I've been reading a bit about real estate auctions of late ... my take is that buyers and sellers are still miles apart on what they think property values are in this market, and this is keeping most auctions from being successful (with the expection of "absolute actions, where the buyer alone determines the "market value"). When a property goes to auction, buyers are expecting an absolute steal (I offer the attached article as evidence of this observation). If auctions are being used by sellers with lofty price aspirations, then I suspect both buyers and seller will walk away from the auction process with a bitter taste in their respective mouths.
The article also addresses the "minimum bid" questions that Smiling Joe brought up.
Low bids take glow off property auction - Starting amounts possible next time
By Pete Skiba
pskiba@news-press.com
Originally posted on January 24, 2007
One Cape Coral homeowner left an auction sponsored by the Miloff Aubuchon Realty Group Inc. elated her home fetched a $400,000 bid.
Then the bottom fell out.
"The bid came over the Internet. They said there was a computer glitch," said Rosemarie Leibert, 79. "They put it back on auction and the bid was $250,000."
Leibert declined to take the bid.
The glitch occurred because the bidder hit $100,000 four times when the first bid didn't go through fast enough, said Marty Higgenbotham, owner of Higgenbotham Auctioneers international Ltd. since 1959.
"One glitch out of 850 bids isn't that bad," Higgenbotham said. "We said we'd like to have seller answers to the bids by Tuesday, but that doesn't mean negotiations don't continue. We probably won't know the results until Friday or Saturday."
The auction last weekend attracted more than 400 during its two-day run at the Crowne Plaza hotel in Bell Tower.
"Bidders placed 33 bids on 44 lots, 64 bids on 66 homes and bids on three out of the seven luxury homes," Higgenbotham said. "We still receive phone calls asking if the homes are sold and can they bid on them."
Neither Miloff Aubuchon officials nor auctioneers would say how many bids were accepted by 5 p.m. Tuesday.
At both days of the auction everyone spoken to said the bids came in too low and no one expected them to be accepted.
Leibert was upset with the auction, calling it a "farce." She believes the bids were too low and the auction didn't deliver serious bidders.
"I think a lot of buyers thought they were going to bottom-feed. These are eager but not desperate sellers." Miloff said. "The auction tells me we are in a market correction."
Leibert's three-bedroom, two-bath, 2,200-square-foot home, valued at $255,810 on the Lee County Property Appraiser Web site Leepa.org, remains listed with Miloff Aubuchon.
One buyer who bid $400,000 a lot for each of two neighboring lots on the Caloosahatchee River wasn't surprised his bids were rejected. The lots listed at $799,900.
"I'll bet that less than 25 percent of the sellers accept," said Minnesota developer Larry Gensmer. "I think they could have had a better auction if they had announced a starting bid."
Calling the effort a learning experience, Jeff Miloff, the realty group's sales manager, said another auction planned for March could have different rules.
The bids were so unrealistic the auction showed people didn't do their homework, Miloff said.
"The next auction could have suggested opening bids," Miloff said. "People had no sense of what they were bidding. It made no sense."
