The Associated Press via USA Today - July 16, 2008
Home auctions surge nearly 47% since 2003
NASHVILLE - In a sign of just how broad the real estate downturn has become, revenue from resdential real estate sold at live auction grew about 5% last year and is up almost 47% since 2003, according to the National Auctioneers Association.
Auctioneers say that much of their current business is being driven by home builders reducing inventory, and individuals who can't afford to wait out the real estate doldrums.
Despite the soft real estate market, Beazer Homes USA (BZH) recently sold 26 beachfront condos on the Jersey Shore in 75 minutes.
Christopher Gillen, an executive vice president for Beazer Homes USA, said the condos were the first the company had put up for auction in the area.
Before the auction, Beazer was asking between $400,000 and $850,000 for the condos, but sold them for between the high $300s and the high $700s, Gillen said.
The condo sales "may have taken a year-plus to sell if we had gone a more traditional route of putting homes on the market," Gillen said.
On Wednesday, the National Association of Home Builders said the business outlook of the major builders hit a record low in July. The monthly index posted new lows for sales conditions, shopper traffic and sales expectations.
Yet auctions are proving to be one sales solution for both builders and anxious homeowners.
Tommy Williams, president of association, believes more people are turning to auctions because they're more familiar with them, thanks to eBay.
"EBay introduced a world to the concept of auctions better than anybody. The average consumer began to look at auctions not only as an alternative, but in a positive light," Williams said.
Residential real estate auctions are the fastest-growing segment with gross sales of almost $16.9 billion last year, up from about $11.5 billion in 2003.
But individual property owners aren't necessarily making a profit, or even getting what they paid for the house if they bought in an overheated market. Often the main benefit of an auction is getting out from under rising interest on house notes and paying other expenses like taxes and insurance.
Mark Bratton needed to sell his Hot Springs, Ark., home so he could move into a single-story abode because of health problems. He put the property up for auction through a company near his home, where he says houses today can often sit on the market for up to eight months on average.
"What I wanted was to sell the house and sell it quickly," said Bratton, who recently sold the home at auction about 30 days after listing it with the company. He bought the house in 2005 for $139,000 and put about $180,000 into refurbishing it. When the gavel came down, the winning bidder paid just $275,000.
Marty Higgenbotham, who heads Higgenbotham Auctioneers International in Lakeland, Fla., said homeowners who bought in overheated markets and are selling their properties at auction now are typically only going to get back about 60 to 65 cents on the dollar.
Buyers typically also have to pay a fee, usually 6% to 10% of the total cost, which covers the auctioneers costs and other expenses.
Bernard Markstein, senior economist for the National Association of Homebuilders, said auctions traditionally are not the preferred route for most people because house values are typically not as high.
"The longer you take, as a general rule, you're going to get closer to your asking price ... But if you want to make a quick sale, you will probably have to cut your price more," Markstein said.
But Williams and other auctioneers say if property owners have to sell at a time when real estate housing values are declining in many markets, it's better to sell sooner than later.
Princeton Premier PRLog (Press Release) - March 27, 2008
Mike Grigg has been named an Honored Member in Real Estate Services by Princeton Premier.
Mike Grigg earned a Bachelor of Arts degree in marketing from the University of Phoenix. He is presently the chief auctioneer of Elite Auctions, a leading real estate auction service in Bakersfield, California. As chief auctioneer, Mike is primarily engaged in the public sale of property, contract negotiation and management of escrow accounts. He is the vice president of the California State Auctioneer Association and is affiliated with the NAA, CAAR, NAR, BBB and the Chamber of Commerce. One significant highlight in Mike's career was his one hundredth property sale which led to his appointment with the CSAA. In his spare time, he enjoys travel and playing softball and is active within his community, supporting the Make a Wish Foundation as well as the Love Inc. organization. In recognition of his dedication and commitment to the Florida real estate industry and for his altruistic efforts, Mike Grigg is being included in the 2008/2009 Princeton Premier Registry where he will be listed among the most accomplished business leaders and professionals in the world.
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About Princeton Premier:
Princeton Premier is the publisher of an exclusive registry comprised of business leaders and professionals making an impact in their industry and community. The online network is a large interactive business community where our valued members use the web based service daily as an online channel to assist them in meeting their specific business goals.
Recent Bakersfield, CA Real Estate Auction results from Elite Auctions...
Auction 1: 3615 Greenleaf Ct. Bakersfield, CA 93309
3 bedroom 2 bath home w/ 1,491 sq ft
SOLD IN MINUTES AT AUCTION FOR $112,200!!
Auction 2: 2108 Cromwell Ct. Bakersfield, CA 93304
4 bedroom 3 bath home w/ 1,673 sq ft
SOLD PRIOR TO AUCTION FOR $115,000!!
Auction 3: 2330 B St. Bakersfield, CA 93301
5 bedroom 2 bath home w/ 2,325 sq ft (needed TLC)
SOLD IN MINUTES AT AUCTION FOR $142,000!!
