The Miami Herald quotes Troy Fowler about Auction

THE FORECLOSURE ECONOMY

 It occurred to Troy Fowler earlier than most that the real-estate market of the boom years was on a collision course with history.

''I lived in South Florida during the 1980s when the last crash happened because of the savings and loan crisis,'' said the real-estate broker and owner of Miami-based Investor Realty & Auction Group. ``When it was all said and done, auctioneers came in and cleaned up. They played a big role in Miami's comeback.''

In 2005, Fowler got an auctioneer's license and began learning the ropes.

DEMAND GROWING

In the three years since, demand for auctioneers has gained momentum as lenders look for ways to unload growing inventories of property repossessed through foreclosure.

Even as the housing market sputtered between 2006 and 2007, revenue from residential property auctions increased 5.3 percent, according to the National Auctioneers Association. Regions such as South Florida, where foreclosures are currently skyrocketing, are lucrative markets.

''I'm thrilled about what is coming up,'' said Jim Gall, president of Miami-based Auction Company of America, which conducts property auctions around the country.

Auction companies generally earn a buyer's premium of between 6 percent and 10 percent of the winning bid. A buyer, for instance, would pay the auctioneer $10,000 on a $100,000 bid. Sellers pay the marketing costs.

Fowler said most of his business has been auctioning homes for buyers with equity. He gets calls from homeowners looking to sell quickly to avoid foreclosure as well, but most owe more than the market value, so he declines. Auction buyers expect below-market-value deals.

Larger auction companies, such as Dallas-based Hudson and Marshall and REDC, or Real Estate Disposition Company, of Irvine, Calif., have an edge in getting business because they have licenses to operate nationally and the marketing muscle to draw big crowds.

Hudson and Marshall held an auction on Saturday at the Hyatt Regency in Weston, where more than 250 houses were on the block. The company has auctioned off 1,500 homes over the last year, according to co-owner David Webb. He said national lenders have been among the first to turn to auctions to move unprofitable inventory off their books.

NO WINDFALL YET

But the windfall has yet to arrive for local companies. Gall said he expected that to change over the next 12 to 18 months, or as soon it is perceived the housing market has hit a definitive bottom. Then, he predicted, lenders and developers would see the merits of auctions.

So far, Gall said about 10 percent of his business comes from lenders auctioning individual homes. He expects the percentage to double over the next year. Right now, both Gall and Fowler are taking the sales pitch to local and regional banks that have been slower to jump on the auction bandwagon.

Webb, of Hudson and Marshall, said local auction companies are in the drivers' seat in their regions.

''There are a lot of developers who need auction help as well as investment firms and asset management firms. The business is there,'' Webb said.