Last night I attended the Tranzon auction in Fairfax. Since most of you will probably never attend one, but many of you are probably interested, I thought I'd give you a report.

There were originally 19 auction lots to be sold. (Auction lots as opposed to parcels of land.) Ten of those 19 lots were from our area. They also had a half dozen DC properties and some land parcels in Clifton and Chantilly. I believe the proportion of local properties is representative of how much tougher the real estate market is as you move further away from DC.

Four of those 19 properties were pre-sold prior to the auction. In addition, one of the lots was three Culpeper townhouses. Two of those were pre-sold as well.

It was interesting that not one of the parcels of land met the reserve price. There were bids. But the seller had set a minimum price at which they'd accept an offer and none of the bids on any land parcel met that reserve. Land prices are always less elastic than residential homes and this confirmed that. And, since many of the bidders on land were builders, it's pretty clear that they're being very cautious right now. (If they weren't they'd be bankrupt, not bidding at auctions!)

I was at the auction with a buyer client so I had that hat on. So, I'll give my impressions from the buyer side first.

While the auction prices on some of these properties were attractive, there were no "steals" here. The ultimate sale prices overall were not far off current market prices. That tells me the people in that room had done their homework and weren't going to overbid. It also tells me that the heat of a bidding competition got some of them to bid a bit more than they really wanted to.

It was a cautious crowd overall. (And a large crowd.) For example, on the first property of the evening, a large colonial in Manassas on a 1.18 acre lot, the auctioneer tried to start the bidding at $700,000. He ultimately had to go down to $400K to get the first bid. The final sale price was $530K.

I was also struck by some of the comments by Tranzon, both the auctioneer and the gentleman providing the descriptions of each property. Comments like "You know this is going to be worth $350K in a year or two" and "The value on this can only go up" were shocking to this REALTOR who has been trained to never misrepresent value. And, the interesting thing is that I think those kind of statements were actually counterproductive. You could hear some of the scoffing after these comments as the potential buyers seemed to be reminded of the current state of the local real estate market and the folly of such predictions.

From a seller's perspective, this is not an unattractive way to sell a home. None of the residential properties failed to meet the reserve price. They all certainly sold faster than they would have under normal circumstances. And, I don't believe there was a significant decrease in the net in the seller's pocket. Remember that all of these properties are sold as-is with no inspections, appraisals, etc. And, settlement must take place within 30 days. I wouldn't hesitate to help a seller use an auction to sell their property. In this market, it's probably a method more sellers and their agents should seriously consider.

It was a very educational evening. If you're interested in more information on either buying or selling at an auction, let me know and I'd be happy to help!