Remember the top-of-the-hill Del Mar lot that was auctioned off for $4,000,000, and then they added the 10% vig?
Category Archive: ‘Auctions’
Auctions have a seat at the house-selling table, and their ultra-low opening bids are eye-catching for buyers hungry for new product. Will one player emerge from the pack to dominate the space, or will every realtor be offering an auction option some day? These guys are figuring it out – it’s better to cozy up to agents, rather than try to replace.
From the wsj.com:
The hors d’oeuvres and drinks were flowing at an Auction.com broker party in Midtown last week when Rick Sharga shushed the crowd of commercial real-estate brokers to explain to them why the online property-sales service is their friend, not their competitor.
About 75 brokers from the New York region were at the event, lured in part by Auction.com’s promise to give away five $1,000 gift certificates. The service—one of the largest online property-auction sites—also is offering brokers $5,000 for simply listing one of the properties they represent on the site, whether or not it’s actually sold.
“We believe the best model is a hybrid model” that combines traditional brokerage and Auction.com’s online bidding service, Mr. Sharga, an executive vice president with the firm, told the crowd.
Auction.com is launching a major push to develop stronger ties with brokers as part of a broader effort to expand its commercial-property business. The firm, which started online real-estate auctions in 2008, has been listing commercial property since 2009.
But so far its volume has been dominated by residential sales.
The firm expects to sell 1,000 to 1,500 commercial properties this year and 50,000 to 60,000 homes.
Read full article here:
A 15-bedroom American mansion with a guitar-shaped driveway has gone up for auction – with a starting bid of $0.
Seven Montagel Way will go under the hammer on October 31.
The 27-acre property in Shoal Creek, Alabama comes with a horse riding arena and a fitness centre.
The impressive 16-bathroom property includes a decadent foyer with ceiling murals and crystal chandeliers.
It also boasts a screening room with a 170-inch screen, theatre-style seating for 25 people and an authentic box-office, a commercial-grade elevator, a wine cellar with shelving for 2,000 bottles and a game room.
In 2011 the property was listed for $17.9 million (£11.67million) by owner Larry House – the former CEO of MedPartners, a firm that supplies staff to hospitals and medical centres – but he removed it after it failed to sell.
Last year, the house was put on the market again for $13.9 million (£9million). At the time, Pam Ausley, the listing agent, said the property awas too big for Mr House.
She said: ‘Their kids are grown, and they’re just ready to do something different. He knows it’s not the best time to sell, but he’s just ready.’
Mr House also put the property up for auction in 2003 but bought it back when it sold for just $3.95 million (£2.57million).
CEO and founder of DeCaro Luxury Auctions, Daniel DeCaro, said: ‘Inspired by historic French and Italian castles of Europe, architect Bill Shepard designed 7 Montagel Way to feel like a traditional palace in Versailles.
Read more: LINK
I love her sales strategy here, and we should adapt something similar!
The estate sale is next weekend, October 16, 17, and 18th:
I keep hoping that the auction format will take hold, and at least become one of the choices for sellers to consider. The Harcourts hubbub has settled down – I haven’t seen or heard of any of their auctions lately – but auction.com is finally sticking their toe in the water.
They are beta-testing their Select division, which is a happy blend of an online auction and regular transaction terms. From their website:
- A Buyer’s Premium of $2,000 will be added to the Winning Bid amount to determine the Total Purchase Price (TPP). The buyer is responsible for paying the TPP whether using financing or cash to purchase the home.
- An Earnest Money Deposit of 1% of the Total Purchase Price, or $1,000, (whichever is greater), is required at the time you execute your Purchase Sales Agreement. This $1,000 will be applied towards your closing costs and/or down payment at closing.
- A Buyer’s Broker Commission of 2.5%, or $1,200 (whichever is greater) is available to registered Buyer’s agents/brokers. Click the Agent/Broker Info link at the bottom of this page to find out how agents/brokers can register to be eligible for commissions.
- A 15-day Finance Contingency is available for qualified buyers who intend to purchase using financing. To learn more about finance contingencies, view our FAQs.
- An Inspection Contingency is available on this property as follows: A 10-day Inspection Contingency is available for financed transactions, and a 7-day Inspection Contingency is available for cash purchases. Find out more about inspection contingencies on our FAQs.
