The Intelligent Way Of Fixing the Condo Surplus
The common denominator in many condo markets is that we have too many units for sale and they cost too much. That combination keeps the huge surplus in place and kills the condo market.
Well, there is a solution on the horizon. And a smart one at that.
Condo.com and AmeriBid are teaming up to provide a national auction for condominiums. This will allow those units that are bank owned or surplus for the developers to sell. And it will also create the most important ingredient for a market.
A solid price that both buyers and sellers can trust.
Right now the market is a mess. Sellers paid too much and want to get their money out, and buyers know that almost everything out there is overpriced. Developers do not want to lower prices and face the earlier buyers who now feel overcharged.
An auction provides a fast quick cut that sets the market and reduces the present inventory.
If this idea between Condo.com and AmeriBid works, it will move the market forward and provide a solid base. At that stage buyers will be confident that they are getting in to the units at a price that they will not be losing money.
Here is Larry Latham, CEO of Ameribid, explaining it in more prosaic terms:
“It’s really simple: There is too much inventory on the market which is a leading indicator of the unhealthy state of the real estate market. What’s going to change that? We’ve got to clear out this inventory. How is that going to happen? Prices need to be reset to what the market will bear. How does that occur? By using online auctions to set the prices and sell off huge amounts of inventory to the widest audience possible. Online auctions have the potential to be the closest thing to a miracle the real estate industry will experience in 2009,” Larry Latham, CEO of AmeriBid remarked. via msnbc.com.
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Comment by Sean Terry | Deal Makers Blog on 5 February 2009:
This will be interesting to see the success rate of the closings of these types of deals, what I have experienced is that most of the complexes have aggresivelly sold to investors leaving over 51% of the complex non-owner occupied. If this is the case than the entire complex becomes unfianceable under current conventional financing guidlines. So if a buyer at one of these auctions doesn’t ask the right questions they will not be able to finance the property thus close the deal, and if they pay cash as many have they will never be able to sell to a buyer that needs conventional funds to close the deal. This of course could all change if a guidline is revised.
Thanks for the article,
Comment by Atlanta real esate on 7 February 2009:
I hope these work, maybe similiar tactics can be used with the new homes surplus. It should work easier due to less financing restrictions involving new construction home neighborhoods. I guess we can wait and see.
Comment by Albany Homes on 9 February 2009:
Seems to make a lot of sense to me but I would have concern over how these deals would get financed. I certainly don’t see online real estate auctions as a panacea for the real estate industry.
Comment by Laguna Niguel Real Estate on 11 February 2009:
In the past condo ownership suffered with a negative image for a variety of reasons, however that image has since changed dramatically. Once the thorn in homeowner’s sides, condominium associations have worked hard in recent years to clean up their negative image where disputes and lawsuits were once rampant….