Using Real Estate Auctions To Determine Value In Soft Market
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We typically think of auctions as a means of divesting properties that are impossible to sell. Foreclosures, builders closeouts, ect…
But the use of an auction to determine value in a down market is intriguing and pretty smart if you ask me. We all know Florida is a stalled market where no one can figure out what pricing is correct. And new condo developments are still coming on line adding inventory to a mess.
But a sale last week made sense. A new condo development put part of their inventory up for auction with reasonable minimums and they sold their inventory. Now the builders have 2 important parts of the puzzle moving forward. They have some people living in the community so it is not a ghost town. And they also have base pricing for the units. They will be able to market the rest of the properties in a price range that has credibility to the public at large and they can make accurate projections.
What some may see as desperation is actually a savvy business move.
“In this market, it’s not easy to determine value,” said Jon Gollinger, co-founder of Accelerated Marketing Partners, the real estate company that handled the auction on behalf of the developer, Wood Partners, which had previously sold about half the units.
The goal of an auction is to establish the value of a property by bringing a lot of buyers together and finding out what they will pay — speeding up a process that might otherwise take months in a stalled market like South Florida.
“It’s a win for the developer because he moves a lot of inventory quickly,” Gollinger said. “And it’s a win for buyers because it shows that there is a market for the building — it gives them comfort in their purchase.” HeraldTribune.com
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Comment by Rochester MN Real Estate on 1 December 2008:
That’s a great idea for getting a great understanding of the optimal price for a piece of Real Estate
Pingback by Sumner County Real Estate and Auction News! » The Brilliance of Auctions. on 1 December 2008:
[...] some time about the credibility of using an auction to gage pricing in your area. I ran across this article today, and it only stood to prove my [...]
Comment by Tom Wood on 1 December 2008:
I agree, using an auction is not only smart, it’s really the best way to sell in any market. Thanks for your sharing this!