Kenneth Fisher - BeachTownBrokers.com Remax Essential - Wilmington, NC

An Auction is a great way to sell a home. When a seller puts a house on the market, the goal is to sell the home for the most money possible in the shortest time period...right? A properly conducted auction sells homes fast for the markets top dollar. Here’s why. There is always a pool of ready, willing, and able buyers in the market. All of the buyers, however, are not typically motivated to pursue one particular house. Many of those buyers may have an interest however, for the right price. Out of those “potentially interested buyers”, there will be a handful of “good buyers”. Ideally, the best buyers are end users, or primary residence buyers (depending on the property). These are the buyers that think about more than just making money when they purchase a home…opposed to the bottom feeders. There will always be bottom feeders looking for a bargain.

The auction sales model says to the buyers in the market “Hey..We’re going to sell this house on this date. We don’t know what the true market value is but we’re going to sell it for the price that the market says it is worth. Come and get it if you are interested at all.” This skews, and takes advantage of, the economic relationship between supply, demand, and price (low supply + high demand = high price). By removing price as a barrier for buyers, assuming the marketing is excellent; an auction attracts mass attention, which is the key for getting the markets top dollar. It captures buyers’ interest with the opportunity to get a house for a great value. The timeframe creates a sense of urgency and compels buyers to participate, if they are at all interested in owning the house. A competition between interested “good buyers” is the best condition a seller can hope for, which is why an auction is a great way to sell a home.

There are factors of the auction that can affect the outcome. For example, an absolute auction (where the home will sell to the highest bidder on auction day regardless of price) attracts maximum attention, but it is more risky for the seller. What if it rains and there is a low turnout? To reduce the risk of potentially having to sell the property for less than the seller wants, a reserve can be set for the auction. This is the price that the seller will not sell if bids do not reach. A reserve does reduce the seller’s risk, but can have adverse effects on demand due to the uncertainty factor. There are several methods which can be used to reduce risk for the seller while maintaining the integrity of the auction.

Strong marketing and having the house in top condition are major contributors to the effectiveness of the auction. It certainly helps to have a highly desirable property. The real estate market is highly inefficient, but by using an auction based model that focuses on fundamental principles we can take advantage of that inefficiency and use it to the sellers favor. No model can sell a home for more than it is worth, and a home is worth what the best buyer is willing to pay. The auction model is the fastest, most efficient way to get to the market value of the house and that is why an auction is a great way to sell a home.

What does it take to get a short sale completed successfully? First, the sellers have to be qualified for the short sale. The basic qualifications are that the homeowner owes more than the home is worth, is unable to maintain the payments on the property, and has experienced some sort of hardship. Ideally all of these conditions are present, but they don't necessarily have to. Banks are ususally less willing to negotiate favorably with sellers who meet less than the above criteria, but its still business to them. They are going to look for best way for them to recover as much of the money as they legally can. In the beginning the seller should be properly prepared for the journey they are going to take. They must be prepared to be frustrated, and to be patient. In the early stages, the bulk of the work involves preparing financial statements, hardship letters, gathering documentation, and of course consulting the appropriate legal and tax professionals. We always recommend speaking to a layer and a CPA

Once all of the preliminary preparations are complete, it's time to get the property on the market and to get the best price the market will bear. This is a very important factor in a short sale. The seller should get the house in the best condition they can, realizing that many short sellers dont have the money to put into the house. Many of the things I see that detract are not costly things, they just take effort...like cleaning. Then the marketing effort has to be equally substantial. The property needs to get enough exposure to excite people about it and to want to bid competitively on it. This marketing part, and the valuation part, are both completely seperate subjects. Bottom Line, since short sales can scare a portion of buyers away, agents need to do even more to attract the right buyer at the best price, and to eliminate barriers to buying. Low earnest money deposit is one way to prevent a buyer from feeling like they have too much tied up, particulalry if the buyer is an investor. We want to get the best price we can to take to the lender.

When a short sale offer is accepted by the seller, it then goes to the bank for review. In North Carolina, until the short sale is approved by the lienholder, the property is still marketed for sale as an active contingent listing. Other offers can still come in as back-ups and the lender must be made aware of the offers existence. Another interesting point is that the primary buyer, with the sellers permission, can be made aware of the terms of back up offers. This is an advantage, obviously, because it gives the primary buyer, as it should, an opportunity to top the back-up.

