WASHINGTON — About 1.7 million homeowners were on the verge of foreclosure in the fall, a looming “shadow inventory” of homes that will be put up for sale in the coming years and weigh down prices, a report said Thursday.

The number, up from 1.1 million a year earlier, is likely to keep rising through the middle of next year or later, said Mark Fleming, chief economist of First American CoreLogic, the real estate research firm that released the study.

Already, the foreclosure backlog is equal to nearly half the 3.8 million unsold new and existing homes currently on the market, First American said.

“We’re going to be dealing with high levels of distressed (sales) in the marketplace for at least a couple of years,” Fleming said.  “It’s not just all going to disappear.”

Other reports have come up with larger estimates.  But First American assumes that fewer delinquent borrowers — only about one-third — will wind up losing their homes.  It also estimates that nearly 30 percent of bank-owned properties have already been listed for sale.

In many markets around the country, the number of new foreclosures has dropped in recent months as homeowners are reviewed for loan modification programs.  But real estate agents, who have seen this as an encouraging sign, still fear that an onslaught is coming.

“We’ve been in recovery mode for most of the year.  How many foreclosures do they have to dump on the market to affect that?  I don’t know,” Deborah Farmer, owner of StarLight Realty in Tampa, Fla.  “Any house priced under $225,000 will be affected by a large increase in foreclosures in this market.”

In fact, Moody’s star economist is predicting another big fall in home prices next year, by 5 to 10 percent. Harder hit markets, like Miami, Las Vegas and Phoenix could see huge drops of as much as 20 to 30 percent.

Of course, it does not take a rocket scientist to list all the factors, as Zandi does, that will be a drag on home prices.

It’s the usual list of suspects: high unemployment, a planned pullback by the Fed come March on its aggressive buying of mortgage-backed securities, not to mention the phasing out of the home buyer tax credit a month later in April.

And of course there’s the never ending foreclosure crisis to round out the list, with another 2.4 million homes likely to be seized by their lenders.

These homes largely represent loans that are delinquent but have not yet resulted in foreclosure sales.

About 7 million properties are destined to go into foreclosure, according to a September study by Amherst Securities Group, compared with 1.27 million properties in early 2005.

“There’s a huge supply out there,” says Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C. “The foreclosure process can take a long time. When it comes to (the housing recovery), we’re not home free.”

There is often a long lag time between a borrower going delinquent and the bank taking the home. Here’s why:

• Moratoriums. New state laws imposing short-term moratoriums have slowed the timeline from delinquency to foreclosure.
• Overwhelmed lenders. Banks dealing with a surge in refinancing, mortgage modifications and defaults are overwhelmed with demand, so it can take longer to initiate a foreclosure sale.
• Modifications. Many loans now are first examined to see if they might qualify for a modification. This drags out the timeline and means it is taking longer for homes to go into foreclosure.
• Asset write-downs. Banks may in part be waiting to liquidate homes through foreclosure because they don’t want to write down the value of the asset. Lenders can keep homes on the books at a higher value until they are sold at foreclosure.

“There is a lot of foreclosed property in the pipeline that will hit the market and depress prices,” says Mark Zandi at Moody’s Economy.com. Foreclosed homes often sell at prices below those on the market and can therefore drag down overall home values.

CLOSE TO HOME: Our nationwide look at local real estate markets

The shadow market of foreclosed homes eclipses the number of homes lost this year. Zandi anticipates there will be about 2.4 million homes lost next year through foreclosure, short sales and deeds in lieu of foreclosure. That compares with 2 million homes lost in 2009.

Jumana Bauwens, a spokeswoman at Bank of America, says the bank is projecting an increase in foreclosures in part because customers will not be qualifying for existing loan-modification programs.

Sellers love it, because it allows them the opportunity to showcase their property to an increased number of buyers, which increases their chances of getting an offer and getting their property sold quickly. It also eliminates the risk of over or under pricing their property in an uncertain market.

Buyers love it, because it puts them in control, giving them convenience and the detailed information they need to research the property online, from their home or office.

Realtors love it, because they now can offer an alternative marketing system that gets results very quickly, without discounting their commissions.

Utah Real Estate will post for sale at auction 20 to 60 properties per month. These properties range in values from $5,000 to $5,000,000, and come from all over the state of Utah. Each property can be viewed prior to the auction and buyers have 30 days to close the transaction should they become the successful bidder.

LINDON, UT– December 9, 2008 – Utah Real Estate Auctions is a real estate brokerage that focuses on selling properties for highly motivated sellers. Sellers include properties that are either bank-owned, in the foreclosure process, private individuals, builders, or developers that need to sell real estate quickly. The auction provides a system that sells property in a 4-6 week timeframe.

Kevin Gallagher, broker and auctioneer, said, “At a very simple level, we bring buyers and sellers together. Buyers include individuals looking for the best deal on a great property, to investors taking advantage of the prices of the current real estate market. We want to be the first place people think of to buy property.”

