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SHELLY

SoWal Insider
Jun 13, 2005
5,775
802
Advertisement in Friday's WSJ for Absolute Auction of 7 Condos at Heron's Watch on May 19. (Selling Furnished.)

Copy reads: "Sales Regardless of Price, No Minimums, No Reserves"

Guess one can say it's shaping up to be an "Auction's Market."


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00seer00

Beach Lover
Oct 12, 2006
112
3
PCB
Auctions are helping the market establish the bottom. People who want to buy land are still sitting on there hands, they don't want to over pay. A absolute Auction seems to set some price and establish new comps for similar properties. The more there are the faster the bottom will be established. Some properties are already below what they should be due to the fear of buying, some properties still have a way to go down. It takes some Faith in a good Auction company to have one in this market right now, some great deals will be had due to this. This is just what I see and I seldom right ( just ask my Wife ).

00seer00

Our land goes nex Saterday, PM me for a personal tour.
http://www.roebuckauctions.com/auction_detail.php?ID=137031
 

Smiling JOe

SoWal Expert
Nov 18, 2004
31,648
1,773
I disagree, 00seer00, about auctions setting the bottoms right now. Most of these auctions are not absolute, and sometimes when a seller has multiple units listed absolute, they are pulling the other six if they don't get bids they want on the first one. With all of this going on, they are not drawing many bidders to the auction steps. If sellers would realistically set their asking prices, buyers would show up, and I'm not talking about one or maybe two, like the recent auctions draw.

I think if these auctions want to get buyers in a down market, they need to do reverse auctions, starting at the listing price of comps and decreasing the price until the first guy raises his hand. That would cause a frienzy.
 
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00seer00

Beach Lover
Oct 12, 2006
112
3
PCB
I disagree, 00seer00, about auctions setting the bottoms right now. Most of these auctions are not absolute, and sometimes when a seller has multiple units listed absolute, they are pulling the other six if they don't get bids they want on the first one. With all of this going on, they are not drawing many bidders to the auction steps. If sellers would realistically set their asking prices, buyers would show up, and I'm not talking about one or maybe two, like the recent auctions draw.

I think if these auctions want to get buyers in a down market, they need to do reverse auctions, starting at the listing price of comps and decreasing the price until the first guy raises his hand. That would cause a frienzy.

So you are siding with my wife? Oh well, I did refer to Absolute Actions only. If someone pulls the property then it is not Absolute. The Absolute Auctions I have been to where 1 property per Auction, in each case the bidding did not start until they reached maybe 30% of what the property ended up selling for. We will have 3 lots going Absolute, there will be no pulling off of any lots if the first one does not go well. A 20 acre , 40 acre, and a 60 acre plat, will sell Absolute, regardless of price. Someone might get a extremely good deal if bidding does not go well. Word of these great deals will bring more and more buyers to other Absolute auctions. With more and more buyers, more and more Absolute Auctions for buyers to go to. This will all help form a bottom. I am often wrong, but this is how I see this one.
 

egrp

Beach Lover
Sep 22, 2005
122
3
This will be interesting...i am very curious to see what these go for as i am very familiar with this development.

lowest one in MLS at around $185K...they rent for around $1K/month.

Lets do quick cash flow evaluation here...

$12,000 annual rental income

($2,640) HOA dues -- I'm pretty sure its around $220/month incl Insurance

($1,000) Transitional Vacancy and Repairs/Improvements

($1,500) RE Tax

$6,860 in annual operating income

Just breaking even, this will support a mortgage of $86K (7%, 30 yr)

So I guess around $90k would be a good price??!!

People think thats crazy, but seriously the residential rental vs for sale market is sooo out of whack...this may be an extreme example, but it goes to show you that good investments cash flow. I totally understand buying beach real estate because of the intagables (emotional aspect), but don't kid yourself that its an investment.
 

Smiling JOe

SoWal Expert
Nov 18, 2004
31,648
1,773
egrp,
Your numbers look fairly accurate, but remember to include the 10% buyer's auction premium.
 

SHELLY

SoWal Insider
Jun 13, 2005
5,775
802
Just breaking even, this will support a mortgage of $86K (7%, 30 yr)

So I guess around $90k would be a good price??!!

People think thats crazy, but seriously the residential rental vs for sale market is sooo out of whack...this may be an extreme example, but it goes to show you that good investments cash flow. I totally understand buying beach real estate because of the intagables (emotional aspect), but don't kid yourself that its an investment.

eg,

No, I think < $86K would be a good price.

Good number crunch...but wasted on investulators who wouldn't know cash flow from shinola.

BTW, is the "new airport" baked into that number too?

.
 
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Smiling JOe

SoWal Expert
Nov 18, 2004
31,648
1,773
From looking at it from no other view than a cash flow, I would want to mark in a 10% annual return, so you could further reduce that purchase price, in order to have some positive cash flow better than CDs and MMs, not break even.
 
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