Some tragic disasters aren't acts of God.

One day last October, a disaster struck a Queens co-op. In a matter of hours, apartment prices dropped by an average of 23 percent, with some units retaining only 2 percent of the value it had just the day before. An elderly woman who had purchased her own apartment in June and invested in four others saw the value of her combined investment nosediveby $70,000, threatening her entire life savings.

Amazingly, this widespread destruction was not caused by fire, flood or an unforeseen act of God. It was the result of a real estate auction -- a sales process being chosen today by a number of banks and other owners desperate to dispose of large inventories of unsold apartment units.

Unfortunately, while the auction method of selling has a successful history with some products, when it comes to housing, particularly co-op housing, it is fraught with danger. An ill-advised auction can have devastating long-term consequences for a building, its occupants and even its neighborhood.

Let's examine why. In conventional sales, an agent or broker works to stabilize a property and increase its value. Auction companies, on the other hand, are called in to sell as many units as possible on a given day, relying on the theory that a concentrated group of potential buyers will engage in a sort of feeding frenzy to drive prices higher and faster than conventional methods.

Recently, however, an alarming number of real estate auctions have resulted in prices being driven down instead of up. The cause? Most of the time it's the result of unsophisticated buyers bidding high and then deciding not to close on their apartments while savvy, professional bidders are successfully purchasing their units at the lowest possible prices.

As a result, many owners find themselves in an even more difficult situation than existed prior to the auction. Not only have they incurred huge up-front advertising and marketing costs promoting the one day event, but even more devastating, they did not achieve the prices they sought and the value of their remaining assets have been totally devalued.

The after-shocks of such an auction can ripple throughout the entire marketplace. Investor and consumer confidence is shaken as the equity of their remaining property plummets. Sales become more difficult and, in some cases, it is virtually impossible to resell an apartment. Finally, as the appraised value of a property goes down, its prorater share (a formula banks use to determine the appropriate relationship between a property's value and the amount of its underlying mortgage) goes up to a point where no bank will give end loans, even if the property is 51 percent sold.

At the Queens co-op cited earlier in this article, an auction company was retained to dispose of 141 occupied and 15 vacant apartments. Prior to the auction, 84 units in the 314-unit co-op had been sold by our company for prices ranging from $25,000 to $35,000 for occupied units.

Pre-auction sales arranged by the auction company dropped the price per occupied unit to an average of $12,500. On the day of the auction, an average occupied apartment sold for only $7 ,000 with four units selling for as little as $700.

In stark contrast to the auction process, a full service real estate brokerage can help increase prices while stabilizing the market. Qualified and interested buyers are located, and the flow of apartments brought to sell is controlled, reserving below-market prices for less desirable units.

Real estate brokers, after all, have a stake in the community as well as the property and therefore seek to build long-lasting relationships. Our company, for example, carries out a comprehensive assessment and analysis of the property prior to going to market. If there is a significant problem with the building's financials, underlying mortgage or physical condition, we make recommendations on how these problems can be remedied before embarking campaign.

Agents also provide follow-up services such as renting, reselling, management, and investment analysis to maintain a high level of value for the property.

By working closely with an owner, full service selling agents, using a comprehensive approach, help raise prices. It may take longer, but in the end, a healthier conversion is achieved.