Marco Island Real Estate Auctions Yield Zero Homes Sales
With Florida home mortgage demand so quiet, one way developers and sellers have tried to drum up interest is through real estate auctions. But the Marco Island market is proof this doesn’t always yield results.
“People a lot of times hear the word ‘auction’ and think it’s a deal, but that’s not always the case,” said Ken Gandy, a broker for Keller Williams Realty. “The implication of an auction implies low prices, and that’s bad publicity for Marco Island and Marco Island property values.”
Problems with local auctions
All of Marco Island’s auctions held have been what’s known as “reserve auctions,” meaning that bids must be agreed upon by the seller before closing. With buyers looking for cheap buys and hot deals in a market which has been witness to incredible increases in property values, the question remains:
What is there to gain by selling in an auction and are there deals to be made at all?
“In a down market, auctions don’t work very well,” said Erik Hansen of Premiere Plus Realty, who helped organize two of last year’s Marco Island auctions. “When the market is going down, buyers are looking for extremely low prices from an auction. We’ve got so much inventory on the market that something has got to change. Very few things are being sold and those that are selling are getting sold much lower than average market prices.”
Still, auctioneer Randy Kincaid of Kincaid Auction - who presided over two of Marco Island’s real estate auctions last year - said that there is value to be had and benefits to be reaped by auction transactions.
Kincaid noted that he has witnessed real estate auctions in the Florida housing market gain in popularity, estimating that last year he was an auctioneer at approximately 30 real estate auctions.
“We did those auctions last year (in Marco Island) at a time when the market was taking a nosedive, post-Hurricane Wilma,” he explained. “The market has pretty much stabilized now, but we’re still off some 20 to 30 percent.”
More about the market
In Florida, high real estate prices - coupled with high insurance premiums following the deluge of recent hurricanes - have aided in crippling the real estate market. When it comes to auctions, the invisible costs - known only to the seller - may influence whether a seller will accept a bid or not, especially when sellers are asked to consider a bid well below their perceived property value.
“What goes up has to come down, that’s just the natural cycle of real estate,” said Kincaid. “In the interim, we are going to have natural fluctuations in the market. As auctioneers and sellers, you don’t set the price - whether that is in a conventional sales environment or an auction sale - ultimately it’s the buyers who set the price. Being able to present to the [Florida home loan] buyers that you are going to have value (for sale) at the auction is crucial.”
Whether or not low bids are the key culprit in deciphering why properties haven’t sold at local auctions remains known only to the would-be sellers. But in real estate auctions, price may be best justified by the bidders.
“As auction companies, we are going to have to be much more selective in the properties we accept, to ensure the listed properties are in-line with market pricing at the time (of auction). We had buyers there and we could have sold most of the properties at those auctions, but the sellers didn’t have realistic expectations,” noted Kincaid.
Gandy, meanwhile, sees the fate of local real estate auctions a bit differently.
“I don’t feel auctions in resort properties are a good idea,” he added. “They can lower the market value of the properties. In the Marco Island real estate market, I don’t think they’re a good idea.”
