Auction of 56 foreclosed homes canceled after stingy bids

PROVO — An auction of 56 foreclosed properties — most of them in Utah County — fell through after the sellers decided they might get a better price in the federal bailout.

Eric Nelson, founder of Eric Nelson Auctioneering, said buyers' bids totaling about $7.5 million were rejected because of indecision among nervous lenders, the pending bailout and last week's stock market plunge.

The properties are owned by three banks and two private lenders.

The auction included an unfinished $1.2 million home in Draper and a 62-acre parcel in Park City valued at $3.5 million. The Draper home drew a $615,000 bid. The Park City parcel drew a $1.1 million offer.

All the bids were rejected at last week's auction in Salt Lake City.

"I think the sellers were surprised that the lot prices came in so low. One of the sellers walked out in the middle of the auction on his lots. He paid about $231,000 for each of his lots, but they were getting $100,000-plus bids," Nelson said.

Nelson said many lenders are anticipating better deals after a federal bailout.

"They're thinking, 'Why sell the properties for 50 cents on the dollar' when they may get 75 cents or 80 cents through the bailout?" Nelson said.

Kelly Matthews, a senior economist with Wells Fargo, said it's unclear whether the government will buy up foreclosed properties.

"The initial proposal is that the government may buy mortgage-backed securities which could possibly include properties that were already foreclosed on," Matthews said. "But I don't believe there's any clear-cut evidence or defined program that the (U.S.) Treasury is going to buy those foreclosed homes."

Steve Cuillard, owner of Affiliated Realty in Orem and a broker specializing in foreclosure sales, said he doesn't know of any lenders who are delaying sales in anticipation of a bailout.

Foreclosure sales are slow because it's more difficult to get financing, he said.

"More lenders are now requiring 10 percent to 20 percent down payment, instead of 3 to 5 percent. I've had two potential buyers bail out on me this week because one of them had to take a pay cut, and another one was told his employer was cutting back," Cuillard said.

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