foreclosure listings

An auction company has been hired to sell 17 houses in the Fresno area next week -- offering a highly visible example of the depth of the real estate slump.

Homeowners lost the properties to foreclosure, and the lenders turned to Hudson & Marshall after failing to sell them in traditional methods, said Dave Webb, a company principal.

The firm will attempt to sell 400 houses in Northern California in a series of auctions beginning Tuesday in Fresno and continuing through July 22 in Sacramento. It's the first home auction here since 2001.

While the 17 homes being sold in the Fresno area is a small number compared with many other regions, their inclusion in the auction indicates how quickly and how deeply the real estate market dipped after one of the greatest periods of appreciation this region has ever seen.

And it is only going to get worse, said Shannon Martin, a Fresno real estate agent who specializes in selling bank-owned properties.

"There will be another wave coming at the end of the year," he said. "The teaser-rate adjustable-rate loans are coming due."

Those are loans that promised initial low rates and adjust upward after a certain period. By some estimates, $3 billion of those loans could adjust this year nationwide, with homeowners defaulting on as many as 30% of them, Martin said.

California cities reported six of the nation's Top 10 foreclosure rates in June, with Stockton, Merced and Modesto among them.

Fresno finished 13th with a 24% increase in filings in June, according to RealtyTrac, an online markethouse for troubled properties.

"Over the past year I've been doing this, we started in the Detroit area and the Northeast and now we're seeing the wave of foreclosures moving west," said Crystal Wright, a spokeswoman for Hudson & Marshall.

This is the first Hudson & Marshall auction in Fresno since a sale of foreclosed homes in 2001. The company also was in Fresno in 1993 when 8,000 acres of west side farmland went into foreclosure after water deliveries were cut.

The condition of the houses for this latest sale varies.

"There is one on Alluvial at San Joaquin Country Club that is a beautiful custom, and the one on Ashcroft is a nice and clean entry-level home. And then there are some junkers in there. They are across the board," said Martin, who has some of the listings being sold.

Auctions often generate a frenetic atmosphere where the bidding is fast and furious. Wright said the firm sells an average of 90% of the properties at the auctions. All properties come with guaranteed title insurance but are sold as-is.

Wright said some buyers can purchase properties at significantly reduced prices. "It is not unusual to buy at 70% to 80% of the [listed] price in a soft market that continues to get weaker by the day and month. Banks are very motivated to quickly dispose of property and to not hold on to nonperforming loans."

But at least one expert says auctions don't often produce bargains because they use promotion and hype to jack up the price.

"These auction companies are doing a much better job than any agent who tries to sell houses on the multiple listing service. They are spending a lot of money on marketing and advertising and set up very easy financing available on the spot, which creates huge crowds to show up," said Alexis McGee, president of Foreclosures.com, a Web site for investors, and author of "The Foreclosures.com Guide to Making Huge Profits Investing in Pre-Foreclosures."

"Those crowds create competitive bidding, which creates a feeling of loss of deals, which creates a bidding frenzy, which creates very high selling prices, often at current market value. Now add to those high selling prices the auction companies' 5% commission that is tagged on and you have a terrible buy. Not good for any investors looking for deals," she said.

Webb disagreed. "Sellers are willing to take less money because they are selling a bunch of properties at once. They move a lot of property in a short period of time."

Webb said his firm will revisit Fresno in November, and possibly beyond, depending upon the wishes of his lender clients.

"California is a funny state," he said. "When it goes up, it goes up fast. And when it goes down, it drops on down."