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Cork On the Ocean

directionally challenged
HighBidder said:
Hi Camp,


The auction process is an incredibly fair method of marketing, and is the best way to exchange assets for the highest possible dollar value under the current set of conditions, whatever those might be.

Hi high (love that :D )

I don't have any real problems with the auction process because as you say it's nothing new. I do have problems with the language that the company's website uses regarding exerting persistent psycholigical pressure or something like that. Also language about the frenzied environment creating an illusion (wrong word) of an impending sale. First, I'd have concerns about allegations of undue pressure and secondly I don't pressure any buyer into a sale because its just too important of a decision to make under any sort of pressure. That's my primary beef with the marketing.and/or process.

I understand that you disclosed the closing costs and "as is" nature before the auction but no mention was made of the potential that they'd need to close even if it doesn't appraise. With many of those buyers, you're acting as a transaction broker with buyers that are otherwise unrepresented I'd think there'd be some sort of requirement (ethical or otherwise) to advise them of that.
 

Cork On the Ocean

directionally challenged
HighBidder said:
Hi Cork,

In most cases, the seller typically pays for the advertising budget in advance of the auction. This is the direct cost of advertising and marketing the sale. None of these proceeds are retained by our firm.

Thanks for clarifying that.

HighBidder said:
The values were set in at about 50-60% of current listing prices. These are not "bottom feeders".

I tend to disagree with that. If a seller of a listed property got an offer of 50-60% of asking, he'd probably decline to counter. That might occur on the courthouse steps but you're not selling these properties on the courthouse steps and most of them aren't true distress situations, just a change in marketing strategy as you said.


HighBidder said:
It is important to realize that asking prices do not establish market values, but merely reflect past market values. Current transactions represent current market values.

If you check back on my threads, you'll see that I consistently make this same point.

HighBidder said:
If no transactions are occuring, wouldn't it then be safe to assume that the market values are significantly lower than owners/sellers are willing to admit?

No, wouldn't agree with that necessarily especially when average sales prices are significantly elevated. I could go to South Beach and refuse to pay those prices but that's not gonna make them come down. The property owners in this area have a stronger ability to sustain and in many cases I think if buyers can't afford this market, they're gonna have to go someplace they can afford. Don't go to Destin expecting to get Chiefland prices. They're gone. You missed the boat. (not you personally)

HighBidder said:
What percentage of total properties are currently listed? SoWal has a serious Supply & Demand issue, hence the adjustment in property values that are currently being experienced.


I agree that there's a serious supply and demand issue but recent sales data that SJ posted show that not one type of property decreased in value in the last year. DSF's appreciated significantly and so did condos. Land to a much lesser degree (almost flat)
 

Cork On the Ocean

directionally challenged
Smiling JOe said:
Knowing this, why did you waste your time and money knowing that the prices which were bid would not meet the reserve prices set by the sellers? That is not smart business.

What a great point Joe! It would seem that a market analysis would have been done and if they knew there was too wide of a difference between what sellers were willing to take and what buyers were willing to pay, why would they give hope to sellers or encourage them to pay for this auction. There are apparently more auctions scheduled. Is that gap going to get that much closer in the next month or so? :dunno:

We're in the wrong business. We pay all the expenses and if we sell it, many resent paying us a commission. If we don't sell it within 3 months, that same seller moves the listing to someone else as if they could do better. I'd rather let them lose the money and praise me for trying :lol: when I tell them that it wasn't my fault it didn't sell but the fact that they're property value has plummetted.:scratch:

Name one example please. What is the parcel id and what was the bid?:dunno: I don't know what was auctioned, but I believe you must have made a typo.
 

Cork On the Ocean

directionally challenged
HighBidder said:
Franny,

You are correct. There is no more accurate barometer to establish market value than a properly advertised absolute auction. The market will protect itself, however many sellers don't have the stomach for it. No crime in that.

I hope to hear from you all as to how that auction goes.

When and where is it Franny? :popcorn:
 

Cork On the Ocean

directionally challenged
Smiling JOe said:
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. ;-)

Ditto, High. I have to commend you on your professionalism in dealing with the pressure that we've been exerting on you. I appreciate the time you've spent and the control that you've exhibited in helping to help us understand the process. :clap_1:
 

Cork On the Ocean

directionally challenged
HighBidder said:
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.

