Property Auction Blog

With the downturn in the marketplace more and more auctioneers are getting in on the bulk ballroom auction sales. These sales are mostly impersonal but certainly effective for an institution looking to quickly dispose of hundreds of properties in one day. We have noticed that auctioneers who have traditionally performed on site auctions for a single residential property still exists.

The challenges that they face are new. No longer can a real estate investor of a single residential property buy today at one price and sell tomorrow at a higher price. So what’s the secret to success these days with this type of auction? It comes back to the same tactic that all auctioneers use right now to create a sense of urgency for buyers. That’s offering the property either at absolute auction or at a published reserve price that is just so low that any reasonable investor in the area would be foolish not to buy.

This is certainly the case for Luxury Real Estate Auctions offering 2509 Ogden St in Denver, Colorado next month. It’s a beautiful townhome built just in 2000 and is offered at a published reserve of $155,000. According to industry locals this is a slam dunk price for this property and should attract a ton of buyers to the auction sale. The auction price, of course, will determine the true market value for this property.

Auction companies have traditionally offered brokers who bring clients to an auction and “duly register” them a broker cooperation fee. This is essentially a commission to the broker/agent if their client successfully closes on the property. However, in the last few years, during the boom times, we noticed some auctioneers moving away from this practice. After all, properties were selling left and right, without any need to excite the brokerage community to come out and play.

The times have turned and we’re seeing broker co-op fees climbing: 2% seems to be the norm, however, 3% and even 4% can be found right now. And the registration process is usually a piece of cake. Fill out a 1 or 2 page form, have the broker and the buyer sign, fax it in and collect the cash! Well the buyer still needs to win the bid and close on the property, but that’s just a minor technicality-:) Auctioneers also prefer (and sometimes require) that the broker/agent be present at the auction along with their client and for good reason: usually the agent can assist the client in value, signing, etc.

The slower economy has hit the brokerage industry particularly hard. Brokers and their agents should be embracing the auction community by searching right now for residential auctions or commercial auctions for their clients and get in on the broker cooperation fees being offered!

Here are two very exciting residential auctions coming up offering a generous broker cooperation fee:
Rowell Auctions is offering over 100 properties throughout Georgia this month at online absolute and reserve auction.
Tranzon Driggers is offering 31 new homes in Ft. Myers Florida. One third of the offerings will be sold absolute.
And here are two very exciting commercial auctions coming up offering a generous broker cooperation fee:
Eddie Haynes Inc is offering an RV Park and Executive 18-Hole Par 3 Golf Course in Cedar Valley Oklahoma.
Tranzon Venuebid is offering 6 +/- AC Upland Gulf Front Land in South Padre Island, Texas.

As the markets change focus, auctioneers also change, often concentrating in certain asset types at certain times. Williams & Williams out of Tulsa, OK has traditionally been an auctioneer for residential bank owned property. However in recent months they have aggressively pursued the commercial market auctioning off several assets including office buildings and land developments.

We have found that certain auctioneers tend to say that they specialize in the “auction process” more than any specific asset type.

RE/MAX Group Auctioneers out of Cartersville, GA is mixing it up next month with “Commercial, Residential, Land, Lots and Development Opportunities” throughout the state. Among the offerings is a 7 bedroom home and an office building. Certainly these cater to different types of buyers. They are offering the properties in both sealed bid format and on-site open outcry format. the auctions will take place over several days throughout October.

We’ve commented on this earlier this summer and now there has been a serious spike in not only absolute auctions but also the “all absolute” auctions. In these auctions all of the properties being offered are sold regardless of price to the highest bidder. Offering a few properties absolute or a small percentage of the total pool may not be enough anymore. Buyers want more and the auction community is responding.

Tranzon Asset Advisors out of Kentucky will offer all 18 residential lots for a lender at absolute auction in early October. The sale will take place on site in Missouri and is expected to be sell-out. The auctioneer is ahead of the curve working with the lender as opposed to the developer who is most likely either all or partially out of the picture.

