Luxury real estate meets market realities

FORT LAUDERDALE, Fla., May 7 (UPI) -- Many U.S. luxury homes are facing the same fate as foreclosed properties, the sometimes painful reality check of the cash auction, Realtors report.

It is rare for luxury homes to fall into foreclosure in normal market conditions, ABC News said Wednesday.

But, wealthy homeowners are turning to auction sales and taking their lumps, because buyers pay upfront, in cash, closing within 30 days of the auction.

An auction sale eliminates the chance -- during a severe credit crunch -- that the homeowner will be denied financing. But, high-end properties are often selling for far less than the homeowners intended.

A four-bedroom home in Scottsdale, Ariz., which was listed for $3.2 million, was put up for sale at auction with an opening bid of $1.5 million, ABC reported. Townhouses and condos in Fort Lauderdale, Fla., with list prices between $450,000 and $650,000 have been selling at auction for $330,000.

"It comes down to market realities," said Rick Sharga, vice president at RealtyTrac. "If you want to get out from under that house, you're going to be at the mercy of whatever the market conditions are at the time, just like everybody else."