Mixed Action at These Auctions

As more troubled properties flood the market, lenders and developers are turning to auctions to get rid of them.  Smart buyers know to do their homework before attending an auction, because it’s easy to walk away with less than a bargain.

The buyers at a recent auction in Fort Lauderdale must have been pretty auction-savvy.  Out of 99 properties up for grabs, only 32 were bid on, reports the Gulf Coast-based Herald-Tribune:

Only a handful of the properties would be selling absolute, where any bid would be accepted. The rest carried a non-disclosed reserve, or minimum bid. “When there aren’t many absolutes, it makes it hard to get things going,” DeCaro said. “And this is a tough market.” The auction, which was anticipated to take four to five hours, wound up clocking in at barely two.

Hmm….could the problem be that many of these homes were still drastically overpriced? Most had bids starting over $1 million. Who has that kind of money lying around?

On the other hand, the lower-priced properties saw plenty of action.

A number of Wilton Station brownstones and condos that were absolute provoked some heated bidding wars. Five brownstones priced in the $500,000-to-$600,000 range all garnered bids, ranging from $230,000 to $275,000.

Prediction:  Look for those million-dollar homes to go “absolute” very soon.

Meanwhile, up north in Oakland, buyers snapped up 41 brand-new condos for up to 34% off their original prices, reports the San Francisco Chronicle.  The condos were part of a 157-unit complex that had seen just 20 sales in more than a year before the developer decided to try an auction to stir up interest.

One of the early single-bedroom condos sold for $316,000, up from a starting bid of $245,000 but well below the original $435,888 asking price. The auction for a three-bedroom, three-bathroom town home started at $475,000, stalled around $528,000 and then quickly ran up to $534,000….That was nearly 34 percent off the list price of $805,888.

Many property prices are so inflated, it’s hard to tell whether these buyers got a deal or not.  I tend to think there are still many sellers who haven’t accepted reality yet.  Once those sellers either slash their prices or give their homes back to the lenders, we’ll start to see widespread price declines.

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