- Buyer may request a Seller Concession credit of up to 3%, not to exceed Buyer’s recurring and nonrecurring closing costs, for all financed purchases. View our FAQs for more information on seller concessions.
- Buyers will receive insurable title upon successful closing. View our FAQs for more information on title insurance.
- If Buyer uses the Seller’s designated closing company/agent, Seller shall pay the Buyer’s title policy premium for a state-specific standard owner’s title policy.
- Until the Seller’s reserve price is met, Auction.com may counter bid on behalf of the Seller. Counter bidding gives Buyers and Sellers more flexibility to find a mutually agreeable price. Counter bids do not occur after the Seller’s reserve price is met.
They just couldn’t resist the last paragraph, and it’s one that will likely be a turn-off to casual bidders. But unless they get to the reserve price, who cares – if their shill has to try to bid it up in order to hit the reserve price, then the buyer can always say no.
But they’ve only had five listings in the state so far:
The online aspect sounds convenient, but it’s the live event that makes it worth it. The live auction is where buyers might get hyped up enough to bid a little higher than they thought, and be more likely to hit the reserve price.
They have Google behind them:
So if the beta-testing works out the bugs, and Google can spend millions on advertising it, then the auction.com Select format could be what brings residential resale auctions to the masses.
If they could incorporate a platform where ANY listing agent could utilize the service and have it be friendly to all, then we’d really be cooking!
Hat tip to DH for sending in this article:
“Going … going … gone! Seller will reduce price by $50,000 every day until sold,” said an ad that Coleen Brennan of Engel & Volkers ran in the Los Angeles Times in June.
The price kept dropping – in all, some two dozen times – until it hit $12.74 million on July 7, the Multiple Listing Service shows. A little over two weeks later, the property went into escrow.
While this reverse-auction type strategy is intended to create a sense of urgency among buyers, it can be risky, too. What if everyone just keeps watching the ax swing? The seller could wind up having to take the house off the market again.
But that wasn’t the result here.
On Friday, the deal closed. Sale price: $12.54 million.
Read full story here:
Do realtors steer buyers to listings that pay higher commissions? This new study by NBER says we do – I chimed in at the comment section:
Maybe it’s my rose-colored glasses, but doesn’t it seem like every issue facing realtors can be solved with the auction format?
Reader 3rd Gen SD sent this in yesterday:
JtR, have your sales and experience led you to a percentage of listing price that should be devoted to making deferred maintenance and aesthetic updates? Perhaps a suggested metric other than percentage of LP?
To wit, I’m sure there are some listing agents who would love for their clients to dump as much cash into the front end as they can. No skin off the agents’ backs, right?
Hypothetical: If a CMA led to a listing price of 800K, would you advise your client to invest 8K, 16K, 24K toward making it truly marketable?
Am assuming paint and flooring, kitchen and master bath updating if needed, but there has to be a point of diminishing returns. I mean, there are “cream puffs” and there are “cream puffs”…
Any general guidelines you’d care to share would be appreciated.
General guideline: Make the house look and smell clean. Add new carpet and paint, do a thorough cleaning, and remove all clutter and half the contents. Include staging to provide emotional appeal and make it memorable.
Let’s go back to his paragraph two.
Not that anyone reads the contracts (principals or agents), but our listing agreement encourages sellers to consider all offers. But once the home is on the market, sellers tend to dig in on price. Their family, friends, and neighbors have seen the price, and sellers feel the need to defend it – at all costs.
It’s not necessarily a conscious thing – it is human nature….in this society.
It is miraculous that buyers are willing to satisfy the sellers’ demands approximately 3,000 times every month in San Diego County (3,568 detached and attached-home sales last month).
Agents hope that trend continues and are willing to list a home for sale at no cost to the seller. Yes, we can score a big bounty at the very end if we can get buyers and sellers to the finish line. But we do so without having a vote on the eventual sales price.
From Paragraph 7 in our listing agreement: “Seller is responsible for determining at what price to list and sell the Property.”
It happens regularly that a listing agent will spend weeks, months, and sometimes years trying to sell a house. They may procure several offers, which would seem to indicate what the market will bear. But the seller has no obligation unless a full-price offer is produced.
To tie it back to 3rd Gen’s question – Because every seller wants to sell for the top of the range of what homes are selling for in the neighborhood, agents are smart to tell them to buff it out before listing.
