Real estate prices have fallen in the past few months, but an auction last weekend in southwestern Fairfax County showed that prices are not falling as far as bargain hunters would like.

Dominion Associates Group Inc., the developers of Stonecrest, a collection of five-acre wooded homesites in the rolling terrain near Clifton, had sold three of the sites for more than $269,000 apiece in the past 18 months. But when the local real estate market turned sour, it decided to auction off five other lots.

However, last Saturday an auctioneer could not coax a bid higher than $60,000 from a group of 17 bidders for any of the lots.

When Dominion said it would not accept a bid of less than $160,000, the bargain hunters began to leave.

"We got some serious inquiries after the auction," said Robert Morabito, project manager for Stonecrest. "We started talking to some people about terms and conditions after the auction."

Although the Stonecrest auction was just one event, the small drama that unfolded at Dominion's auction in some ways illustrates an important trend in today's real estate market: Despite substantially dropping prices, the market has yet to settle on equilibrium prices that are accepted throughout the community.

Even though sellers have been lowering their prices on various types of properties, would-be buyers are still making offers that are substantially below what sellers are willing to consider, much less accept.

"There are some good deals out there, but you can't steal," said Richard Kessler of the Kessler Co., a development firm.

"There may be a 10 percent discount, maybe somewhat more in some markets," he said. "Some people may show up rubbing their hands and wanting to buy at 50 cents on the dollar, but that isn't going to happen." Only in distress sales, typically foreclosure auctions, would a buyer enjoy a steep discount, Kessler said.

Stonecrest was developed by Dominion on 45 acres near Clifton, 25 miles south of the District. Three lots were sold between July of last year and this past May, and an $800,000 home has been built and occupied on the lot closest to the entrance off Colchester Road.

But the remaining lots are among 80 in the Clifton area that are on the market, Morabito said, and Dominion is refusing to let them go for less than $160,000 to $170,000. "I think the prices will firm up because we showed strength and resisted the ridiculously low offers," Morabito said.

Lorraine Case of the Shannon & Luchs Co. realty firm has a five-acre lot in the same general area listed for $300,000.

"I get a lot of phone calls about {this and other listed properties}, but I have not been able to turn any of those phone calls into a sale," she said. "I'm seeing there is a glut of lots on the market now."

Would-be buyers are holding out for lower prices in the coming months, Case said. But lenders are warning that financing packages might be more expensive then, she said. Sour real estate loans on the books and increased regulatory pressures are making lending institutions more cautious about approving new loans.

"There is less-easier-to-obtain financing out there right now," Case said. "The creative financing that we once had is now gone."

It was Dominion's financing of the Stonecrest land that prompted it to put its lots on the auction block. Although it had the cash reserves to service its debt, Dominion decided instead to push its properties harder in an attempt to raise money to pay the mortgage, Morabito said.

Carrying mortgages that averaged $200,000 per lot, Dominion would have been willing to take a loss of $30,000 to $40,000 on each lot in order to generate cash, Morabito said in a telephone interview after the auction.

Dominion, a partnership of Dan Harris, formerly of NVHomes, Larry Jager, owner of the excavation firm that worked on the road in the subdivision, and Dr. Peter Morabito, Robert's father and an Arlington dentist, paid about $1.5 million for the raw land in early 1989, Robert Morabito said.

At first the investment seemed to pay off handsomely with the three sales, including one to partner Jager. Confident in their product (the lots are near the site of a proposed commuter rail stop and can accommodate septic tanks for five- and six-bedroom houses), Dominion sat on the properties through the summer.

But no lots have been sold since May, and Dominion decided the time had come to complete its business in Stonecrest and concentrate on its other projects. One spectator at the auction said a five-acre lot closer to Clifton had sold for $125,000 a few months ago. Kessler said he knew of another five-acre lot on the market for about $150,000.

As auctioneer Greg DeLoach tried to coax bids from the crowd, the bidders and spectators stood silently waiting for someone to break the ice. DeLoach first asked for a bid of $200,000, then dropped it to $150,000, then $100,000.

"Do I hear $75,000? Seventy-five? Do I hear seventy-five?" intoned Deloach. No one answered. "Did you come to buy a lot?"

At last one man said he would bid $50,000. "Sir, I'm looking for a bid of $75,000 right now," DeLoach said.

That bid never came. Retrenching, DeLoach soon after fished that $50,000 bid back out of the crowd.

Another man raised the bid to $55,000 and a couple who already lived in the area upped it to $60,000.

"I have $60,000," DeLoach said. "The market may be low now, but things run in cycles and it will go back up."

But it did not go back up last Saturday. "We are willing to sell for a fair price, but we aren't going to give these lots away," DeLoach said.

No one bid higher than $60,000 for the five-acre lot that was on the block. DeLoach conferred with Dominion's owners and then returned to the podium to say they would not accept a bid of less than $160,000.

"You said in the flyer {advertising the auction} that there was no minimum bid," one man noted.

DeLoach simply repeated the price the owners were asking and asked if there were any bids higher than $60,000. There were not, and the lot was withdrawn from the auction.

Having announced Dominion's minimum price for their lots, DeLoach started the bidding on the next lot at $175,000 and no bids were made. The crowd began to disperse.

A man asked if Dominion would lower its price per lot if two were sold as a pair, but the company said it would not.

And that was the end of the auction.