Sky Sotheby’s International Realty Inc is planning another giant real estate auction next month, claiming it to be the biggest single-city auction of real estate in Florida with over $200 million dollars worth of homes. (more…)
Maysville, the developer of the new Platinum condominium in Miami’s edgewater neighborhood, auctioned off 20 of the unsold condo units in Thursday in the hopes of moving some of its inventory. (more…)
Orlando based IDX Realty will auction an estimated $100 million worth of real estate early next month in one of the largest real estate auctions during this declining market. (more…)
Bonnie Whittemore’s two-bedroom, two-bath Bonita Springs condo sat on the market for 18 months with no takers. So she turned to an unconventional, sure-fire way to drum up interest in her property: an auction. (more…)
Real estate auctions have become a more familiar phenomenon in the Southwest Florida housing market and the state as a whole.
But with the cooling housing market, the region’s top brokerage, Michael Saunders & Co., fired off a sharp broadside against the practice in a recent advertising section. (more…)
Auctions have become a more familiar phenomenon in the Southwest Florida housing market and the state as a whole with the cooling housing market.
Some of the trend is an outgrowth of owners who need to move properties quickly, while another driver is banks auctioning properties after foreclosure.
As traditional real estate sales came under pressure in the recent slowdown, property auctions for houses have become one way for sellers and brokers to generate both buzz and, hopefully, closings.
A few weeks ago, luxury Florida mortgage broker Sky Sotheby’s International Realty and J.P. King Auction Co. announced that they were teaming up to market luxury auctions in the Sarasota-Manatee market.
Then, Naples-based DeCaro South Auctions announced a Sarasota-based real estate real estate auction business run by former Michael Saunders’ Realtor Dudley Brown that will handle lower price-point properties one at a time.
DeCaro also has a high-end division and works as an exclusive auction division for many brokerages in Florida.
The latest local entrant in the auction game is Marsha Wolak, a licensed Florida auctioneer and member of the Florida Auctioneers Association and the National Auctioneers Association.
Wolak has held a Florida real estate broker’s license since 1994 and sold conventional real estate from 1990 to 2002, with career sales of more than $100 million. In 2002, she formed Marsha Wolak Realty and focused on real estate investing.
Then, last year - recognizing the need for auctions in the current market - she put together Marsha Wolak Auctions. The company is based in the Sarasota housing market but has satellite offices in Naples and Tampa.
The multi-tasking Wolak is a mother of two, works out, rides motorcycles, and plays golf and tennis.
Wolak’s first area “mega-auction” is scheduled at the Sarasota Hyatt on April 15 at 11 a.m. There will be more than 30 properties up for bid, including several multimillion-dollar luxury homes.
Her auctions differ from those of Sky/J.P. King.
“We do take ordinary properties,” Wolak said. But the business also takes “sellers who need to sell in this difficult time, too.”
“We also specialize in short sales, which is when the bank takes less than the [Florida mortgage] due, to close the sale in a market like this,” she added.
Wolak said that the short sale program has been marketed in recent months and well-received by area brokerage firms. She offers a Realtor referral program that pays agents 3.5 percent at closing.
In order to generate interest, Wolak has been hosting Realtor seminars as well. She held two last week, in Punta Gorda and at the Naples Board of Realtors. Another is scheduled for Wednesday at noon at Jackson’s at Harbour Island in Tampa.
SOURCE: The Herald Tribune
You be the judge.
But depending on how you look at it, Sylvestri Investments’ auction of 25 condo units at Ocean Walk in New Smyrna Beach, Fla., last weekend was either a desperate move or the bold setting of a new trend - but it has drawn criticism from some Realtors concerned about the sagging Florida condo market.
“I’m getting calls from Realtors. They are saying the market is really bad and you are going to show how bad it is,” said William R. Bone, president of the Alabama-based National Auction Group.
“They are afraid the condos will sell real cheap and hurt everybody,” Bone told the Daytona Beach News-Journal. “Everybody’s property values are at stake here. But something’s gotta happen. Things will move at some price.”
On the other hand, some developers are watching Sylvestri’s experience.
“They are telling me, ‘Gosh, if you can do this, I’ve got others to sell.’”
It didn’t take an auction to expose how bad the market is; the numbers speak for themselves. In December, sales of existing condo units in the Volusia County-Flagler County housing market plummeted 83 percent from December 2005, according to the Florida Association of Realtors.