If sellers were willing – and committed – to sell for what the market will bear, then we could throw a house on the market in any condition and see what it’s worth.
But most sellers won’t sell for any price – they want to sell for their price, regardless of what the market will bear. Thus, fixing them up improves everyone’s chances of a successful sale. You’ve seen me personally get involved in the improvements too – I know it helps our chances!
If we could all understand and agree that a house will sell for what the market will bear, it would change everything. But instead, sellers are motivated to hire the agent that quotes them the highest price, regardless of condition. Some do the fix-ups, and some don’t, and then buyers are left to figure out the rest.
Another reason why realtors should be proponents of auctions!
The effective date of the TRID has been determined – October 3rd:
The way some people are acting, you would think it was the end of the world.
The changes in loan disclosures were supposed to take effect sooner, but the mortgage industry pleaded for more time. The lenders’ software needs to be changed and employees need to be re-trained, but once in place it looks pretty simple to me.
There will be two required forms: a Loan Estimate that must be delivered or placed in the mail no later than the third business day after receiving the consumer’s application, and a Closing Disclosure that must be provided to the consumer at least three business days prior to consummation.
Lenders will have to be a little sharper about printing loan documents in a timely fashion. The companies that already have strong, organized clerks who can handle their desk and can print out loan docs will take it all in stride. The lenders who don’t pay enough to get good clerks will struggle with these new timelines. Get Good Help.
People are worried that buyer credits arranged late in the transaction could delay the closing, because the lender will have to re-issue the Closing Disclosure. But credits negotiated during the 17-day inspection period still give the lenders another 13 days to close a regular sale. If your lender is on their game, there shouldn’t be a problem.
But if buyer credits are a problem, what other alternative is there?
Let’s have the sellers supply a written inspection report to every buyer. Have each buyer make an ‘as-is’ offer after reviewing the inspection and termite report, knowing the condition of the house. Buyers might procure their own inspection reports later, but with good inspectors, the findings shouldn’t vary much.
How often does it happen where the buyers make a retail-priced offer thinking the house was in good condition (staged or otherwise), only to find out it needs a lot of work. It happens ALL THE TIME. The sellers won’t do much for them, they are tired of the pursuit, and close the sale any way – and then spend $50,000 to $100,000 over the next 12 months to make it right.
At least if the buyers saw a decent inspection report before offering, they can say that they made a knowledgeable decision.
Handling the repair requests are a major part of a realtor’s job. We would prefer sales to be ‘as-is’, so once we make a deal we can just head for closing.
With ‘as-is’ sales, we’ll only be one step away from auctions.
None of the wranglings with Zillow or others will matter much if auctions take hold. Here’s another example of how they are being presented:
LINK HERE to story.
The property is being auctioned through Premier Estates in conjunction with local listing agent Shelly Tretter Lynch of Sotheby’s International Realty. Tuvia Sablosky, director of sales for Premier Estates, is directing the auction, which is the first Premiere Estates has conducted in Greenwich.
“This is the first time we’ve done this in Greenwich, but we’ve done it all over the United States and it’s been very successful,” Sablosky said. “It’s not so much affected as far as location, it’s more sellers who are interested in an accelerated sale. There’s a specific date where the property is expected to be sold and buyers have to make a decision by a certain date if they’re going to make an offer. That’s really the biggest difference.”
Lynch said the Greenwich home located at 591 Indian Field Road has been off and on the market for several years, and now the owners simply want to get the house sold as quickly as possible. As a result, she sought alternative sales strategies and decided auctioning the home could be a great way to accelerate a sale.
“We’re really putting this on the fast-paced plan,” Lynch said. “This is a fairly new process in this area of the country, but it has been successful throughout the country and there’s no negativity surrounding the auction. It’s a homeowner making a choice to have an auction and that’s really important to note. It is entirely the homeowner’s choice.”
Selling homes at auction was once considered a last-ditch attempt to unload a property that wasn’t selling, but in recent years auctions have become a viable option for luxury home sales by replicating marketing techniques used to sell high-end art, antiques and collectables. According to the National Association of Realtors, the perception of auctioning a mansion is changing because it allows homeowners to set a deadline and hope a bidding war will result in a higher selling price. Sometimes the method results in the home selling below its market value — a risk associated with this method of home sales.