As Marcus Ison moved his belongings into his new townhouse in San Pablo’s Devon Square development last week, he had mixed feelings.

His excitement about buying his first home was tempered by a sobering reality: Outside, bright red signs announced that two dozen homes in the development would be sold at auction within days - with starting bids of $250,000, far below the $415,000 he had just paid for his three-bedroom-plus-den unit.

“For the sake of my property values, I’m fairly anxious about the upcoming auction,” said Ison, an information technology consultant. “I’ll cross my fingers and hope there will be numerous bidders to drive the price up. As a first-time home buyer, this has definitely been a bittersweet experience.”

Fire-sale auctions of new homes have been virtually unknown during the past decade of real estate boom times. But they’re making a comeback with the market slump as developers act aggressively to thin their inventory. Besides Devon Square, at least three other Bay Area developments have homes that will go under the gavel in the next three weeks. In Southern California, dozens of units have been auctioned in recent months.

Pulte Homes, which built Devon Square, said it decided to auction 24 units in the 74-unit complex because the development, located in a mixed industrial/residential area, is not readily accessible to house hunters.

“This is a tough community to get traffic to,” said Steve Kalmbach, Bay Area division president for Pulte. “It’s in an area where there are not a lot of other new-home projects for sale. We felt it’s better to try to sell out sooner than try to drag on for the next however-many months. We decided to figure out a way to create some excitement and bring some energy.”

Residential real estate auctions (including existing homes) grew 12.6 percent in 2006, according to research firm Morpace International. Chris Longly, a spokesman at the National Auctioneers Association, said residential real estate is the auction industry’s fastest-growing sector, noting that such auctions grew 39 percent from 2003 to 2006. This year, they jumped 3 percent from the second to the third quarter.

The upswing in new-home auctions follows a similar rebound in auctions of foreclosed homes.

“Now that the market has slowed, builders are looking at the auction method as an accelerated marketing program to move standing inventory,” said Rhett Winchell, president of Kennedy Wilson Auction Group, the Beverly Hills company that will conduct the Devon Square auction, as well as ones for developments in Pinole and Benicia.

Winchell said auctions work well in a soft market because they ease buyers’ concerns about overpaying.

“In the market we’re in now, buyers tend to resist making an offer because they don’t know what will happen down the road with prices, incentives, how long it takes to sell a project,” he said.

By contrast, he said, in an auction “people understand that the project will be sold out in one day. That leaves out a lot of those concerns. They see the price, they see it’s below what they consider market, they bid competitively, see what other units sell for, know they’re paying pretty much the same price as everyone else with small variances.”

Kennedy Wilson’s auctions have minimum bids that are the actual minimums, as opposed to the “secret reserve” method where there is an unpublished minimum bid that must be reached for the property to sell. The auctioneer does not charge buyers premiums, so the winning bidders pay only their bid amount plus closing costs. (For Devon Square, Pulte will pay up to $5,000 of closing costs for bidders who use its preferred lender and close within 30 days.)

Kennedy Wilson said its commission from the seller is equivalent to what a seller’s real estate agent would make, which is about 3 percent. Buyers’ agents who accompany successful bidders receive a 2 percent commission.

For potential bidders, the big question is: What do auctioned homes actually sell for?

The upcoming Bay Area auctions advertise minimum bids that are a good 40 percent below their original asking prices. But the actual discounts are likely to be less dramatic. In one recent auction, the final amounts ended up being 14 percent less than the lowest previous asking price.

In late August, Centennial Homes auctioned 22 townhomes at Santa Rosa’s Chanate Village, with minimum bids of $260,000 to $330,000 on units that had originally been priced as high as $399,000 to $589,000.

“We got 86 percent of our previous (lowest) asking price,” said Jim Clifford, a partner in the Novato home builder. That lowest price takes incentives into account. For example, a unit that listed at $399,000 with $16,000 in builder incentives might have sold for $329,000, or 86 percent of $383,000.

With almost 200 registered bidders in the fray, the units went for one-quarter to one-third more than the minimum bids, he said. Clifford said he was delighted with the process, which he turned to after nothing else worked.

“We tried everything,” he said. “We spent tons of money on all different kinds of marketing; we had radio ads offering to give away free cars. It was just dead. We were sitting around one day trying to figure out what to do, and we got a cold call from (auctioneer) Kennedy Wilson. We went, ‘Wow, we never thought of that.’ We calculated this was the best way for us to go and we did it.”

Clifford said the company made enough from the auction to pay off its loans and make “a little bit” of profit.

Farther from job cores, the auction discounts have been steeper.

Last week, Anderson Homes auctioned off 34 single-family homes in its Paseo West subdivision in Manteca (San Joaquin County) with minimum bids starting at $285,000. The homes went for about $400,000, according to press reports - a 27 percent plunge from the most recent $550,000 asking price. Paseo West homeowners, many of whom had paid $600,000 and up, were incensed that their property values took an instant nosedive and organized to protest the auction in advance.

The Bay Area auctions so far haven’t inspired similar outrage.

Jeff Lawrence, Northern California regional manager for Watt Communities, which will auction 25 Rohnert Park townhomes Nov. 4, said that while some homeowners are disappointed, many realize it’s to their advantage for the community to be fully sold.

“It’s difficult for homeowners to compete with the builder if they want to sell their home,” he said.

Lawrence said he has high hopes for the auction.

“The great thing about the process is that it’s market-driven; it lets people decide what they want to pay; it lets us find out, what’s it going to take to move some homes,” he said. “From a business standpoint, I would rather discount homes and sell them than pay interest to the bank. The bottom line is if you sit and wait, you pay the interest and you’re still sitting with the house.”