Sold! Sellers Use Auctions to Unload Homes

With a national foreclosure rate of nearly one in 500 U.S. homes and a growing number of homes unable to sell at their earlier values, developers, lenders and home owners have had to come up with a more creative way to unload their houses.

Some have brought in home auctioneers to help sell homes quickly.

"Sellers don't want to wait and see their homes languish for six or nine months," said Lynnette Khalfani-Cox, author of "Your First Home." "They see auctions as a faster way to execute a sale."

The auctions have attracted people like Sonny and Flerida Zaragoza. The newlyweds hoped to buy their first home -- their dream home -- at a California auction.

"This was our first and only chance to buy a home," said Flerida Zaragoza.

The couple ended up purchasing a home for $355,000, which was a savings of more than $100,000 off the market rate for the 2,000 square foot home.

The home the Zaragozas bought was not the only deal on the block.

Prior to the auction, many of the luxury homes sold for high prices. Now, sellers aren't deciding where the market is, but buyers are, said Craig Barton, of Anderson Homes.

And the deepening home mortgage crisis and credit crunch has economists estimating U.S. home prices will continue dropping during the next two years.

All of this may make a better market for home buyers.

"I think it's a win-win for the buyers, obviously, because they get a great buy on the property they want to purchase," said Rhett Winchell of the Kennedy Wilson Auction Group. "And the builder obviously gets 34 sales in one day."

But some the Zaragozas' neighbors were unhappy about the auction, and saw it and the credit crunch as troubling for their own home values.

"It's not their fault," said homeowner Lisa Baker. "I understand it's a good opportunity for them. But speaking from a neighbor, I know my neighborhood is very upset about it."

Nevertheless, the Zaragozas were ecstatic to get such a deal.

"It's tough times," said Sonny Zaragoza, "but supply and demand is what dictates the market."