Real Estate Auctions

Discussion in 'Real Estate' started by Spencer, Aug 3, 2006.

  1. Spencer

    Spencer Beach Lover

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    I'm just curious to hear everyone's opinons on real estate auctions. Do you believe in them? What do you think about the initial fees and buyers premium?
     
  2. spinDrAtl

    spinDrAtl Beach Fanatic

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    I bought a property in Park City, Utah at auction a little over two years ago. It was a developer closeout auction on a condotel property. The initial fees were only about $100 I think to register and participate in the phone auction part for all out of state participants (others were live at the auction site).

    Premium was 10% of the bid, which you just need to factor into your bid to determine if that is a price you are willing to pay. I thought I got a great deal and appreciation since then has proven all prices at that particular auction to be a steal (so far).
     
  3. OnMackBayou

    OnMackBayou Beach Lover

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    I was speaking with a friend of mine earlier today. They inquired about selling their SoWal property through Roebuck Auctions. They owe about $700,000.00 on it, and have lowered the asking price to about $775,000.00, down from their original asking price of around $850,000.00.

    Roebuck told them they require a non-refundable $7,500.00 listing fee to sell at auction, and that they could expect to get a bid of around $500,000.00 at the sale.

    I assume this means the auctioneers get money up front, and an additional % if the property sells. In this market it seems like a great deal for the auctioneers and the buyers. If you're a seller, be prepared to get bottom dollar if you decide to sell this way.
     
  4. Spencer

    Spencer Beach Lover

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    The upfront fee is for advertising. If they have 6 properties in a single auction, they may have a $60K budget. My understanding is they take that 60K and split it up among the sellers depending on value of the property. The 10% is a buyers premium. If they bid $500K, they will write the contract for $550K. The seller doesn't pay it. It's not always a bad deal for the sellers. Of course, the deciding factor on that is going to be when they bought and how much they paid. If your friend had paid $300K for the property, and it brought $500K at auction, it wouldn't be such a bad deal.
     
  5. GVM

    GVM Beach Lover

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    The problem with auctions is that many people think an auction will change market fundamentals...which it usually won't. The best way to sell a property is to price it so that it's attractive to a buyer. In today's South Walton market, that means turning the price clock back by about 3 years and get the widest exposure possible, and that's usually by listing with a Realtor. Say what you want about Realtors, but they're the ones with the buyers. Unless you just want to unload a property at any price --- and it's done every day by estates and other circumstances --- I think an auction would be a terrible way to sell property in South Walton under current conditions. Just my opinion.
     
  6. OnMackBayou

    OnMackBayou Beach Lover

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    I understand the % on the back end is paid by buyer. I guess what I should have said is this is a good deal for auctioneers, buyers and advertisers.
     
  7. Lisa Ruby

    Lisa Ruby Beach Fanatic

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    I totally agree with this philosophy...200%, and there are still many sellers that would have this level of appreciation with this formula. :clap_1:
     
  8. Spencer

    Spencer Beach Lover

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    I've been doing some research on this and have seen a lot of different views. One of the main points the auctioneers are making is that there is no better way to set a price on a property than having 10-15 people competitively bidding against eachother. A property is worth only what someone is willing to pay for it. What's your view on that?
     
  9. Diane4145

    Diane4145 Beach Fanatic

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    I've dated a VERY successful Auctioneer,( another story...:blink: won't bore ya) that works all over. He's known for his audience participations and that's the biggest advantage, in my opinion! He can pull money, out of a rabbitt's ****!:clap_1: :clap_1: :clap_1: Anyone interested, PM me.:D
     
  10. Smiling JOe

    Smiling JOe SoWal Expert

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    From what I am seeing and hearing at auctions, there are not 10-15 people bidding. Most of the time, there may be 2-3 bidders, and I know of plenty with one or zero bidders. Are you suggesting that your auctions are different?
     
  11. Smiling JOe

    Smiling JOe SoWal Expert

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    Now that is an auction which I would like to see. :popcorn:
     
  12. Spencer

    Spencer Beach Lover

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    I've never held an auction, just going by what others have said. I too would be suprised if auctions averaged that many bidders.
     
  13. Smiling JOe

    Smiling JOe SoWal Expert

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    I have a friend who recently scored a new 2/2 townhome on 30A for under $200K at auction. :eek::lol: It seemed the bank wanted some money from the developer, so, he auctioned off a few units. I found out in hindsight, otherwise that bidder would have been wearing my nametag. A great score for the buyer. ;-)
     
  14. Spencer

    Spencer Beach Lover

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    Definately a good buy!
     
  15. mark pale

    mark pale Beach Comber

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    Auctions are fantastic for a buyer in a down market, and excellent for sellers in a hot market. The absolute best time to buy is when its a buyers market, which is right now - and dont buy anything when its a sellers market. The interesting thing about this market is buyers are so skeptical and sellers are so nervous its pushing the prices down below what the equilibrium price should be. In other words - NOW IS THE TIME TO BUY! Its working for me, I bought 2 properties this year at auction and have done very well on both of them. I am not a realitor nor did I use a realitor when I turned around and sold them both.
     
  16. Smiling JOe

    Smiling JOe SoWal Expert

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    Mark pale, not all auctions are great for buyers right now. Many sellers are not selling absolute, and have a substantial minimum. From what I see in auctions today, the majority of properties held at auction, are not selling at auction. I will be curious to see how much one particular property, being sold absolute auction this week, brings. We had it under contract last year for $5M+. Had the seller placed a little more realistic price on the mobile home to begin with, perhaps we would have went to close.
     
  17. Diane4145

    Diane4145 Beach Fanatic

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    I've been to numerous auctions of Jack Granger's, with Granger Thagard Auctioneers Birmingham, AL. You wouldn't believe, the turnouts!:eek: I'm certain that it's due to the advertising (lots) and their impecible reputation! And yes, he's the one that I dated!;-) In his business, he knows what he's doin', draws the crowd in & gets them to participate and is VERY successfull at it! Commercial, Residential, Farms/Equipment, Liquidations, Charities, he does it all and everywhere! :razz:

    http://www.gtauction.com




    [​IMG][​IMG][​IMG][​IMG][​IMG][​IMG][​IMG][​IMG][​IMG][​IMG][​IMG][​IMG][​IMG][​IMG]
    Jack F. Granger, AL# 873, CAI

    President
     
  18. Spencer

    Spencer Beach Lover

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    Smiling Joe, I assume that you're talking about the acreage in Freeport. I'll be there as well.
     
  19. Lisa Ruby

    Lisa Ruby Beach Fanatic

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    Originally posted by Mark pale
    That would be REALTOR, not the unknown profession you mention :dunno:
     
  20. SHELLY

    SHELLY SoWal Insider

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    So one could say that it is an "Auctioneers, Buyers and Advertisers Market."
     

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