Foreclosed Home Auctions Gaining Popularity in Texas

Foreclosed home auctions are gaining popularity as the easiest and cheapest way to buy properties. In Dallas, Texas, listings of foreclosed properties in June increased from the same period last year. However, industry analysts pointed out that the real estate market is balanced and home sales for the month showed improvement.

But they cautioned that the market could get worse before it starts to get better. They pointed out the potential resurgence of foreclosed homes as foreclosure moratoriums implemented by lenders in 2008 and 2009 are starting to expire.

They predicted that another tide of foreclosure properties will be seen on the market in the last quarter of this year or in the first quarter of 2010.

They explained that many banks and lenders want to get rid of foreclosed houses on their inventory before they release new foreclosures on the market. This is because if they decide to flood the market now with new foreclosures, prices would hit their lowest levels and the potential for incurring losses is great.

Analysts added that it is part of banks’ strategy to hold off foreclosures to create an artificial lack of supply on the market. And with the increase in number of first-time homebuyers who want to take advantage of the $8,000 federal tax credit, demand for cheap bank foreclosed homes will surely rise.

For the meantime, banks are eager to sell foreclosure properties on their inventory and many are opting to dispose them at auctions.

Industry analysts said that buyers who purchase homes at auctions can save hundreds or thousands of dollars. For example, foreclosure homes on Forest Lane neighborhood in North Dallas sell for $400,000. But the starting bid for these foreclosure properties is at $99,000 at auctions.

Meanwhile, industry experts pointed out that the price of a foreclosed home at auction depends on the location, condition and the number of buyers who will bid for the property. An intense bidding could result in a higher home price.

On the other hand, Texas foreclosure rate for the first half of this year declined by 14 percent compared with the same period the previous year. The figures earned Texas the 29th position in the ranking of states with highest foreclosure rate from January to June.

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