I would be interested in knowing how low these sellers are expected to go and the tone of your posts High, makes me think that pressure is now being exerted on them to take these really lowball offers. Regarding that beachfront lot, I got a buyer looking for a beachfront lot under $2 million about 4 weeks ago. I think that was his request but would have to check with realtor that I gave the lead to. If there are buyers out there looking for beachfront under $2 million, I'm gonna scream if that seller takes $1.25 :bang: :bang: :bang: because then this auction process is devaluing our properties. Tell me that's not the deal you're still working on High :banging:
 
Cork On the Ocean said:
I would be interested in knowing how low these sellers are expected to go and the tone of your posts High, makes me think that pressure is now being exerted on them to take these really lowball offers. Regarding that beachfront lot, I got a buyer looking for a beachfront lot under $2 million about 4 weeks ago. I think that was his request but would have to check with realtor that I gave the lead to. If there are buyers out there looking for beachfront under $2 million, I'm gonna scream if that seller takes $1.25 :bang: :bang: :bang: because then this auction process is devaluing our properties. Tell me that's not the deal you're still working on High :banging:


Good morning, Cork.

Rest easy. It's not. You can also rest easy on the pressure issue. It may be overstated somewhat, but I don't want to get into that now. I think anyone in attendance Saturday will vouch for us on the pressure issue, or the lack thereof.

Let's talk about "WHY" we believe much of the nation's real estate, especially residential, is about to experience a serious readjustment in value. It's really quite simple.


The US economy has experienced significant economic growth since 1982 thanks to Ronnie & Bill (Reagan & Gates). After the S&L/RTC fiasco in the late 80s most people invested heavily in the stock market.

"Put your money in business! Support your nation's economic growth!"

Thru the 90s we had solid growth in the stock market, moderated by several adjustments, both large & small, and capped by the dot.com bust. In spite of the adjustments most people improved their financial condition thru that time period. Investors started putting significant amounts of money into land and improved real estate.

"Buy Land! They're not making it anymore!"

Due to the availability of wealth generated by Ronnie & Bill, many people "invested" in vacation homes and recreational lands. This was a good thing at first, but hype and speculation set in following the inital phase of investing. The impending rapid and unsustainable growth was fueled by low interest rates, interest only loans, IRS incentives, and the hype of everyone even remotely related to the business of real estate marketing and mortgage/money marketing.

Our nation's media fueled the fire by reporting on the stability, growth, and profit potential in the real estate market. "Flippers" started buying and selling land (often without ever having closed) at prices supported primarily by the previous transaction values and the anticipation that land values do not go down, but only go up. How soon we forget. Remember the day-trading frenzy in the dot-com scenario? The flippers are different only in the particular commodity that they are trading. The demand for these properties was created by people wanting to make a profit (artificial demand), not by people wanting to take up permanent residence (real demand). Hot Potato. Who's holding it?

Cheap money also became easy money. People buying on credit often weren't concerned about the cost of the asset, but the amount of the payment. They anticipated an unabated appreciation in value as justification for the additional expense. As interest rates increase, many buyers who anticipated a better personal financial condition five years down the road are finding that they have no more cash than before, and the note payments are rapidly increasing. The interest only loans are starting to mature or transition into P&I.

With an increase in interest rates you have an inverse reaction in property values. How often have we qualified a buyer based on what he/she can "afford"? (I don't care what it cost, just tell me how much the payments are.)

The two types of owners indicated above will be our (the real estate licensee's) sellers. They bought wrong, or at the wrong time. Unfortunately there are far too many of them to be able to reallocate the assets without significant adjustments in R/E values.

You don't make money when you sell, you only make money when you buy.
 

Jdarg

SoWal Expert
Feb 15, 2005
18,068
1,973
I'm throwing this in here for a little fun.

On Feb. 28th, a 2 year old Thouroughbred was sold at auction for $16 million at the Fasig Tipton Florida 2 yr. old in training auction. Average sale price was $403,812. That is basically a $16 million dollar lottery ticket purchased at auction.

I could buy a few Sowal parcels for $16 mil?
 
jdarg said:
I'm throwing this in here for a little fun.

On Feb. 28th, a 2 year old Thouroughbred was sold at auction for $16 million at the Fasig Tipton Florida 2 yr. old in training auction. Average sale price was $403,812. That is basically a $16 million dollar lottery ticket purchased at auction.

I could buy a few Sowal parcels for $16 mil?


Yeah, we saw that but heard it was a 4-year-old. We're horse people, too. How screwed up are we?
 

Jdarg

SoWal Expert
Feb 15, 2005
18,068
1,973
HighBidder said:
Yeah, we saw that but heard it was a 4-year-old. We're horse people, too. How screwed up are we?

Nope - he's a baby- it was the 2 year old in training sale at Calder. Guess it's a bit better than paying that price for a yearling.


Being from KY, thoroughbred auction prices don't totally surprise me anymore. Doesn't everybody have $16 mil to spend on a horse??:rotfl:
 
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