Credit Markets: Cash is King
The amount of properties (commercial and residential) that are being brought to auction in the past quarter is certainly on the uptick when compared with earlier this year. This was due primarily to the shakiness of all the credit markets. Now that things seem to be on the road to recovery more properties are coming to auction. However, the dilemma remains the same- without credit how many of these properties are actually being moved out the door.
Auction sales are cash sales, or at least “cash at closing” sales. Most buyers still must depend on commercial lines of credit and banking relationships to get deals done and right now that seems to be an impossible task. Since lenders are still not willing to lend, cash right now is king. Those who are sitting on mountains of cash will be the kings over the next couple of quarters when buying property at auction. Vulture funds, opportunity funds, etc are all getting out there now and competing for some of the excellent deals being offered by auctioneers. As inventory swells even more, auction sellers will become more realistic. However with recent interventions (such as the bailout) the natural course of the auction market as we see it may be delayed.
Auctioneers right now are certainly working with the institutions that absolutely need to sell, evidenced by these auctions coming up next month;
Premier Real Estate Auctions is offering a bank liquidation auction of 3.99 acres of prime waterfront in Florida. There are two sites available with both offering excellent development opportunities. Tranzon Alderfer Real Estate is offering prime vacant land at auction in Pennsylvania. This is a sealed bid as well as an absolute auction. Assiter Auctioneers is offering at absolute auction the Baptist St. Anthony’s Hospital in Texas. The building is over half a million square feet.