The year-end figures showed a 55 percent drop from 2005-2006.
Local Realtors continue to sound upbeat, stressing the drop in sales is simply a painful correction of the once-booming Florida housing market.
Bone said his company, which auctioned Mary Kay Ash’s pink mansion in Texas and the homes of Kenny Rogers and Harrison Ford, is receiving more requests from builders to auction new houses and condos.
“I think you are going to see the trend continue,” he said. “We’re new to Volusia County, but we’ve done a few in the Panhandle. People say it is a tough market here. We’re used to working in tough markets.”
The 25 Ocean Walk condos sold at auction for an average of $290,000 each, an affordable Florida mortgage compared to many areas. The new condos at Ocean Walk usually range from $379,000 to $850,000 for a penthouse, said Rob Camporese, vice president of Silvestri Instruments.
Neither Bone or Silvestri would say what the price range was of the condos sold at auction.
Silvestri put up 30 condos for auction, but 10 had reserve prices, which meant Silvestri had to approve the price.
Five of the reserve condos weren’t sold. Winning bidders at real estate auctions are required to pay 10 percent on auction day and have $10,000 in certified funds for each piece of property. Bone said 128 bidders from 19 states and Canada came to the auction.
An oceanfront property in Daytona Beach also went on the auction block Wednesday but was involuntary. Regardless, it’s a different real estate climate here than previous years.
Gone are the days when buyers simply walk into condo developers’ offices.
“Most of these guys are great home builders, but the marketing strategy has to change,” he said. “They need an event. We’ll have plenty of music, plenty of food. It will be under a big tent and people get to compete to win.”
Some Realtors worry auctions of new condos will hurt sales of existing condos.
Don Woods, president of the New Smyrna Beach Board of Realtors, said he understands why Sylvestri would auction off its condos.
“It’s a case of the developer having a lot of inventory and needing to get the money out of it to continue on,” he said. “But I think it will hurt resales pretty badly in the short term.”
Woods, who said he would be at the auction representing a client, said other developers - still reeling from the decreased demand for Florida mortgage loans - are cutting their prices on condos.
Camporese said Silvestri bought the Ocean Walk property 26 years ago and plans 20 buildings. He said 12 of the buildings are complete, with 33 units in each, and two buildings are under construction. Camporese said some of the condos being auctioned had been sold, but buyers walked away from their earnest money deposit.
“Basically what has happened everywhere is people got caught up in the real estate market and some went out and purchased units. They continued to buy and roll, but they got caught in the roll,” he said.
To pump up a slowdown in the Cape Coral housing market, Miloff Aubuchon Realty Group Inc. plans to hold an auction.
And not just any real estate auction - with 120 properties up for bid, it could be the largest held in Cape Coral.
“Any time a multiproperty auction is held of more than 30 properties it is considered a large auction,” said Earl Williams, auction manager with Higgenbotham Auctioneers International Ltd. of Lakeland.
A slowdown in real estate sales triggered the idea for the auction, said Jeff Miloff, the group’s sales director. He hopes this leads to a slew of Florida mortgage loan applications.
“The auction might also be the future of the real estate industry,” Miloff said. “People have gotten used to auctions because of eBay.”
The Aubuchon Miloff sponsored auction for three commercial properties and 66 residential lots begins 11 a.m. Friday. Bids are scheduled to begin for 44 homes 11 a.m. Saturday.
Seven luxury waterfront homes come up for bid at 7 p.m. Saturday.
Although the majority of the properties are in Cape Coral, there are a few in the Fort Myers housing market, along with Lehigh Acres, Estero and Punta Gorda.
“The idea came from Terry Mell in our office. We worked on putting it together with Higgenbotham Auctioneers for five months,” Miloff said. “We are so excited and optimistic that we are having another one in February or March.”
Hardly containing her excitement about the auction, Virginia Ward, 67, said she and her husband David, 69, are having a lot of fun putting their home up for auction in the hope of luring in new Florida home buyers.
They reside in a three-bedroom, two-and-a-half-bath, single-story home on Dolphin Canal in the Yacht Club area.
The home’s fair market value is $862,410, according to the Lee County Property Appraiser Web site Leepa.org.
“We did all our research and we decided to go with the auction partly because Jeff Miloff came out himself to talk to us about it,” Ward said.
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.”