Auctions are fun, straightforward, and cut a lot of time out of buying or selling real estate. Buyers can walk through the property, look at the title report, and read through the sellers disclosures all prior to bidding on the property. Once the property is “sold” at the live auction, the buyers sign a real estate purchase contract that gives the seller 7 days to accept the offer. Some properties are sold with no minimum and no reserve and are not subject to seller’s approval.

Sellers are looking for ways to generate interest and sales in this volatile market. Utah Real Estate Auctions creates another option for sellers that are not having the success they would like selling their property. Generally, there will be 50 plus properties from 10-30 different sellers at an auction. Utah Real Estate Auctions plans on doing at least one or two auctions a month in Utah. Auctions are planned for Utah Valley, Salt Lake/North, and St. George/Southern Utah.

In addition to selling homes, condos, townhomes, and building lots, Utah Real Estate Auctions will also sell commercial property, land, and bulk sales of real estate. The advantage sellers have using Utah Real Estate Auctions is their properties have a broad exposure to many potential buyers in a short time frame. All the sellers marketing dollars are combined to create a buzz and excitement hard to achieve without the auction system.

Auctions include properties in all price ranges. The December 9^th auction at the Provo Marriott at 7 pm will include over 40 properties with values under $100,000 and up to $1.5 million.

To learn more about buying or selling through Utah Real Estate Auctions, please visit www.UtahREA.com

Nearly 15,000 property owners in Utah representing 1 in every 61 mortgaged housing units received some type of foreclosure-related notice last year, nearly double the total in 2007. That placed Utah 13^th highest among states, according to a new report, which ranks Salt Lake City 46^th highest among 100 metro areas. Though rates in 2009 could be higher, there are counseling options available and potential federal assistance to help borrowers avoid that fate. (“Salt Lake Tribune “January 15^th, 2009).

Frustrated sellers of property sink deeper into debt each month as properties on the market remain unsold, with little or no activity at all. If properties could be sold and closed quicker, sellers would avoid costly holding and default expenses which eventually drive prices upward to an unrealistic property price. Often times, the asking price is now based solely on the mortgage balance and not the real market value that a buyer is willing to pay.

Utah Real Estate Auctions, a Utah based Company is proactively doing something to help homeowners and potential buyers. Utah Real Estate Auctions provides an alternative marketing method which brings buyers and sellers together quicker in a market unlike any other we have ever seen. Their goal is to get immediate results at true, current, market value.

Here is a simple example of what is happening in today’s market:

A seller has a home with a value of $300,000 and they find themselves in financial trouble. With each missed payment, that amount gets added to the total balance due on the mortgage; additionally, missed payments mean late fees, penalties, and eventually attorney fees. The homeowner’s mortgage balance of $300,000 could easily increase to $320,000 in just 6 months and even more as time goes on. This now forces the seller to increase the price of their home, thus overpricing it and compounding the problem. All of which could have been avoided with a quick sale. So as one looks at the current real estate market conditions, you will see this exact same scenario played out with hundreds, if not thousands of sellers, causing the short sell phenomena we are in today with banks and sellers taking big hits.

Utah Real Estate Auctions provides a method of selling real estate that gets results fast at fair market values benefiting Buyers, Sellers and Banks; and eliminating the risk of sellers over or under pricing their property.

Utah Real Estate Auctions works with and invites participation from all Brokers and Agents. Currently Utah real Estate Auctions has 3 scheduled auctions with an estimated 170 properties being offered for sale.

February 5^th, 2009- Utah, Wasatch, Salt Lake and Tooele County

February 19^th, 2009 – St. George, Cedar City areas

March 17^th, 2009 – Las Vegas and Mesquite Area.

Buyers and investors are invited to take advantage of these incredible values. With rates at a 50 year low and inventory very high, now is a great time to buy! Utah Real Estate Auctions is changing the way people buy and sell real estate.

For more information visit our website www.UtahREA.com or call 801-922-9700.

Over 300 buyers attended the three hour event. Buyers bid on a broad range of houses and lots which proved that there are buyers wanting to buy in this market. The auction had something for everyone.

Fully improved building lots went for $30,000 to $100,000, while homes of all types fetched prices from $150,000 to $900,000.

The auctioneer and staff felt pleased with the turnout and the results of the auction.

Lot prices where a bit on the low side, which was expected due to the large supply of lots available.

The next Auction is scheduled for November 25^th.

A foreclosure rate of 3 percent would put about 13,000 homes in Utah in foreclosure, nearly double the previous high of 6,800 homes in 2002.

These trends increase the need for sellers and lenders to find an alternative marketing method of selling real estate. Real Estate Auctions allow sellers a way to quickly expose in a unique, high visible way their properties to an increased number of qualified buyers. According to Auctioneer/ Broker Kevin R. Gallagher, UREA

Builder auctions are gaining in popularity nationwide, as the housing market continues to lag, association spokesman Chris Longly said.