Welcome to Auctions & Short Sales
Auctions.... The Fastest Growing Segment in Today's Real Estate Market
If you are like most people, you've heard of auctions, but probably thought they were only for those experiencing financial difficulty and desperate to sell their home. In fact auctions have become the fastest growing segment of the real estate market. According to the National Auctioneers Association, public auctions generated more than $14 billion in sales in 2005 and accounted for 6 percent of all U.S. real estate sales in 2004. Both the National Auctioneers Association and the National Association of REALTORS, estimate that 30% of all real estate transactions will be sold through auctions by the year 2010.
What the press is saying about auctions
According to the National Association of REALTORS®, "An estimated 30% of all real estate transactions are projected to be sold through auctions by the year 2010."
The National Auctioneers Association states: "Public auctions generated more than $14 billion in sales in 2005... Such auctions accounted for 6 percent of all U.S. real estate sales in 2004 and are expected to grow to 30% by 2010."
Although these projects may appear high, recent reports from the Phoenix, Arizona area have current auctions and short sales accounting for approximately 20% of the total real estate sales (as of July 2007).
Most financial analysts interviewed by the likes of CNN Money Watch, Forbes, The Wall St. Journal, MSNBC and Bloomberg News, all agree the market is going to continue to adjust at least throughout the end of this year and well into 2008. Foreclosures and loan defaults will be on the rise and auctions and short sales will play a larger role in the percentage of real estate that is sold.
How an auction or short sale can benefit you
It is well documented that banks and lending institutions are looking to avoid the burden of marketing foreclosed property and the associated costs involved in the foreclosure process. As a seller, an auction or short sale may be the vehicle to sell your property prior to going into a foreclosed status, where your credit rating could be adversely affected; however, it is important to note that auctions do not benefit just those facing financial difficulty.
While auctions are an effective tool in avoiding foreclosure, they can also be used to sell properties quickly for those who have built up significant equity in their property, but don't want to wait to go through the traditional marketing process for their property to sell. Auctions should be viewed as a means to sell a property at a fair market price, by a specific date!
Short sales can also be used to avoid foreclosure; however, in the case of a short sale the property sells for less, or "short," than what is owed on the existing mortgage(s). For those looking to sell, the willingness of a lender to settle for less than what is outstanding on the mortgage could potentially put the purchase price significantly lower than similar properties listed on the open market, resulting in a great opportunity for buyer, seller, and lender. Since there are tax consequences and nuances to short sales (especially for the seller), it is always recommended that you discuss your options with your lender and tax advisor prior to participating in a short sale.
used effectively, auctions and short sales give financial relief to the seller, investment opportunities for the buyer, and cost-effective measures for the lender: a win/win/win scenario for all.
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