Auctioneer Perry Diamond stood on the pool deck of the historic home in West Palm Beach’s Flamingo Park and barked into his microphone.
“Looking for $600,000, do I have $550,000? $550,000? $500,000? Let’s kick it in at $500,000,” said Diamond.
Two dozen people sat before him, but no one budged.
“The auction is today. You’re going to buy it today, or it’s going to go back to the seller,” Diamond urged.
Still nothing.
Nevertheless, after 70 seconds of banter, Diamond declared that he had a $500,000 bid for a home that once listed for as much as $725,000.
“We can consider it sold subject to seller’s confirmation,” he said.
But there was no bid for the seller, John Neuharth to confirm. The personal trainer in West Palm Beach waited out the auction at a friend’s house, and two days later he said he was still confused about what happened.
Amid a slow South Florida housing market for home sales and a growing glut of properties, frustrated sellers increasingly are turning to auctions in search of quick transactions. Auctioneers hype the process as a way to build buzz and move homes in a moribund market.
But as the failed example above shows, auctions offer no magic solution.
BUYERS CALL THE SHOTS
First and foremost, no amount of breathless banter can motivate buyers who don’t want to buy. Moreover, the nuances of auctions are lost on buyers and sellers who aren’t familiar with the process.
Real estate auctions have yet to lose the stigma of a vehicle for unloading foreclosure properties and other less-than-desirable homes.
The latest home sales figures from the Florida Association of Realtors last week show that even the most steadfast residential real estate bull is going to have a hard time denying the bear is in the house. An auction may be a clever gimmick, but if the Florida mortgage costs don’t add up, the house isn’t going anywhere.
After soaring to $400,000 in September 2005 during an unprecedented five-year real estate boom, the median price of an existing home in Palm Beach County plunged to $365,500 last month, a 9 percent year-over-year drop. It tied with the Treasure Coast for the third-largest drop in the state.
Buyers are officially calling the shots.
SELLERS ABSORB MARKETING COSTS
The shifting dynamics have led to thousands of frustrated sellers such as Neuharth, looking at everything from auctions to value-range pricing.
Neuharth quickly learned a key difference between auctions and traditional sales. In auctions, sellers pay their own marketing costs (he spent $10,000 on newspaper ads). In traditional sales, Realtors bear those expenses.
In the above case, it did little good. Sometimes a great selling strategy can only go so far. Shortly after he declared the property sold, Diamond acknowledged there was no sale.
“Sometimes you want to cry. Let me introduce you to one of those times,” Diamond said while standing in Neuharth’s dining room.
It’s not uncommon for an auctioneer in a reserve auction to make a bid on behalf of the seller, and Diamond said he declared the home sold simply to save face for the seller.
But the seller was upset that his auctioneer went ahead with an auction when only one bidder showed up with the requisite check for $25,000. Neuharth also didn’t understand why the auctioneer proclaimed his home sold, leaving Realtors at the auction with the impression that the house was off the market.
“I am not pleased. There shouldn’t have been an auction because there was only one registered bidder. This is so new to people, and there’s a lot of confusion,” Neuharth said.
DEGREES OF RISK VARY
For now, the hype and expectations have outpaced the reality of auctioning homes in a slow market. Neuharth’s home was offered in a reserve auction, a type of sale that’s the least risky to sellers but also the least likely to lure bidders into making an offer. That’s because there’s a magic number that seller and auctioneer have in mind — and don’t share with bidders.
Sellers who want to strike a middle ground can try a “minimum-bid auction,” which is the route chose by Robert Bono, who plans to auction his home next month.
The minimum bid is $269,900, a little more than half the home’s listing price of $515,000.
“It’s a little frightening. The downside is that you don’t know exactly what it’s going to sell for. Theoretically, it can sell for the minimum opening bid,” Bono said.
Still, he hopes the auction nets him a quicker sale and gets him out from under his Florida mortgage loan on the house, an investment property that — as of right now — is producing no income.
“Listing it on the multiple listing service is going to make it one of thousands. And I don’t have a tenant in there, so it’s costing me $3,000 a month,” Bono said.
But his prospects are iffy at best. You just can’t sway large-scale market influences, and too many buyers are still priced out of this market, even with slashed auction deals. Bono is one of what some Miami real estate experts say will be a growing number of home sellers choosing auctions in today’s sluggish market. But will it pay dividends for him?