Most banks have a processor to review the file to make sure it has all of the ingredients for approval, then they will submit it to a negotiator, who will actually negotiate the terms of the contract and short sale approval letter. Once you reach the negotiator step, most of the waiting is done. The negotiator will offer terms to the buyer regarding how much they will take for settlement, whether they will persue deficiencies, etc. An experienced attorney should represent the seller and negotiate these terms on their behalf. A huge component to success in a short sale is the financial position of the seller in the outcome.

A big reason short sale fall apart is because buyers are not properly prepared for the process and they back out before its over. They need to be aware that it could take several months to get the transaction done. If they are in a hurry to move into a place, the short sale transaction may not be the best option for them. When this happens, if a new buyer is not obtained quickly the process has to start over. Properly prepared buyers for short sales are in a position to take advantage of the down market and get great deals.

With so many underwater homes in todays marketplace, short sales are becoming more and more prominent. As time goes on, I believe the banks will continue to get better at handling them because they realize that they have to. Its the best way to mitigate the loss caused by troubled assets. Short sales require specialized knowledge, resources, and skills. They can be quite frustrating and therefore many agents simply turn them away.

Cape Fear Real Estate Solutions specializes in short sale transactions and we have a complete system in place for maximizing performance of short sale listings in the Wilmington, NC area.

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I do love my Active Rain. But probably not for the reasons most subscribers do. I don't post a lot for points, and although I hope it helps a little with web presence, I don't love it for that either. the thing I like about Active Rain is that it keeps me in the NOW. I really like the daily emails with some of the most popular blog topics for the day. There is usually at least an article every day that catches my attention and makes me a better agent for reading it. And I usually like to leave a comment if its a good post because it helps the writer. I must say, don't see how some of you guys find the time to do so much blogging. I found a few minutes to write this while I wait for AAA. I locked my keys in the car, and its running....unbelievable

Beach Town Brokers Team of Priudential Laney Real Estate is hosting a First Time Homebuyers Seminar on Tuesday, July 21 at 7:00pm. The event will take place at the Laney School of Real Estate at 803 S College Rd. beside K-Mart and UNCW. We will have guse speakers on the topics of mortgages and home inspections. We'll talk about the beneifts and risks of purchasing a home, the process of buying, how to find a good deal, the $8000 tax credit and more... Pizza will be provided by Incredible Gourmet Pizza of Wrightsville Beach. Call Kenneth @ 910-616-2123 for more info. Hope to see you there.

I've been keeping up with the green movement and sustainability for quite some time now. In college I worked on a project that involved passive solar design. As my real estate career has developed I've worked with numerous people who have been interested in green features, and I think there is a common misconception about the cost associated with GREEN.

I just went to a continuing education class with Bill Gallagher (quite entertaining for ce). The topic of the class was green building. Having already been pretty well exposed to the topic, most of the info was not new to me, but it did refresh my memory.

Although there are levels of green building that can be expensive, like solar panels, there are also many simple things that can be done in the construction process, and even as simple as changing light bulbs, that can make a home "greener".

*Some inexpensive forms of green building are: Using more rapidly replacable materials, like bamboo. Energy star appliances, Water collection systems for irrigation, using high r-value insulation (or even foam insulation) and low u-value windows, reusing materials from old homes, limiting impervious surfaces, incorporating proper ventalation, using tankless water heaters, applying low voc paint, etc.

*Passive Solar - If one has the luxury of being able to start fresh, one thing that can make a major impact is the direction the home faces, and the angles of the windows. Depending on the location in the world, a house can be positioned to get the benefit of the sun in the winter, and shade in the summer. Plants and trees are also inexpenive ways to help with this. I've even seen homes bermed against to provide insulative qualities. Besides solar panels, there are other ways to benefit from the sun. Certain materials, like brick, absorb the heat from the sun and when the sun stops shining, they slowly release that heat. A step further with the same principle is using a solar mass, which can be as simple as a black barrel filled with water. The barrel of water absorbs heat from sunlight during the day and releases it at night, or it could be used for hot water during the summer.

"Being green" is a full circle thing. It encompassed everything from being close to things so driving is limited, to reducing energy consuption at home, to using local materials, to eliminating health and environmetal hazards. All of these things decrease the footprint we leave on the earth and also help to reduce our cost of living. It doesn't have to be expensive . The term "Green" does get thrown around quite a bit for things that are not really "green", but it also gets a cold shoulder sometimes from people because they think its too expensive. ITS NOT NECESSARILY.

For more information on the subject, visit www.usgbc.org, the website of the US Green Building Council. Smart building and renovating will have to embrace this now and even more so in the future.