- submitted by s.levenstein on 05/28/2009
Home Auctions: Coming To A Cul-De-Sac Near You
By Steve Levenstein
Most everyone agrees The Great Financial Crisis of 2008 began with the burst of the housing bubble and many state the recovery, when (and if) it comes, will begin in the same, badly beaten-down sector. Whether that's the case, only time will tell... in the meantime, though, quite a few people are betting the time to buy a full house is now, when the chips -- and home prices -- are down.
Easy to say, sure, but without a working crystal ball who knows when the market's really bottomed out? Actually, who cares? Home prices have been taking it on the chin for so long now almost ANY bid can bring buyers big savings compared to the glory days of 2007. Yes, I said "bid", 'cause the method homebuyers are using to hammer down great deals involves slamming down the mallet at a real estate auction.
Home auctions have blossomed into a nice little business for real estate auction specialists like Kennedy Wilson of Beverly Hills, CA. By providing property owners with a quick way to offload stagnant assets, real estate auctions sop up red ink while offering homebuyers a way to snap up homes & condos they never would've been able to afford otherwise.
It would seem the only ones left out in the cold are those who bought in at the top of the market. Imagine watching happy new neighbors move into a house they "stole" for $300,000 at an inventory closeout auction...from the window of your 3-year-old, half-million dollar home. The glass is anything but rose-colored and the pane is real. Or is it... unoccupied homes in relatively new communities stick out like missing teeth in a movie starlet's smile. Fill in the gaps and everything starts to get better -- including the depressed value of the occupied homes. To further extend the window metaphor, maybe the glass is half-full after all.
Kennedy Wilson's most recent real estate auction was May 17 at Brazos Place in Austin, TX, and they have another one coming up June 14 for Coeur d'Alene, Idaho's Village at Riverstone. With 20 and 36 condos respectively crossing the block, these are major events, especially for the latter auction in wild & woolly Idaho.
The auctions themselves are somewhat wild & woolly themselves -- forget everything you learned from stuffy art auction scenes in old movies. Instead, think of the televised Barrett-Jackson auto auctions...anything but staid, those. Actually they're quite the spectacle: a bidder ups his or her bid and the auction rep shrieks as if the auctioneer's mallet had just smashed down upon their nether parts!
While there have been no reports of shrieking or nether-part-malletting from KW's real estate auctions, the theory still applies: excite the audience and turn the bidding into a competition. Outbid, Outlast, Outpay...to paraphrase the Survivor motto. Though enticed by the prospect of savings of up to 50 percent or more, frenzied bidding at the well-publicized auctions often results in sellers getting up to 90 percent of their asking prices and yet, buyers walk away thrilled to know they beat out the other guy. As Rhett Winchell, President of Kennedy Wilson's Auction Group puts it, "Beyond a doubt, our auction format sells homes remarkably well -- in good times and bad -- to the satisfaction of both buyers and sellers."
A real estate auction in your neck of the woods? It's more likely than you think -- check out the local papers and watch the local TV news.
Reporters love these types of stories as they can weave in a number of different angles: the state of the local and national economy, human interest from existing homeowners and prospective bidders, and a perfect setting for a "live eye" report. Best of all, the combination of financial gloom and the prospect for recovery, seasoned with a little "underdog makes good", makes for the perfect news item. Just look out when the mallet drops!
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Steve Levenstein was born & raised at the then-northern edge of metro Toronto, Canada. Looking through the prism of the suburbs has not only given him a slightly skewed view of society, but has also helped frame the wider world as a series of variations on a theme. Closer to home, Toronto's multicultural mix acts as a rich, vibrant tonic -- an essential elixer that, by putting people out of their place, highlights the common humanity which lies within.
After a 15-year dip in the corporate pool, Steve abandoned the daily commute to focus on his first love, writing, and spending time with his family. Steve's wife of 18 years hails from Tokyo, Japan, and provides a unique window into the delights and diversions of modern Japanese culture while his 2 sons (the younger an established tech blogger in his own right) help keep the house from getting too quiet. Steve writes for a number of respected blogs including InventorSpot, WebUrbanist, Dark Roasted Blend and The Thinking Blog. ...read more rants
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