Jobs Homes Autos For Sale

More lenders opt for home auctions
By Caroline Kim | Medill News Service
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Published: 3/4/2008 12:15 AM

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Foreclosures continue to increase nationwide, primarily because of the subprime mortgage meltdown, and in the Chicago area more lenders are turning to auctions to liquidate what they call real estate owned, or REO, properties.

The number of REOs in the Chicago region, which includes the eight surrounding counties, more than doubled to 1,042 in January from 409 a year ago, according to the most recent report from RealtyTrac Inc., an Irvine, Calif.-based company that tracks foreclosure data.

An auction enables lenders to sell foreclosed properties that failed to sell through a sheriff's sale, the usual disposal method. At that point the properties are classified as REOs.

"We're hearing a lot more about auctions taking place now," said Daren Blomquist, marketing communications manager for RealtyTrac. "I think it's because they're more desperate in selling those properties, and it's harder to sell them through traditional methods."

Blomquist said until 2005 lenders rarely sold REOs through auctions, but now they are overwhelmed with costly inventory.

For instance, Cook County REOs more than tripled to 833 in January from 272 in January 2007, while Kane County REOs jumped to 76 from 23 a year ago. Will County was the only Chicago-area county to see a decrease in January, to 29 from 55.

Illinois REOs more than doubled to 1,536 in January from 623 a year earlier. In the U.S., REOs increased 90 percent to 45,327 from 23,905.

David Webb, co-owner of Texas-based auctioneer Hudson and Marshall Inc., attests that in Chicago and cities through the U.S. lenders have become more active in selling REO properties at auctions.

Hudson and Marshall held a Chicago-area REO auction Feb. 23 in Lombard, one of several it will hold this year in the area. It sold 170 homes, double the average of 70 or 80 the company sold in auctions last year.

Webb said crowds at property auctions throughout the nation have increased in the past two to three months. About 1,000 people attended the Lombard auction, including real estate brokers and investors. Webb said about 50 percent of the attendees were homeowners looking to make a move.

"We've doubled our sales volume this year compared to last year," Webb said. "Last year, we auctioned off 7,500 homes; this year we'll be at 16,000 nationwide."