Buyers, Builders Turn to Auctions

Once you’re pre-approved for a Florida home mortgage loan, you’re on the lookout for a reasonable deal at buying time. For many potential owners, this simply involves negotiating for a low price. More and more, however, are beginning to see the appeal of property auctions.

This is especially the case when builders - as opposed to sellers that may have an emotional attachment to their house - are the ones setting up shop at an auction house. As the market slows, an influx of builders and developers are trying to unload newly built homes. In many cases, therefore, buyers can receive a decent price on new properties at auction, with discounts of 20% and more.

New home auctions: A growing trend

According to auction companies, new home sales represent a growing part of their business. Walt Driggers, who runs an auction house in Ocala, says many of the developers who are now coming to him started the building process more than two years ago when Florida real estate prices were climbing. Times have changed, however.

Overall residential auction sales are up around the country. This figure grew 4.4% in the first half of 2006, compared with 4% for the same period in 2005. For this year, it’s projected that home auctions will account for $255.4 billion in revenue in 2006 - a figure that will climb if Florida mortgage loan demand does take off, as some experts predict.

The increase in new home auctions comes amid a softening in the overall housing market. Inventories of unsold new homes are now at a 6.5-month supply, an 11-year high. Developers, like some sellers, are beginning to get desperate.

As each of these groups do, the timing is ripe for hopeful buyers to swoop in. Make an offer - one lower than you initially planned on - and feel confident that you have all the leverage.