Brian Michaud just picked up a little something for 40 percent off -- a brand-new, two-bedroom condominium in Fish Creek, Wis., with a private elevator and harbor views. His method: He bought it at auction. Though the condo was new, its developer decided he wanted to sell quickly, so he put it on the block last month.

Mr. Michaud had been watching the condo since construction started, but figured last year's $1.25 million asking price was beyond his budget. But when it went on the block, Mr. Michaud and his brother snapped it up for $740,000 -- less, even, than comparable units without water views have sold for nearby. "It was a great deal," he says.

As the U.S. housing market slows, private homeowners have begun experimenting with various sales strategies, including putting the prized family home up for auction. But another group of sellers is also heading to the auction house: builders and developers trying to unload newly built homes. Unlike typical homeowners, whose emotional and financial stakes in their homes might keep them from slashing prices, developers tend to lack sentimental attachments and may have more room to negotiate financially. So in many cases, buyers can get a decent price on new properties at auction, with discounts of 20 percent and even more.

Auction companies say new-home sales represent a growing part of their business. In Denver, auctioneer Janelle Karas has gotten so many inquiries from builders and developers worried about mounting inventories that she recently changed her business model to specialize in them. In Gadsden, Ala., auctioneer Craig King says he handled 12 auctions of new homes in 2005, and this year he's on pace for about twice that number. Walt Driggers, who runs an auction house in Ocala, Fla., says many of the developers who are now coming to him started the building process more than two years ago when real-estate prices were climbing. This weekend his parent company, Tranzon, will auction a four-bedroom lakeside townhouse in White Pigeon, Mich.; next month, it will try to sell a 5,000-square-foot brick mansion in Lorton, Va.

Nationwide figures on new-home auctions aren't available; neither the National Association of Home Builders nor the National Auctioneers Association break out such numbers. But overall residential auction sales are up, according to the NAA. The association's most recent statistics showed that the category grew 4.4 percent in the first half of 2006, compared with 4 percent for the same period in 2005. The group projects home auctions will account for $255.4 billion in revenue in 2006, compared to $240.2 billion last year.

The home-builders association says interest in new home auctions is up as builders experience an increase in contract cancellations -- 30 percent this summer, compared with 15 percent last summer. Builder confidence, as measured by the trade group's monthly survey of its members, is at a 15-year low. Alabama auctioneer Mr. King adds that builders and developers are struggling to pay overhead, taxes and interest on their loans. "They're looking for ways to stop the bleeding," he says.

The increase in new-home auctions comes amid a softening in the overall housing market. Inventories of unsold new homes are now at a 6.5-month supply, an 11-year high. Overall, new home sales were down 21.6 percent, housing starts fell 13.3 percent and building permits dropped 20.8 percent in July from the previous year, according to government statistics.

Terrence Wall, who developed the Wisconsin condominium that Mr. Michaud recently purchased, says potential buyers stopped calling when interest rates went up last year. He sold one of the six units for $1.05 million, but then he got competition from three other projects that went on the market in the little resort town. Though the auction didn't raise as much as he'd hoped, he was pleased with the process. Unlike the brokers he'd hired to market the condos, who'd had few open houses, the auctioneers staffed an open house for two weeks in July before the sale. They had 252 showings, with potential buyers coming from 27 states. The proceedings were held in a conference center, where bidders were treated to a buffet of salmon, cheese and deviled eggs. Fifty people registered, 17 made bids, and in a half hour, it was over.

"It was 'bing, bang,' I'm done," Mr. Wall says. "I walked away knowing I got the top possible price."

Unlike private homeowners, who may overvalue their homes and are often reluctant to reduce their asking price at auction, small builders and developers tend to be more sophisticated and motivated, auctioneers say, with a clear-eyed understanding of the value of their properties. And because builders make as much as 40 percent gross profit on the homes they sell, they also have more wiggle room when it comes to reducing the price. "A home seller is in a retail position," says Destin, Fla., auctioneer Ben Anderson. "A builder is in a wholesale position." (PERSON NAME="Marks, CW-10Auction economics made sense for David")Auction economics made sense for David Marks. The developer has already sold the first 133 units of his Vista Hills condominium project in Austin, Texas, the conventional way -- spending $150,000 in marketing and advertising costs over 21 months, and selling the units for $170,000 to $300,000. But with sales slowing, he's eager to close out the project. So much so, in fact, that he's using an "absolute" auction -- meaning, he'll take the highest bid offered, without a reserve price -- to sell the remaining two-bedroom units, which have granite countertops, stainless-steel appliances and crown moldings. He realizes he could take a big loss on the Sept. 30 sale -- he'll have to pay the auctioneer $50,000 -- but says he's made enough profit on the previous condos to cushion him. "Six units aren't enough to justify a sales staff," he says.

