Property Auctions

I have heard that some sellers are being pressured by their neighbors not to list or sell too low or it will hurt the neighborhood's market value.

However, flippers stuck with a buildout time lot are either going to have to sacrifice their lot at a low price or build. In Watercolors lot owners are having to pay $2500.00 a month for every month they do not build after the deadline start date in their contract.

So if bids were half of market price (by all reports) and that was half of what sellers were hoping for, it sounds like sellers were hoping to get market price.

Would like to know if there was any of the properties where the seller was willing to take 70-75% of market price? My thoughts are that since the property could sell as low as 90% on the open market, when you subtract the additional 13% the buyer is paying , plus risks outlined below, I would want to see these properties going at least 75% of market or lower to motivate me to buy one. I wonder if any were priced that low. :idontno: Anybody?

THERE IS NO MARKET PRICE for these properties. The owners are not willing to sell for price the public is willing to pay (both inside and outside the auction--otherwise they would not have been at the auction in the first place)....AND...the buyers are not willing to pay the amount the seller is asking for these properties. (The closest the buyer came to the actual current market price of their property is the highest bid he got at the auction.)

The buyers can now add any costs they incurred for the auction to the carrying costs of the properties and continue to hold out until someone blinks. With inventories raising in Florida (and across the nation) on a daily basis (we've run out of bigger fools?), and carrying costs mounting daily for investulators, my money is on the sellers being the first to blink (or ride the slippery slope down to unprofitability like their stock market brethren before them did during the dot.com bust). In a stagnant market, every day that passes means carrying costs in the form of taxes, insurance and interest eat away at the profit.

A vacation/second home is certainly not a "must buy now" purchase. I think buyers who are toying with the idea of purchasing in Florida are quite willing to hold out until after the hurricane season ends--or until they get the price "they" are willing to pay.

It sounds like the "buyers" who showed up were hoping for prices of desperation, not the going list price or a small reduction, thereby making them un-qualified in my terms, aka tire kickers or sight-seeers.

SJ- I agree with most of your opines on this board, but have to cry out here.
What the heck is a "fair" price - is it 90% of 2005's inflated value so an overextended investor can bail out with a profit? Smart buyers will wait and get as close to a desperation price as possible. If in that process they never buy and miss the boat, they lose. Over the past 3-5 years it's been all seller's market, now it's a buyers market. A small reduction over an inflated, "aspiration" price is no bargain. On the other side of the coin, list price may be a relative bargain if listed aggressively.

In my experience, anyone showing up at an auction (unless it's Sothebys) is looking for a smokin' deal....

The poor results at the auction may just reflect current market conditions. The mindset of many buyers now is "either take my low offer or I walk and wait".

Perhaps the other possible reason for lack of any sales at the auction (maybe only two sales of 21), is that the weather was so nice and warm for a change, that all of the real buyers were enjoying the beach. :idontno:

Hey but one sale in hour and half is not bad compared to months years on the market.

That is not a true picture given the number of weeks of advertising leading up to the auction. Also, I have not heard of an actual sale from this auction. Did a property sell?

I think I counted 15 buyers or bidders.

15 bidders for 21 properties is a week turnout in my mind, not different from the normal market.

SJ- I agree with most of your opines on this board, but have to cry out here.
What the heck is a "fair" price - is it 90% of 2005's inflated value so an overextended investor can bail out with a profit? Smart buyers will wait and get as close to a desperation price as possible. If in that process they never buy and miss the boat, they lose. Over the past 3-5 years it's been all seller's market, now it's a buyers market. A small reduction over an inflated, "aspiration" price is no bargain. On the other side of the coin, list price may be a relative bargain if listed aggressively.

In my experience, anyone showing up at an auction (unless it's Sothebys) is looking for a smokin' deal....

Glad to shake things up. I don't want everyone riding in my boat -- we may sink. :floor:

I am not sure that I understand your question about a fair price. I never mentioned fair price. IMO, a fair price is a meeting ground between a buyer and seller, and as far as I can tell, it sounds like no fair price was established. Many sellers still love their property to much, and I too, wonder why they are placing them on the market since they love them too dearly. Personally, I think many prices are way too high to sell today. Attractively priced properties are out there and some sell quickly, and others have not. After seeing the listings not sell for 6+ months, the sellers should reconsider their asking prices if they are truly wanting to sell.

Perhaps most people misjudged what this auction was all about. These properties weren't in foreclosure, but when I hear "real estate auction," I think of desperation or "smokin' deals". Obviously that wasn't the case here. Isn't this a rather new way of selling properties?

I am not sure that I understand your question about a fair price.

:idontno:

Me neither, kinda went off on a tangent....

Anyways, what I was trying to say is auctions seem to work at the extremes- strong buyers or strong sellers market.

Perhaps most people misjudged what this auction was all about. These properties weren't in foreclosure, but when I hear "real estate auction," I think of desperation or "smokin' deals". Obviously that wasn't the case here. Isn't this a rather new way of selling properties?

That's what I'm thinking too. "Real estate auction" conjures up images of the courthouse steps for me.

Auctions seem to take on a flavor and bring results depending on the local market. I have worked with an outfit over the last 4 years that has done constant aucions in the Destin and Sandestin market and has sold properties seemingly at market value. I believe the sellers and buyers were savvy and got the deals done in a timely and efficient manner. A lot depends on the marketing beforehand and the database of buyers/investors the auction company has.

In a dire market the results are likely to be much different than a hot, or a normal market.

When properties at an auction have a "reserve" I dont think you get true buyers making bids. You get people who feel safe bidding on that 2M property for 1M . They will never hit the reserve, it is wishful thinking. Even though it would be a good deal those bidders think twice before bidding 1.7 or 1.8 million because they know they might hit the reserve and actually have to buy it. If I were really looking to purchase a 2M lot I would definitely take a shot at an auction and bid up to 80% or 85% of its value. (net of the buyers premium)

IMHO, an absolut auction, particularly if there are ready and able bidders present would definitely drive the price close to what its true markey value is, sometimes higher if a frenzy is started.

:idontno:

Me neither, kinda went off on a tangent....

Anyways, what I was trying to say is auctions seem to work at the extremes- strong buyers or strong sellers market.

Strong buyers only if it is an absolute auction.

Personally, I think we should start putting properties on Ebay :rolling:

We're so spoiled here. I remember a few years back in Tampa Bay, homes would be on the market well over 6 months. It was expected.

I have heard that some sellers are being pressured by their neighbors not to list or sell too low or it will hurt the neighborhood's market value

None of us want a blue light special in our neighborhood but it happens every day in every area. A divorce, a bankruptcy, a death. Sellers need to do what's right for their particular situation. If they have it priced right and are patient, it will eventually sell. If they need the cash, then they need to do what they need to do to protect themselves from financial problems.

Do we know if there were any sales at the auction?:idontno:

There's another one coming up in Destin - different company.

Okay Gang. Here I come. I do want to say that I'm pleased with ALL of the chatter over the last few days, and even agree with most all of it. The market is certainly in transition, if not somewhat in turmoil. Actually no, the market is not in turmoil, but the owners and agents who failed to recognize the advent of the market transition most certainly are.

Essentially, we are currently experiencing a market adjustment resulting from the non-sustainable increases in real estate market values. No different that the stock market adjustment a few years ago.

I am going to begin replying to each post individually, but some may be answered in the response to someone else. Please bear with me.