SUN PRAIRIE — At least 20 properties here will be sold to the highest bidder next month — an event promoters are billing as one of the largest real estate auctions in state history.

Condominiums, duplexes, single family houses and empty lots will make up the 40 residential properties that are up for auction, something experts say is a growing trend in the real estate market. Twenty other condominiums in Fall River also owned by Kraus Real Estate and Builders will be auctioned the same day.

But before buyers think they're going to come away with a steal, there are a few caveats.

First, only half of the total 60 properties will be sold to the highest bidder regardless of price. With the remaining properties, the developer has the right to refuse the final bid. Buyers also will have to pay a 10 percent fee to the auction company.

"They're definitely not a gimmick," Joe Murray, a lobbyist for the Wisconsin Realtors Association said of housing auctions. Murray also lives in Liberty Square, one of the developments with properties up for auction.

"It's truly a sign of the economy and real estate times and how significant they are," said Murray, adding property auctions are "fairly uncommon" in Dane County.

"Wisconsin is not hip by this yet," agreed Travis Hamele of Hamele Auction Service in Portage, which is not conducting this sale but has done other real estate auctions over the past 20 years.

But while property auctions are increasing nationally as foreclosures rise and the housing market slows, "there isn't really a consensus among economists whether (a person bidding at) an auction ends up getting a better price," said Stephen Malpezzi, professor of real estate development at the UW-Madison School of Business.

The key, he said, is common sense: "Don't get caught up in any sort of frenzy."

Thirty of the properties up for auction are part of Liberty Square, begun in 2004 as a "traditional" neighborhood — a higher density development with smaller lots built closer to the street — and includes different housing styles from apartments to single-family homes to condominiums for senior citizens.

Seven empty lots and three homes also are up for auction in the nearby Hickory Grove subdivision.

The properties are within walking distance of a neighborhood park, an elementary school, a salon, gas station and a place to grab a burger. Yet, about 25 percent of the approximately 300 units remain empty.

"We got a speed bump in the economy," Herman Kraus said. Many of the buildings were under construction when the market started to slow and "we had to finish out what we had," he said.

Reducing the company's inventory isn't the only motivation for the auction.

As of Monday, Kraus Real Estate and Builders Inc. also was listed among Dane County's top tax delinquents, owing $777,712 in back taxes.

Kraus said the tax backlog, insurance payments and other costs associated with carrying a large number of vacant properties led him to "be more aggressive" about unloading the properties.

"We are paying (back) taxes every week," he said. "Our intention is to get as far caught up as we can."
Once a property is sold, Kraus said his company will pay the back taxes at closing. "(The buyer) does not take those property taxes."

People looking to bid on a property at the May 2 auction need to come ready to make a split-second decision.

Potential buyers will gather in a hotel ballroom armed with bid fans and watch as pictures of the properties appear on a big screen.

"We sell a property about every two minutes," said Craig King, president and chief executive officer of J.P. King Auction Company, which is handling the auction.

Under the terms of the sale, Kraus reserves the right not to accept bids on up to half of the properties, but the other half will "go regardless of price," King said.

AnchorBank, which has issued some of the loans to Kraus builders on the project, will offer financing to buyers at the auction.

Kraus said he's "excited, curious and cautious" about the event.

"We're getting a lot of people out there looking … something we hadn't had in a long time," Kraus said.

Among the curious were Jack Miller and his wife, Sandy, who toured the senior living apartments and a single-family home last week after learning of the auction from their son-in-law, a general contractor in the area.

"We'd like to be near the kids and grandkids," who live in DeForest, said Jack Miller. The couple live in Owensboro, Ky., but used to live in Sun Prairie.

Miller said they plan to come back for the auction with the hope "that we find a bargain."

If you go:

What: Auction of 60 properties in Sun Prairie and Fall River.

When: 10 a.m. May 2 at the Crowne Plaza, 4402 E. Washington Ave., Madison.

Coming up: J.P. King Auction Co. will hold another auction of 45 Lake Delton condominiums at 1 p.m. June 21 at Trappers Turn Golf Club, 652 Trappers Turn Drive, Wisconsin Dells.

For more information, visit www.jpking.com.