On February 16th at 1pm, 515 Tucker St will be auctioned off to the highest bidder. Bidding will start at $100,000 and can be done on location or on WilliamsAuction.com. It's a beautiful place in a great location and it will be interesting to learn the price of the winning bid.
More importantly, I think it is a genius idea to get a place sold quickly before the bubble deflates further.
This is something owners whose property has been languishing on the market should look at closely.
Take a look at 545 Westmont Court:
This property was listed on October 11th at $569,000... nearly a quarter of a million dollars more than the owners paid for the place in 2002. They have surely done some upgrades and are convinced the value has appreciated significantly, but to date buyers don’t seem to agree.
You can almost see how painful the sales process is for the owners in the numbers above (click image for larger view). Their real estate agent is probably pleading with them to lower the price to spur demand. The owners hem and haw, wonder if they have the right agent, wait a few more weeks with still no offers, then decide: "Well, I guess we could lower it another $10,000."
To them $10,000 is a vacation or a car. To potential buyers looking at home priced at over a half million dollars, $10,000 is less than 2%. Amortized over 30 years that's equivalent to a few trips to Starbucks a month. Meanwhile, in the two months it took them to decide to lower the price by $10K, the housing slump has probably decreased their home's value by $20K.
If I were the seller I would take a different approach. I'd have my agent run an ad in the Press Democrat and Healdsburg Tribune announcing an innovative home sale. In one month's time (pick a date... let's say March 1, 2009) your home, currently priced at $529,000 will begin to fall in price by $10,000 A DAY!
If there are no bidders the first day, it falls to $519K. If none the second, it falls to $509K. If after 50 days there are still no bidders it would fall to $29,000!
Of course, it would never fall to $29,000 (I assure you I'd buy the home well before that). I'm guessing such a sale would generate such a buzz and get so many people looking at the home it would sell in no time. Maybe even the first couple of days.
The catch is you have to act sooner rather than later. As REOs start hitting the market and auctions become more common, such a technique would lose its novelty. Owners will be stuck chasing the market down, auction or not.
This demonstrates just how ignorant you are of the local market and of real estate in general.
ReplyDeleteThe auction is a horrible idea. They should have gone with a respected local agent who knows the market, something they'll discover after the fact. I've never even heard of the company they are using.
And how can you state with so much certainty that home prices will continue to decline? No one knows what the future holds.
Well, I guess we will see what happens. To me, the auction sounds innovative.
ReplyDeleteBut I’ll admit, after I posted this I talked with an acquaintance of mine who works in the industry and they were surprised the owners went the auction route. I would be interested to get more feedback on if this model is viable from any others in the business.
As for why real estate should continue to decline take a look at the charts I’ve linked to above. Also, on the right sidebar there are plenty of websites providing additional evidence.
I’ll be posting a much more detailed explanation of why I believe home prices will continue to decline. I just haven’t had the time to finish it yet.
Thanks for stopping by.
Concerning 515 Tucker, it looks like this place was listed with a real estate agent. In fact Redfin says it was initially listed in April 2008. So after 250+ days on the market, it looks like the owner wants it sold now and went with an auction. Why is this such a bad idea? They may get a better price than a couple of other houses I can list that were initially listed at over a million and are now in the 700s.
ReplyDeleteThe trick for this place is that it is it is divided up into four units(renting out at over 4300) so either the new owner will have to keep it as a rental or put some more money into it to convert it back to a single residence. Either way, it will be interesting to see how this works out.
Also I think Williams auctioned off a lot in Clear Ridge Dr. if memory serves. No idea how "good" they are.
Tom-
ReplyDeleteThanks for this info. I wasn't aware of the rental units.
If anyone is planning on attending the auction please email me the results: (healdsburgbubble@gmail.com)
FYI-The listing agent is actually the owner.
ReplyDeleteDoes anyone know what happened at the 515 Tucker auction? Why is the home currently on the market for 1.175 million, and a 398 days on the market per redfin?
ReplyDelete