This isn't the first time that large numbers of new homes have gone under the gavel. In the late '80s and early '90s, builders large and small were buying land and building houses on speculation. When the market turned, many of these properties wound up in foreclosure, along with thousands of privately owned homes. As a result, banks created separate departments known as REOs, for "real estate owned," to handle the onslaught of sales.

But that's much less likely to occur in the current market, industry observers say, in large part because big developers, who build 68 percent of all houses in the country, are waiting for signed deals before they break ground. Companies such as Pulte Homes Inc. in Bloomfield Hills, Mich.; Centex Corp. in Dallas; and Toll Brothers Inc. in Horsham, Pa., all say that they haven't auctioned their homes and don't plan to anytime soon. "We build only when someone signs a contract," says Joseph Sicree, a spokesman for Toll Brothers.

To register for an auction, a buyer must put down a deposit, usually 8 percent to 10 percent of the home's estimated value. As with any transaction, caveat emptor: New homes sold at auction are often in out-of-the-way places, with few comparable recent sales. Although sellers must disclose defects, brokers caution buyers to check to make sure the property isn't encumbered by liens, has had proper permitting and inspections, and that all new home warranties apply. And the hammer price isn't necessarily the final price: Some auctioneers take a "buyer's premium" of 5 percent to 12 percent.

"Just because it's an auction doesn't necessarily mean you'll get a deal," says Wayne Jones, a Mississippi insurance executive who has bought homes at auction. Recently, after spending six months looking for a vacation home in the Gulf Shores area of Alabama, he spied an ad for the auction of a new 3,100-square foot home with tile floors, gray granite countertops and a view of a lagoon.

He thought the builder's $1.29 million asking price was high; after other sales in the area, he figured the home might sell for closer to $1 million. The auction set no minimum bid price, so Mr. Jones registered for the May sale. Thirty people had signed up, so he was surprised when, after the auctioneer started his patter, only one other person bid, then quickly dropped out. After only a few minutes, Mr. Jones got the property for $812,000 -- $20,000 above the opening bid. "I wasn't expecting to win it, but I think it was a good buy," he says.

Going, Going...

More new homes are showing up on the auction block, a boon for bargain-hunters. Here are some upcoming auctions and a few recently completed sales.

PROPERTY/ORIGINAL ASKING PRICE: Sand Dune Court Destin, Fla.; $948,000
AUCTIONEER/AUCTION DATE: Anderson Auctions, Sept. 9, 2006
COMMENTS: A custom builder is selling this four-bedroom home, with three porches, two kitchens and private beach access. With 11 active listings in a 34-home community, it's been sitting on the market for more than a year.

PROPERTY/ORIGINAL ASKING PRICE: Brandon Pines Drive Providence Forge, Va.; $630,000
AUCTIONEER/AUCTION DATE: Tranzon Fox, Oct. 5, 2006
COMMENTS: This five-bedroom home overlooking a fairway in Brickshire, a golf course community, is being unloaded by a local builder because there are 87 other homes for sale in the community, a two-and-half year's supply.

PROPERTY/ORIGINAL ASKING PRICE: Delaware and Surf Avenues North Wildwood, N.J.; $500,000 to $650,000
AUCTIONEER/AUCTION DATE: Sheldon Good, mid-October 2006
COMMENTS: The developer put these 18 townhouses, two duplexes and two flats up for sale last summer when the Jersey Shore was hot -- but now it's not. The three and four-bedroom units are within walking distance of the beach.

PROPERTY/ORIGINAL ASKING PRICE: Brigadoon Trail Gulf Shores, Ala.; $1.29 million/Sold at $812,000
AUCTIONEER/AUCTION DATE: Coastal Auction Company, May 20, 2006
COMMENTS: Prices were high early last year when a custom builder started marketing this 3,100-square foot lagoon-front home but fell drastically after Hurricane Katrina. Thirty bidders attended the sale, but it still sold

for 37 percent less than the original asking price.

PROPERTY/ORIGINAL ASKING PRICE: Burgess Mill Court Locust Grove, Va. $349,000/Sold at $310,750
AUCTIONEER/AUCTION DATE: Mastin Auctions, May 6, 2006
COMMENTS: A local builder tried for months to sell this rancher in the golf and boating resort of Lake of the Woods, but it couldn't compete with the 160 other homes for sale. At the auction, he didn't set a minimum bid, which excited bidders and pushed up the price. It sold for an 11 percent discount.

PROPERTY/ORIGINAL ASKING PRICE: St. Tropez Miramar Beach, Fla. $1.5 million/Sold at $1.072 million
AUCTIONEER/AUCTION DATE: Anderson Auctions, March 25, 2006
COMMENTS: The builder put this three-story home with Gulf of Mexico views up for sale last August, just when the market began to decline. Though 60 bidders came to the sale, the house sold for 29 percent less than the asking price.