(MONEY Magazine) – When her elderly mother became unable to take care of the family's waterfront cottage in Plymouth, Mass. last year, Kathy Buonopane put it on the market "as is." Months passed, and no sale. She switched realtors and lowered the price to $189,900. Again, nothing. After the house had sat unsold for well over the local average of 180 days, "it was time to change strategies," she says.

What She Did

In September she and realtor Carol Eklund registered the house on auction website AgencyBid.com. Once mainly for foreclosures, auctions online and off are gaining ground among sellers desperate to unload. Live auctions of homes generated $14.2 billion in 2005, reports the National Auctioneers Association (online auctions were too new to be measured).

How It Works

To sell at auction, you set a starting bid (in this case $159,900), a sale deadline and, often, a reserve price below which you aren't obligated to sell (here, $189,900). You then market the property via open houses and the multiple-listing service. After these steps have been accomplished, you simply sit back and wait for bids to come in. Buyers benefit from seeing other bids, sellers from the ticking clock. Because the initial bid is generally lower than what the house would be listed for on the market, auctions might bring in lower offers than traditional sales. That said, auctions can end high, as was found in research recently published in the Journal of Personality and Social Psychology. People become interested when prices are low and then feel compelled to stick with their commitment to bidding even when the item for sale goes above market value.

What It Cost

AgencyBid is free for sellers, with nominal charges for additional listing features like video. (If you use a broker, you'll have to pay his commission too.) Buyers pay a $250 fee. To find an auctioneer, go to auctioneers.org.

The End Result

Putting the cottage up for auction "created a sense of urgency," says realtor Eklund. It certainly egged on buyer Jim Moscardelli, who'd been eyeing the MLS listing for months. On the final day of the auction, he called Eklund directly and offered $187,900—a hair below Buonopane's reserve. Sold!

Reserve price $189,900

Selling price $187,900

Time on auction block 28 days

HOME-LOAN RATES

BOTTOMED OUT Mortgage rates dropped from their summer peaks to new lows in December, according to HSH Associates.

[UP] Up from previous month [DOWN] Down from previous month

NOTES: As of Dec. 15. ¹$417,000 or less. ²More than $417,000. SOURCE: HSH Associates.

DEALS: 30-Year Fixed-Rate Jumbo Mortgages

The banks below offer some of the best loan rates and terms. Use them as a benchmark for your own shopping. Visit hsh.com for more deals.

NOTES: As of Dec. 15. Rates and terms subject to change. SOURCE: HSH Associates.

REFI MADNESS

In December, applications to refinance hit their highest level in more than a year, accounting for 52.6% of total mortgage applications. Outstanding mortgages now break down as follows:

FIXED RATE 54%

ADJUSTABLE 28%

INTEREST-ONLY 18%

SOURCE: Mortgage Bankers Association.