A Los Angeles-based public auction company plans to sell about 200 bank-owned homes across the Valley, including several in the East Valley, later this month.
Zetabid expects more than 1,000 first-time homebuyers, trade-up buyers and investors to attend the auction Feb. 21 at the Arizona Biltmore Resort and Spa in Phoenix. The single-family homes range from $20,000 to $800,000.
Of the 200 homes, 20 are in Mesa, seven are in Chandler, five are in Gilbert and Apache Junction, and three are in Queen Creek.
At Zetabid's recent auctions in California and Florida, homes that went to contract at the auction were 25 percent to 40 percent below the listed retail price. More than 3,500 people participated in five Zetabid auctions in the past four months, and during that time the company brought more than 700 homes to auction.
"This is our first auction in Arizona," said Bob Bellack, Zetabid chairman. "What it does reflect is the clearing out of the bank-owned homes from the mortgage market. What banks have decided is clearly that they need to move this inventory off their books."
Jay Butler, director of Arizona State University's Realty Studies Department, said auctions have risen in popularity because it's a relatively easy way to move a mass number of homes. He tracks Valley home sales and prices.
"If a house does actually get sold, then it does move it to somebody who might care about it, fix it up and take care of other things," he said. "Usually at these auctions, and this isn't an absolute, it's really investors looking for deals ... because you've got to have deposits and all sort of things, and be ready to go on the deal."
Auctions can be helpful to potential buyers because you can see numerous properties for sale in a particular area, Butler said.
"You can go and say, 'OK, I'm interested in a home in Laveen,' and there's a lot of homes there so you don't have to go drive through Laveen or deal with agents," he said.
It's crucial for participants to first visit the properties they're interested in, Butler said.
"You want to go look at the homes, look at the physical condition of these homes, because a lot of foreclosed homes just had the (heck) beaten out of them, and then there's the neighborhood," he said. "You don't want to buy a home in the midst of several other foreclosures."
Banks are anxious to sell these homes and are aggressive with pricing, Bellack said.
"The banks want to see five or six bidders for each of these properties," he said. "That gives them confidence that they have a real marketplace ... and the price represents the market value of the property. And you don't have to go through this whole process of submitting an offer and waiting for acceptance."
Detailed information about the auction and each property is available at www.zetabid.com.
"There's a high probability that they will all sell," Bellack said. "During our auction, not only do we have a ballroom component, but we have a Web cast that allows users to participate in real time on the Web in the auction."
Participants generally have preapproved financing, and the banks that are selling the homes will provide financing on those homes, he said.
The Better Business Bureau of Central, Northern and Western Arizona suggests those interested in a home auction should first check with the bureau to see if the auction company is legitimate.
"We also suggest that you look at the houses before making offers, and you might want to consider taking an inspector with you," said spokeswoman Felicia Thompson. "It also might be a good idea to bring a real estate agent with you ... and then you have someone who really knows the market and the pricing because a lot of times you might be bidding against some experienced investors."
Zetabid encourages buyers to view homes with a listing agent during its open house from noon to 4 p.m., or by appointment, on Feb. 13-14.
"Buying a house sight-unseen is never a good idea," Bellack said.
Anything that reduces the prevalence of foreclosure homes on the local market is a good thing, said Bob Bemis, CEO of Arizona Regional Multiple Listing Service. Currently, of the 52,829 properties listed for sale in the Valley, 24 percent or 12,700 are bank-owned properties.
"Since they're bank-owned, you can pretty much guess that they're going to be sold at a price much below what a normal market would bring," he said. "(Foreclosures) put downward pressure on all of the listings, so the faster you can clear out those bank-owned properties, either from (traditional sales) or through auctions, is going to help the market as a whole."