Government slow to release foreclosed properties

With budget shortfalls a commonplace at all levels of government, more entities are seeking new sources of revenue, and selling off property is one of them, Auctioneers say.

“They’re looking for cash, and many have surplus property,” says Myers Jackson of Tallahassee, Fla.-based United Country Certified Real Estate. “With the budget crunches, it’s property they have no need to hold on to.”

And auctions, Jackson says, are a perfect way for governments to unload all that extra property.

“Sales of government property will increase, and it’s an excellent avenue for Auctioneers.”

Sales are shooting up, Jackson says, at all levels of government. In coming years, the trend should be strongest among county and state governments, he says.

In an auction career spanning more than three decades, first with Larry Latham Auctioneers Inc., now with AmeriBid Inc., Larry Latham, CAI, has sold more than 150,000 government properties at auction.

While sales of government properties via auction are up, it’s nothing compared to what will happen when more foreclosed houses come onto the market, Latham says.

“The government is not auctioning a lot of properties right now, compared to what’s out there,” Latham says.

There are hundreds of thousands of foreclosed homes waiting to go on the market, Latham says, and millions more “shadow” properties — houses whose mortgages are 90 days past due but haven’t been foreclosed on.

So why aren’t more on the market? Simple supply and demand, Latham says. The government is worried that flooding the market would send prices spiraling down. That kind of makes sense, Latham says, and kind of doesn’t. The bottom line is people are too scared and confused to know just what the right course of action is.

“The government doesn’t know what to do, and the economists don’t know what to do,” he says.

And once those properties do go up for sale, it won’t be nearly as easy to buy them as it was during the last big economic slump in the early 1990s.

“If you could put $1,000 down and pass the mirror test — if your breath fogs the mirror, or if you can’t do that, if your reflection shows up in the mirror — you qualify,” Latham says. “Now you need to put down 20 percent, not $1,000. Not many people in this market are going to pass that.”

Latham says that much supply won’t stay unsold forever, though. For one thing, properties can’t sit indefinitely without starting to deteriorate.

When the market does open up, he says, Auctioneers will be there to move a big chunk of it. Sellers love knowing that when they put a house up for auction, it will sell on a certain date, and that date typically comes much earlier than via traditional sale.

“By the second half of 2013 we ought to see a lot come on the market,” he says. “My advice to Auctioneers would be to be as patient as you can possibly be. It’s coming.”

Read the complete story in Auctioneer magazine

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