Property Auctions

Does anybody else think that this auction reflects the current state of the market? Supply would appear to far outdistance any demand. What demand there is is trying to establish the "market" far below asking prices. Sellers still have the luxury of holding and so they do. Soon there likely will be some that don't and so they won't. Only then will the "market" be established. The only logical reading of the current situation is that the market is in a downward transition, the only mystery remains the depth. I take that back, I think it is a mystery that there are so many units on the market, in today's climate, offered by sellers who don't seem to want to accept the reality of the market. Why don't they pull the units off and lower the supply numbers? They are helping to create the very momentum they refuse to recognize. That is a second mystery.

Amen.

Joe,

Using a reserve is a good thing in many circumstances, maybe even most. However, if a seller is not realistic about the current market value of their property then it is best to utilize conventional marketing to sell the asset. Eventually, the market will rise to meet the anticipated price.

Then why would you waste your time on going through the motions, knowing that a seller's reserve price is way higher than the "real price," as you say? I know the sellers like their property very much. I do not question that the prices are too high, just look at the lack of sales to show it. My question is just as I state, why waste your time, money and effort trying to sell today, what may have to wait a year to sell at that price?

Please let me say that I think the auction business is very legit and can serve a great purpose to many peoples needs. I do not question your abilities or professionalism as an auctioneer, highbidder. That is not my intention. My intention is to seek the truth behind the sales. I certainly appreciate your point of view, and to better understand anything, I think we should first question everything. ;-)

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.

I'll second that. I base my decisions on my reality, not my neighbor's reality.

Many flippers are holding the proverbial hot potato. Oops.

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.

You're on it, Shelly. I agree with everything you said except "--otherwise they would not have been at the auction in the first place)". The auction is a great way to sell property, and do so at market value.

Oh yeah, there IS a market value. We just don't know what it is...yet.

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....

Been a long time since I've said this many "Amens".

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?


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

Exactly. Weak. Once sellers realize what they are truly facing and are properly motivated, you'll start seeing serious buyer activity.

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.

Joe's coming around....

: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.

Hi Jelly,

Auctions work in all economic climates but, as you indicated, are exemplified in the extremes.

Joe's coming around....

I've been here the whole time. My thoughts on the subject have not changed, although my ears are always to the ground and my mind is open.;-)

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.

Kurt,

You betcha, but the numbers are still real.

Kurt,

You betcha, but the numbers are still real.

What numbers?

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.

Amen & Shalom.

(It's late, I'm tired, and getting froggy, but that's okay. You guys have a good understanding od what's happening out there.

Strong buyers only if it is an absolute auction.

Joe,

Typically stronger when absolute, but properly motivated sellers is really what makes an auction.

So, were you able to provide the most significant benefit to the people trying to sell their property? Why have we not heard of any sales? Did anything sell? Have I answered my own questions?:idontno:

Hi Joe,

Though many bids were well, well above purchase price, none were accepted. We are still working to get a couple of the deals done.

IMO, the sellers still do not realize the severity of the market conditions in SoWal, or they do not NEED to sell.

I assure you that you'll see very motivated sellers for out next auction in your area.

What numbers?

The numbers acheived at auction. We brought the most money available under that set of terms & conditions.

Going to bed, Gang. I'll check back in over the weekend.

Thanks,

S....

BTW, I understand that no one ever wants to back up. The only people that really suffer in this situation are the individuals who purchased at the peak of the bubble. :bang:

Everyone else will either be required to hold, or to adjust their anticipated profit. Neither one of those choices is the end of the world.

S...


Been dying to use that "bang". That's hilarious!

The numbers acheived at auction. We brought the most money available under that set of terms & conditions.

money not accepted is money not brought to the table. I think it is misleading to say that you brought the most money available, when in reality, you brought none.

Geez...Highbidder, you got through all those posts and no one cued the "Grim Reaper," and you even used the "B" word! :idontno:

I imagine you'll be humping butt once the condo auctions in Panama City Beach, Destin and other places start to heat up.