Posted by David Krulac on December 03, 2002 at 10:43:23:
JT,
I have been to many auctions and it is definetely a seller’s market with nearly every sale being at high prices.
i also agree that the absolute auction brings out more bidders and more bidders with money. Went to one 10 days ago where 27 bidders brought $25,000 each in cash or certified.
David Krulac
Central Pennsylvania
Joe Kaiser’s Auction- Just wondering what happened - Posted by Dee-Texas
Posted by Dee-Texas on December 02, 2002 at 21:21:42:
I was reading the how to articles on Joe Kaiser’s transcript in the chatroom.
You mentioned that you were selling the Seattle house by using an auction company.
Can you tell us what happened?
BTW I enjoyed your article.
Thanks,
Dee-Texas
Here’s what happened . . . - Posted by JoeKaiser
Posted by JoeKaiser on December 03, 2002 at 24:16:49:
Well, we just closed on the sale of the Seattle house a week or two ago, only we didn’t end up doing so with the auction.
It was “interesting” to see lawn chairs on the grass, a dozen or so bidders with $10k cashier’s checks paperclipped to their registrations, and a guy doing the “who will give me?” thing.
The bidding stopped at $172k. With a buyer’s premium, that means they pay around $180 for the house.
With the commission, that means we’d net $164k (next time I’d negotiate that premium/commission thing way down from there).
This was a “seller confirmation” type sale so we could say “yes” or “no.” We left the sale thinking we would accept the deal and just move on. We were into the property $148k and had hopes of seeing $200k as a sales price, so it was a little disappointing.
Just to be sure we drove the neighborhood again, called all the agents who had houses for sale, and asked them to check out the place and let us know if they could do any better. One agent called that very afternoon and faxed us an all cash offer, $175k, no commission. We accepted it the next morning.
I called the auction guy to tell him we had decided to decline the offer he acquired for us (we were obligated to him through the auction only). He failed to contact the winning bidder to advise him the bid was declined.
He called later that afternoon, agitated. The winning bidder had gone to his lender to get his loan started, only to be told someone else had already been in that morning applying for a loan on the very same house. The winning bidder called the auction agent, telling him the whole thing was a scam.
The auction agent called me, “smelling a rat.”
I just told him what happened, as it happened, and felt no obligation to him whatsoever. We both entered the auction arena knowing the ground rules and both accepted the fact that neither of us might get paid.
He said something that made me decide not to use his services again. I had intended to do a half dozen or so to see if it was a viable method of selling. At this point, I’m still undecided.
We did okay for the 10 days work we put into it, and we closed it as quickly as time permitted, so everyone (except the auction guy), including the original seller, was happy.
We could have just listed and probably done better. Probably should have, looking back. Still, I’d like to try the auction thing again. Seems like all those buyer’s with cashier’s checks in their hands have got to be worth something.
Joe
Re: Here’s what happened . . . - Posted by Dee-Texas
Posted by Dee-Texas on December 03, 2002 at 07:10:08:
That’s what I like about you. No fluff and to the point.
In my area, the auction is a great way to pick up good deals. I’ve bought two through a good ole boy auction, made about 20K after fixup.(We have a constuction company so we don’t mind the fixup) It’s getting harder to find auctions that have good deals…go figure when I find something, everyone gets into the act! smiles
Best Success,
Dee-Texas
That has been my experience too… - Posted by JT-IN
Posted by JT-IN on December 03, 2002 at 07:43:10:
Dee:
“It’s getting harder to find auctions that have good deals”.
So from the Sellers side of things, that would be a good thing… I have had some success using the auction method as a seller, and never really much as a buyer, due to seeing “auction fever” take over some of these folks that Joe speaks about… with the Cashiers Check stapled to their bidder #… Down right idiodic if you ask me, but when faced with that situation, the best thing to do with it… is capitalize on it… and be a seller.
Even with Joe’s experience, it doesn’t sound as if he would have come out too bad if he had gone with the auction results… I am convinced that in say… auctioning 10 proeprties, versus offering the same 10 for sale conventionally, that in the long run the auction approach is the most profitable, considering all factors; (time, contingencies, cost, etc). Of course, IMHO, it is best to use the ABSOLUTE auction method, to reap the mot facvorable results. This of course requires quite a level of confidence in the system, in order to do so. What will never be know is this… If Joe had done an ABSOLUTE auction, there may have been other bidders in attendance, due to the terms, that didn’t attend otherwise. The results could have been markedly different… but then that is strictly a hypothetical and an opinion, of which we will be left with only the opinion… and you know what those are worth. (smile)
Just the way that I view things…
JT-IN
Proposed Auction rule: picture of buyer … - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on December 03, 2002 at 19:55:47:
JT–(IN)----------------
I don’t go to auction sales much here in CA. There aren’t many because the market is strong enough that listing with real estate brokers elicit high prices (as I see it) and even bidding up over the asking price. Maybe not so much now.
But there have been some auctions in the past with REOs when the market was not hot here and some of the sold for good prices, from a buyer’s perspective. SOME, but not all. I think that it is percentages thing, a numbers game. Go to enough auctions and you will see a few good deals. I think this applies to tax sales also.
I think you have a good point about doing absolute auctions. Especially if, as Joe Kaiser will, you have a lot of different properties for sale over time. Imagine the impact of just one property selling for considerably lower than market value. I’ll bet the story spreads through most of the serious real estate investing community. In fact, if I were in Joe’s situation, I might well do an auction with an announced minimum bid noticably lower than fair market value, absolute if anybody bids at least that minimum. Then, if a property sold for a lot less than market value, I’d sure let prospective future buyers know about it. Advertisements for the future sales would have a testimonial from the buyer of the bargain. The auctionneer would talk about that purchase before the bidding began. I’d have tried to get an article into the newspaper about the up-coming sale with an emphasis on that bargain buy at the previous sale.
Oh yes, the seller might lose on ome property occasionally, but I’d be willing, almost, to bet money that the profits from future sales would more than make up for it.
Hmmm. Wonder if one of the auction rules could be that anybody who is a successful bidder has to allow a picture of that person being printed in other advertisements in the future? And that the person has to make some comments about their feeling about their purchase–which might be used in advertising.
Good Investing**Ron Starr