Real Estate Auctions: A Growing Trend That's Good for Who?

Link below is to an article in the Sarasota Herald Tribune concerning the recent auction of some luxury properties by a local brokerage. It's the second time they've done it in recent months and you have to admit - it's gotten them lots of press coverage. Heck it's made them lots of commission. And it's gotten some buyers some bargains. But exactly how much does this serve the interests of sellers?

I'm most interested in the quote from the article below:

"Mark S. Miller, chief executive officer of Sarasota's Westwater construction, had six high-end properties for sale in the auction.
He said he sold all of them at about an average of 60 percent of his asking price.
Miller said he had hoped for 70 percent and termed the auction a "success but a necessary evil" in difficult times like these for developers like him.
One Miller-owned property sold at absolute auction was a home at 204 Bird Key Drive. Miller had asked for $8 million but was forced to accept nearly $4.2 million, the highest qualified bid."

He AVERAGED SIXTY PERCENT of ASKING PRICE? You know as slow as the market may be nothing sells Real Estate like price does and if all my sellers would lower their asking price by 30% and then accept an offer for 10% below that - why all my listings would likely be gone in days!!

And that sure would make me smile and put a nice boost in my checking account. It probably would also represent a SEVERE beating for many if not all of them but it sure would be exciting wouldn't it?

Maybe, just maybe, if folks properly price property to begin with, then a day where your customers are accepting offers 40% off your suggested list price might NOT be the cause for celebration it seems to be.

Lastly what do you think those low ball sales do to appraisals of other like properties? Why drive them down too. OK so sellers take a nice big haircut, the market is driven even further down across the board. But hey some Realtors got some nice commission checks. Certainly some folks need the cashflow and need out desperately - still for the majority of people whose realtor tells them they should consider an auction - they need to consider just how LOW can they go?

Why wouldn't you be excited about auctions......

Here's a link to the complete article from the Sarasota Herald Tribune:

http://www.heraldtribune.com/article/20071117/REALESTATE/711170534

- Mike W.

Another One Bites The Dust....Some Sad News...Levitt & Sons Files Chapter 11 Bankruptcy

The builder in our area at Riomar in Sarasota and The Town Homes at San Simeon in Fort Meyer's - Levitt and Sons along with 37 of it's subsidiaries filed Chapter 11 Bankruptcy. On their home page they have posted the following message:

"On November 9, 2007, Levitt and Sons filed for Chapter 11. We deeply regret the impact this will have on homeowners, customers, vendors and employees.
Existing customers are welcome to call the customer hotline at 877-538-4889.
Existing vendors are welcome to call 888-538-4893.
Additional information is available at the following link:
Chapter 11 Information "

As a Realtor we have this love hate relationship with builders: in the "go-go" years of 2003-2004-2005 many new home builders significantly cut their cooperation with local Realtors. Then OF COURSE when times get tough they are e-mailing Realtors, courting them with big incentives etc etc because they know - what buyers there are out there tend to be working with a Realtor. But we take no pleasure in seeing ANY quality home builder in trouble and certainly this level of trouble is so much bad news for so many. The many people who have deposits on homes that are now uncertain of if or when they will close, all the folks associated with these homes that have money and time invested who do not know when or if they'll be paid and most of all the hundreds and hundreds of jobs lost and lives negatively impacted by this failure and just the overall slowdown in this market.

Nationally housing is tied pretty closely to the overall health of the economy but probably nowhere else as much as it has been here in Florida in the last 25 years. Without being on a soapbox we need to have fiscal policy that spurs on the housing market for a lot more reasons that the fiscal health of the Real Estate industry!

A tip we'd like to share with folks wanting a brand new home right now. Consider the benefit of buying a home at or near completion, a spec home if you will. And in so doing consider the safety of using a local Realtor and placing your earnest money IN ESCROW until the closing - if the deal somehow falls through you stand a much better chance of getting your earnest money returned. There is SO MUCH existing inventory - even with brand new homes with builders right now - that you can pretty much have just what you want and because it's already built you can close quickly, with much less exposure to the type of risk represented in this story and in many cases, because the builder or the investor needs to get this building sold - you could negotiate a stronger deal on the existing ones than one you'll close on in nine months.

Here's a link to the rest of the Levitt story:

http://www.floridarealtors.org/NewsAndEvents/n2-111207.cfm

- Mike W.