Developer auctions have been a much tougher sell these days with little or no absolutes and published minimums that may not even appeal to today’s buyer. Some developers, however, are happy with their auctions even if they don’t have a complete sell out claiming that the exposure their project receives as a result of the auction marketing assists them in disposing more inventory in the “after auction” market.

Again, another post on a subject we covered not long ago- traditional brick and mortar auction firms assisting their clients in using online technology to get assets sold. Here’s a great a example: J. Duncan & Associates out of South Carolina will offer two lots at online auction only. The stated minimum bid auction will end on September 26th.

So yet another company will move to at least a partial online strategy for some clients. Benefits are many- the obvious being the auction day event which is pretty much out of the equation. Some also claim that the time to market is faster and marketing costs are lower but this is still up for discussion. We think you still need to advertise as hard if not more to drive the right buyers that will purchase in an online format.

Lots of lots. That’s the name of the game we’ve noticed this summer. Given market conditions residential building lots are selling at tremendous discounts from coast to coast.

Hamele Auction Service is offering several lots in Wisconsin that are perfect for log homes. The upcoming auction event will take place in early September. The sale will be conducted as “multi-parcel auction” event-”whichever parcel combination obtains the highest price is the way the lot(s) will be written to Offer to Purchase”.

Tranzon Alderfer will also be offering several lots as well as new condominiums and much more in an upcoming “Builder’s Closeout Spectacular” auction event to be held in Pennsylvania. To entice buyers even further the auction firm is offering several properties at absolute auction.

Lots of lots on the block this summer is creating opportunities for buyers looking to build or just land bank until the market turns.

We’re starting to see a lot of volume coming out of the “online only” real estate auction companies. One in particular is Bid4homes.com, a new initiative launched by the folks at Bid4assets.com focused on the residential real estate market. The latest offering is 27 single family homes offered at absolute auction. The homes are scattered across the country but the key to their success may be that the auction house already has a major following on the internet having been in the business for almost a decade.

Some offline companies or as we like to call them “on the ground auctioneers” have added online auction components to compete. (Be advised that we are talking about timed auctions, and not live streaming auctions that require a whole separate post to blog about.) We think the trend will gravitate towards both, an online auction for one situation and an on the ground auction for another situation or even a hybrid of both. With the volume of residential property still to come all auction companies will be extremely busy trying to come up with innovative ways to sell and keep the clients happy.

In a down market the first major asset one will sell is their vacation home. Those who have held off buying now have a great opportunity to pick up their dream second home at a real discount. When the general market was hot, so was the second home market. Prices skyrocketed and inventory was scarce. The issue is that most of these buyers were speculators hoping to just turn a quick profit in a rising market. Some made it out, most stayed in and got caught.

If you have ever thought about buying a vacation home, now is certainly the time. House Auctions, Inc. is offering this month 3 custom built beach houses in North Carolina with ocean and sound views. The properties are being sold by “Order of the Secured Creditor” which most likely means even more opportunity for potential buyers as creditors are not in the business of owning vacation homes.

Investors who are interested in renting out a property for income may still do well as long as the proper research is done. In some markets, so much inventory exists that one must wonder what the vacancy rates are like. We found that new construction homes are rarely rented due to the wear and tear that comes along. With all the high-end custom features it’s almost a shame to rent a property out by the week but in these times it may be the easy way to ride out the cycle and cash in down the road.

The most efficient way for large scale corporations to sell real estate assets today is certainly through a real estate auction. We all know real estate brokers are struggling right now with an overload of property sitting in their inventory. These properties are taking months and sometimes years to move. While the corporations are waiting around for something to happen they are paying dearly for it. Holding costs and maintenance costs during a listing period followed by a prolonged negotiation that may or may not result in a sale can run a corporate owned property right into the red.

Seems like one such corporation has elected to have their properties sold at auction. Tranzon Asset Advisors out of Kentucky is representing the auction sale of two large scale corporately owned facilities on April 15th. One of the properties boasts over $1M of NNN income. This actually presents a rare opportunity for a buyer as most corporate properties that we’ve seen are usually vacant.

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