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.

In the cooling South Florida housing market, more and more sellers are counting on public auctions to move property. Case in point: the Great South Florida Real Estate Auction, held yesterday in Fort Lauderdale.

Wanda Brown arrived at the event excited to finally take out a Florida home loan and use it on a three-bedroom, two-bath single family home in the Breezeswept Park Estates in Plantation. However, she left disappointed when the winning bid for said house was $292,000.

“That’s overpriced,” said Brown, 48, a school board maintenance employee. “I know the houses in that area. It’s a nice area, but it’s no $300,000 house.”

Few deals finalized, prices set too high

Many potential homebuyers, realtors and speculators who attended the daylong auction of almost 100 properties shared Brown’s feelings. Some were also taken aback by the “as-is” contract terms they received in their registration packages.

But to Ben Stern, whose Synergy Group real estate firm owned the properties, the turnout meant South Florida’s housing market remains in a slump since sellers set prices high and buyers wait for those prices to be reduced. Who will bugde first, buyers or sellers?

Residential home auctions are becoming popular with sellers nationwide, as properties are taking longer to sell than in previous years. Demand for Florida home loans has been waning; and public auctions generated more than $14 billion in sales in 2005, according to the National Auctioneers Association.

Potential homebuyers hear the word auction and think “steals.” Many are left disappointed.

“The prices are what you would pay at market prices,” said Mary Parks, a Hallandale Beach speculator. “I expected better bargaining, and this is not. These aren’t bargains.”

Stern said the lowest winning bid was $86,000 for a Lake Worth house. The highest bid was about $600,000, for a Tamarac house.

Merly Grigou and her mother, of Plantation, were among the purchasers. Upon obtaining financing on a Florida home loan within one month, they’re set to walk away with a six-unit Fort Lauderdale apartment building on which they bid $522,000.

The issue remains: will sellers bring prices down in order to satisfy those who do wish to apply for a Florida mortgage loan, but can only afford a certain amount? Those wishing to be rid of property in South Florida will have to consider strategies that pay off for all parties.

A few sellers may be having trouble finding Florida home loan takers, but others are turning to auctioneers such as Dan Mahaney for help in today’s market.

Mahaney is an operating partner and broker for Luxury Auction Group, the company that runs u-auction.com, in which people can bid on houses for sale in a way they would bid for things on eBay. He estimates he got three calls from residents last year. Now, he’s getting at least 15 calls a week from people desperate to sell their Florida real estate.

“Fort Myers is really picking up,” Mahaney said, as is the rest of the state.

Some auctions actually take place on the property for sale, while others are over the phone or Internet. A house in Grandezza in Estero is being sold by fax auction, meaning the seller will open sealed bids and accept one, most likely the highest one, within 48 hours.

“It’s an accelerated way of selling real estate,” Mahaney said. “As you see the market slow, people are forced to go for quicker results.”

Mahaney said a house sold at auction generates “fair market value,” meaning that public interest in a property determines its price, instead of how much the seller wants for it.

More information on auctions, finding Florida home loans

Mahaney said auctions allow sellers to unload property quickly. Sales close 30 days after the auction ends, with cash in the seller’s hands. Because of the rapid turnaround, Mahaney said auctions are popular with investors and builders trying to unload inventory and free up some extra funds. They’re also good for a homeowner who needs to sell a house quickly after moving, so he isn’t paying two Florida home loans.

Because the emphasis is on speed, sellers can’t wait around until they get an offer that matches the number they’re asking for. However, some properties do create bidding wars, particularly for highly desired waterfront and trophy properties.

Mahaney said most people think of housing auctions as selling foreclosed homes, but said luxury homes sell particularly well at auction. “You can really use it on any type of property,” he said.

While business has picked up in Florida since the housing market has cooled down, Mahaney said homes sell even better during real estate heat waves because the fervor spreads to bidders who are anxious to agree to terms on a Florida home mortgage loan.

“The auction method actually works better in a fast appreciating market,” he said.

In addition to lots of interest from Southwest Florida home sellers, he’s gotten a lot of calls from people in the Tampa Bay area as well as the Panhandle and Miami. He said he expects to double the number of Florida home loans auctioned soon.

Chuck Humm and his wife, Dee, own a beautiful waterfront home in Ponte Vedra Beach. It was built in 1994, but the couple is now set on selling it and traveling the country.

Will they go through a Florid home loan broker or agent? Nope. An auction will be held on May 5 to determine the value and sales price of the property.

“I don’t know what we’ll get– that’s a function of who comes,” said Humm, 64. “We’re doing this because we want to be able to make plans with some certainty and high-end properties can take time, no matter who the broker is.”

Humm is among a growing number of luxury homeowners in Florida who have chosen to auction off their high-end single-family homes rather than sell them through the conventional Florida real estate system involving a broker or Realtor.

The shift is less a reflection of dissatisfaction with traditional methods than of the increase in unique homes that owners view as a piece of art rather than a piece of real estate.

A new approach to Florida home loans: the auction

A fixed period of several weeks to see the house and bid on it coupled with the ability to attract a group of serious buyers has compelled the Humms and many others to choose auctions.

“It’s becoming more common because it’s no longer seen as a distress sale,” said Michael Fine, a senior vice president with Sheldon Good & Co., which expanded its auction business from commercial to residential properties in the 1970s. “It’s seen now as a good alternative marketing method for many types of properties, one of those being unique high-end homes.”

While sellers have a degree of control in the process, Fine said buyers tend to be accustomed to buying things in auctions, such as art or wine.

This crowd also knows it can expect a bid package from most auction companies that includes home inspection, title search and other documents, making the decision to buy on the spot easier.

An attractive price reached in a speedy manner is what the Humms are counting on. They are obviously not alone. As the Florida home loan market shifts a bit, sellers are looking for alternative ways to find the best deals.