The use of real estate auctions by condo developers in Chicago, banks and in some instances even financially distressed home owners as an exit strategy will most likely continue to be a growing trend in 2009. Third quarter 2008 sales of ction Chicago condos were down 82% from the same period in 2007. There was a 56% drop in sales for November 2008 alone compared to sales in November 2007, according to data from the Chicago MLS. With tightening credit, loans coming due and traditional marketing falling short, developers needing to liquidate inventory fast and raise cash are opting for the quick solution of auctioning off their units.

Adding to increasing number of real estate auctions is the rising number of foreclosures. The national foreclosure rate slowed during the last few weeks of 2008, mostly due to the temporary reprieve that both Fanny Mae and Freddie Mac gave their delinquent mortgage holders. Many states also lengthened the legal time for the entire foreclosure process. But RealtyTrac predicts the number of foreclosures will start to rise again in January 2009 as those temporary reprieves are up for troubled homeowners. The estimated number of houses and condos that will fall into foreclosure in 2009 is 2.25 million, according to the Federal Reserve. That's double the normal amount and many of those homes will be put up for auction.

The combination of excess inventory for developers and banks eager to unload foreclosed properties can add up to some pretty good deals for buyers. It's also beneficial for the developer or lender as they can at least recoup some of their money and move on. Many developers are willing to sell the final few units in a building at a much lower price in order to close the book on the project. To that end, some units are often sold "absolute," meaning that they will be sold at that auction no matter how low the highest bid ends up being. Still other banks and developers will put a reserve or minimum amount that they will accept on a condo. In that case they have the right to refuse the highest bid if that bid doesn't meet the minimum reserve price set before the auction.

There are a few things you need to know before going to a real estate auction though. It isn't as simple as showing up and waving your hand as soon as the bidding starts. Generally the process is the same at most auctions. You have to arrive in time to register with the proper photo ID and you usually have to have a cashier's check with you for a pre-determined amount of money. This can vary from one or two thousand to several thousand dollars, depending on the starting bid and the expected selling price. If you are fortunate enough to win an auction, that cashier's check will then go into escrow and you have to produce at least a 10% down payment in typically 10 days from the auction. Proof of financing for the rest of the amount will be required in 30 to 45 days, so it's beneficial to already be approved for a loan before you bid.

As for foreclosure or bank auctions, the time frame is generally shorter than at a developer auction. With these types of sales, a buyer usually must come armed with cash for the down payment or be pre-approved for a loan. A bank-owned or REO sale is when the property owner and mortgage lender agree for the lender to assume control of the condo and sell it. This sometimes happens when a property doesn't sell at a foreclosure auction. REO sales at auctions can net some great deals for buyers but this type of auction occurs less often.

If you are interested in a condo that is coming up for auction, take the time to do some research on the property. The seller or auction company will normally hold an open house before the auction date and also print fact sheets and property descriptions with the necessary legal disclaimers listed. If you want to go the extra mile, you can talk to current residents of a multi-unit building or high-rise or even consult with a real estate broker or contractor about the property coming up for auction. Most auctions are listed well enough in advance to do this.

Motor Row Lofts One Day Post Auction Closeout Sale
December 5th, 2009 at Motor Row Lofts Development
Time: Noon to 3PM
Sheldon Good & Company auction service

This sale is for a selection of the remaining Chicago condos at Motor Row Lofts. A bidder's information packet is available at the sales center for a cost of $20. Buyers must bring a certified or cashier's check for $5,000 made out to the River West National Title and Escrow LLC for each condo he or she wishes to bid on. Units up for bid are as follows.

Unit #501 3BR/2Bath 2,049 Expansive corner duplex unit with 21' ceilings, 2nd floor den, skybridge bedroom and office, balcony, rooftop deck.
Unit #502 2BR/2Bath 1,679 Duplex unit with 2nd floor den and office overlooking living/dining area, 21' ceilings and private rooftop deck.
Unit #505 3BR/2Bath 1,661 Duplex unit with 21' ceilings, additional third room ideal for den/office/media, and deck.
Unit #301 3BR/2Bath 1,649 Corner unit with balcony off living room and versatile third bedroom in skybridge.
Unit #216 2BR/2Bath 1,418 Spacious end unit with patio that opens to courtyard, large rear balcony.
Unit #402 2BR/2Bath 1,389 Oversized windows in living room and bedroom, spacious floor plan with den.
Unit #310 2BR/2Bath 1,198 Duplex unit with spiral stair leading to 2nd level Master Bedroom, rooftop deck.
Unit #314 2BR/2Bath 1,198 Sun-drenched duplex unit with large rooftop deck overlooking courtyard.
Unit #303 1BR/1Bath 1,057 Wall of oversized windows provides an abundance of natural light, office, walk-in closet in Master Bedroom.


Seven Bridges Condominiums Auction (Woodridge, IL)
Date: December 16th, 2009
Location: Lisle Hyatt on 1400 Corporetum Drive in Lisle, Illinois.
Registration starts at 6PM
Bidding starts at 7PM
Minimum bids to start at $125,000

Open House Dates:
November 29th from noon to 3PM
December 5thm 6th,12th & 13th from noon to 3PM
December 9th and 15th from 3PM to 6PM

This auction is for 18 condos at the Seven Bridges Condominiums development in Woodridge, IL. High bidders will receive a 2% discount if closing takes place within 10 days after sales contract is signed. A buyer's premium of 5% will be added to each winning bid. Some condos are finished, others will be able to be customized by the winning bidder. The condos have stainless steel appliances, granite counter tops, maple kitchen cabinets and soaker tub in the master bath. Building amenities at the 140 condo, 12 story tower include a party room, sun deck, 24 hour doorman and swimming pool.

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