed by Paragon National Bank and other financial institutions. Such auctions may or may not result in a sale. They may result in handing the title over to the bank, which is then the new owner of the property.
Traditionally, banks have assigned the marketing of their real estate to a real estate broker. Now, many lending institutions find themselves owning many unwanted real estate properties, for which they need to carry insurance and other costs. With home sales being soft -- Memphis Area Association of Realtors reports year-to-date sales fell 13.8% from the same period last year -- they are looking for a quicker way to sell their newly acquired homes, which are considered non-performing assets.
"The sooner they can turn them into cash the better," Hopkins says.
In recent months, professional auctioneers have seen a flow of residential real estate auctions done on behalf of banks. Hopkins says last year 5% of the firm's business came from banks; this year the share has grown to 10%-15% and the rate "will go higher if the trend continues."
Jeff Morris, owner of Morris Auction Group, says a growing number of properties are coming in to his auction house from banks.
"Holding a piece of property can be costly over time," he says. "Time is their enemy."
The typical turnaround time for an auction sale is four to five weeks, he says. After several weeks of advertising the auction in multiple media, the property sells on a set date and closes 30 days later.
"Now, with so much on the market, they're much more eager to clean up their portfolios," Hopkins says. "They know the property will sell on a certain date."
Bob Byrd, founder and chairman of the Bank of Bartlett, says the financial institution uses auctions to sell off foreclosed properties in addition to traditional avenues such as Realtors.
"With the decline of the market, more foreclosures and liquidations have occurred," he says. "An auction is a viable strategy."
Nationally, residential real estate auctions are the fastest-growing segment of the auction industry. From 2003 to 2006, residential real estate auctions grew 39.2%, according to a study by the National Auctioneers Association. In 2006, auctioneers sold $16 billion worth of homes, up 12.5% over 2005.
Hopkins says some banks bundle several properties and put them on the auction block at the same time, accepting bids for all of them from a group of qualified bidders on the same day.
Morris believes the trend will continue "whether the market is good or bad." And, the expedited process can benefit homeowners before their house is foreclosed.
"We'd like to see people coming to us before the foreclosure, so we can sell their house and save their credit," he says. "Sell now; don't prolong the inevitable."
Roebuck Auctions
Address: 4932 ParkPhone: (901) 763-2825Web site: http://www.roebuckauctions.com/
Morris Auction Group
Address: 310 UnionPhone: (901) 579-4004Web site: http://www.morrisauctiongroup.com/
Memphis Business Journal - by Einat Paz-Frankel
Financial institutions seeking to sell a growing number of foreclosed properties in the wake of the subprime mortgage meltdown are increasingly turning to auction houses as an alternative avenue for real estate marketing.
The Memphis metropolitan area has one of the highest foreclosure rates among the nation's MSAs. With 6,239 foreclosure filings recorded during the third quarter, up 38.6% compared to the same period in 2006, Memphis is ranked No. 14 in the nation, according to RealtyTrac, Inc. Tennessee has the 12th highest foreclosure rate among the states, with 12,198 filings in the third quarter. Overall, foreclosures more than doubled in the U.S. during the third quarter this year to reach 635,159.
The mounting properties under foreclosure leave many financial institutions with real estate properties they wish to dispose of.
"There are an awful lot of foreclosures in the area," says Jody Hopkins, vice president of finance and administration for Roebuck Auctions. "Lenders own deeds to properties and as a result there's a tremendous influx of lending institutions that opt for auctions thanks to their speed and sense of urgency."
Professional live auctions, which involve a bidding process, are not to be confused with foreclosure auctions held on courthouse steps. Foreclosure auctions were held recently in Memphis for Matthews Brothers Builders LLC properties foreclosed by Paragon National Bank and other financial institutions. Such auctions may or may not result in a sale. They may result in handing the title over to the bank, which is then the new owner of the property.
Traditionally, banks have assigned the marketing of their real estate to a real estate broker. Now, many lending institutions find themselves owning many unwanted real estate properties, for which they need to carry insurance and other costs. With home sales being soft -- Memphis Area Association of Realtors reports year-to-date sales fell 13.8% from the same period last year -- they are looking for a quicker way to sell their newly acquired homes, which are considered non-performing assets.
"The sooner they can turn them into cash the better," Hopkins says.
In recent months, professional auctioneers have seen a flow of residential real estate auctions done on behalf of banks. Hopkins says last year 5% of the firm's business came from banks; this year the share has grown to 10%-15% and the rate "will go higher if the trend continues."
Jeff Morris, owner of Morris Auction Group, says a growing number of properties are coming in to his auction house from banks.
"Holding a piece of property can be costly over time," he says. "Time is their enemy."
The typical turnaround time for an auction sale is four to five weeks, he says. After several weeks of advertising the auction in multiple media, the property sells on a set date and closes 30 days later.
"Now, with so much on the market, they're much more eager to clean up their portfolios," Hopkins says. "They know the property will sell on a certain date."
Bob Byrd, founder and chairman of the Bank of Bartlett, says the financial institution uses auctions to sell off foreclosed properties in addition to traditional avenues such as Realtors.
"With the decline of the market, more foreclosures and liquidations have occurred," he says. "An auction is a viable strategy."
Nationally, residential real estate auctions are the fastest-growing segment of the auction industry. From 2003 to 2006, residential real estate auctions grew 39.2%, according to a study by the National Auctioneers Association. In 2006, auctioneers sold $16 billion worth of homes, up 12.5% over 2005.
Hopkins says some banks bundle several properties and put them on the auction block at the same time, accepting bids for all of them from a group of qualified bidders on the same day.
Morris believes the trend will continue "whether the market is good or bad." And, the expedited process can benefit homeowners before their house is foreclosed.
"We'd like to see people coming to us before the foreclosure, so we can sell their house and save their credit," he says. "Sell now; don't prolong the inevitable."
Roebuck Auctions
Address: 4932 ParkPhone: (901) 763-2825Web site: http://www.roebuckauctions.com/
Morris Auction Group
Address: 310 UnionPhone: (901) 579-4004Web site: http://www.morrisauctiongroup.com/
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