Auction 4: 2008 Lantana Way Bakersfield, CA 93306
4 bedroom 1 bath home w/ studio w/ 1,604 sq ft
SOLD IN MINUTES AT AUCTION FOR $93,500!!
Auction 5: 1400 Carmel St. Bakersfield, CA 93306
3 bedroom 1 bath home (Wholesale property needed work)
SOLD PRIOR TO AUCTION FOR $70,000!!
Auction 6: 1405 Sheila St. Bakersfield, CA 93306
3 bedroom 1 bath home w/ 1,034 sq ft
SOLD IN MINUTES AT AUCTION FOR $63,250!!
Here's the story...
We (Elite Auctions) held a live, onsite real estate auction in Bakersfield, CA where there were 15 registered bidders that all brought $5,000 cashier's checks in order to participate. After about 4 minutes of intense bidding the final price came in at $93,500. The winning bidder purchased the property to hold as a rental and wanted to finance the purchase with Wells Fargo. After the appraiser went out to the property, twice, the appraisal came in at $80,000. How can one person's opinion of value trump 15 bidders' opinion of value?
The following letter was sent to the Well's Fargo representative...
Obviously we were very disappointed that you aren't able to provide a higher appraisal on 2008 Lantana. This now requires that the buyer (your potential customer) will need to come up with more money than maybe he was anticipating.
If you don't know this, a public auction is the best appraisal for any property...as it puts all interested and qualified parties together to determine the true value. Because it is an "as is" / non-contingent sale with money at stake, it truly will provide the cash value of a given property. No formal appraisal is necessary!
It's a shame that property owners in the neighborhood are being subjected to someone's opinion of value vs. true value based on several willing and able buyers with cash. This is truly socialism in textbook form. A neighborhood will never increase in value if value is based on the last sale. Being ultra conservative is not an excuse... let the people with the money and the credit decide where the market should go.
It's amazing to us how lenders and appraisers put us in the current predicament with their greed and now are not allowing the wonderful free enterprise system work to help get out of the mess they created. Buyers determine value not appraisers, realtors or comparable sales...don't ever forget this. Buyers with cash and good credit not no doc loans,/no down payment/lousy credit buyers. I believe you have this switched around. Just a reminder...as a tax payer who is bailing you out, I feel this is a good time to provide you a straight forward lesson in Economics 101 and a reminder of your poor judgments.(and the trend is apparently continuing)
For the record we had 15 registered bidders, with at least 5 buyers who thought the property was worth much more than $80,000. The second bidder was $1,000 less than Jerry!
Before you get upset or think I'm wrong...re-read this letter two more times. If the above lesson doesn't make sense after reading it 3 times, our country has an even bigger problem than we all thought.
If you had no input on this poor decision made by Wells Fargo Susan, please have the respect of passing this along to the responsible parties...if not as a customer, as a concerned US citizen.
ANALYZING SELLERS BEFORE THE CONTRACT
By: Mike Grigg, AARE
There are so many opportunities in the real estate auction business today, but we all must be careful to conduct auctions for sellers that are in the right mindset. Many listings are now taking six to twelve months to sell, and a lot of properties aren't even selling within this time frame. People are turning to auctions for the answer, but most sellers are not good auction candidates. As I have said before, if a seller's expectations are too high, pass on the deal! By taking on sellers that are not willing to let the well-advertised auction determine the true market value for their properties you are giving the entire auction industry a bad name, because on auction day the properties are not selling. How does this look to buyers and sellers when we can't sell a property either? They may think that auctions don't work. The last thing that fellow auctioneers should have to deal with is a seller that has had a bad auction experience and choose to bring their business to a realtor.
The simple way to avoid dealing with unreasonable sellers is to educate them about the market and auctions before jumping into a deal. The property is not what causes an unsuccessful auction, it is 100% the auctioneer dealing with an unreasonable seller. Remember, what happens on auction day is a report card on how well you screened the seller. We must make it clear to the sellers that we have no idea what the property will bring at auction, but neither do realtors. If you tell a seller that you can bring a certain price for their property and you don't reach that price, you will have a tough time convincing the seller that the auction price is what they should take.
Auctions bring future net value. This means that we cut out holding costs, many of us cut out commissions that the seller has to pay, and we virtually eliminate the property's value declining due to the current downward trend in the market. If these are valuable to the seller and they are ready to let the people with the money tell them what they are willing to pay for their property, then they are ready for an auction.
We must show sellers the benefits of selling at auction before we sign the contract. Make sure that you are signing the auction because the seller has to sell, not because you just want to have another auction on the books. We are only as good as our last auction, so make sure you get it SOLD!
Please visit the CSAA website at caauctioneers.org to list your auctions and obtain valuable information about our great industry.
Elite Auctions is "California's Auctioneer of Real Property". Real estate auctions are the most effective way to buy & sell property in a buyer's market.
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