GULFCONDOSALES

Attached below for you is a recap of last month’s sales activity. Please don’t hesitate to email or call me with any questions. Also, let me know if you are interested in any specific properties and I will be glad to share more detailed information with you.

If for any reason you wish to be removed from this mailing list, please reply with the “REMOVE” in the subject line. Otherwise, I hope you will enjoy these future updates.

April 2008 – Sales Activity for Gulf Shores, Orange Beach & Perdido Key

Condo
Sales/Listings Active
Listings New
Listings Avg
Listings DOM Sold
Listings Avg
Sold DOM
$0-$199,999 251 25 233 22 179
$200k-$299,999 329 27 254 9 396
$300k-$449,999 500 57 257 13 146
$450k-$599,999 524 43 265 9 178
$600k-$799,999 330 35 252 1 43
$800k-$999,999 170 10 250 1 438
$1mill-$1,999,999 128 10 269 0 0
$2 mill+ 17 3 175 0 0
Total: 2249 210 55
Avg active “List” price = $527,980
Avg “Sold” price = $299,462 & Avg “Sold” price to “List” price = 93% & Avg DOM =209

Homes
Sales/Listings Active
Listings New
Listings Avg
Listings DOM Sold
Listings Avg
Sold DOM
$0-$199,999 143 30 159 5 127
$200k-$299,999 110 22 198 7 210
$300k-$449,999 159 13 213 6 159
$450k-$599,999 137 15 245 1 322
$600k-$799,999 102 8 260 4 404
$800k-$999,999 68 8 288 0 0
$1mill-$1,999,999 121 8 298 1 121
$2 mill+ 33 2 379 0 0
Total: 873 106 24
Avg active “List” price = $681,217
Avg “Sold” price = $391,845 & Avg “Sold” price to “List” price = 91% & Avg DOM =213

Attached below for you is a recap of last month’s sales activity. Please don’t hesitate to email or call me with any questions. Also, let me know if you are interested in any specific properties and I will be glad to share more detailed information with you.

If for any reason you wish to be removed from this mailing list, please reply with the “REMOVE” in the subject line. Otherwise, I hope you will enjoy these future updates.

March 2008 – Sales Activity for Gulf Shores, Orange Beach & Perdido Key

Condo
Sales/Listings Active
Listings New
Listings Avg
Listings DOM Sold
Listings Avg
Sold DOM
$0-$199,999 248 30 210 13 201
$200k-$299,999 327 28 247 15 308
$300k-$449,999 478 50 259 20 156
$450k-$599,999 539 51 257 7 196
$600k-$799,999 329 36 247 5 413
$800k-$999,999 175 21 239 6 155
$1mill-$1,999,999 139 15 268 0 0
$2 mill+ 15 1 175 0 0
Total: 2250 232 66
Avg active “List” price = $533,170
Avg “Sold” price = $353,481 & Avg “Sold” price to “List” price = 91% & Avg DOM = 223

Homes
Sales/Listings Active
Listings New
Listings Avg
Listings DOM Sold
Listings Avg
Sold DOM
$0-$199,999 125 27 165 12 145
$200k-$299,999 109 19 203 4 186
$300k-$449,999 167 21 204 5 59
$450k-$599,999 121 13 246 0 0
$600k-$799,999 105 12 252 1 264
$800k-$999,999 75 6 283 3 294
$1mill-$1,999,999 116 11 286 1 741
$2 mill+ 32 5 367 0 0
Total: 850 114 26
Avg active “List” price = $684,925
Avg “Sold” price = $348,975 & Avg “Sold” price to “List” price = 91 & Avg DOM = 179

Attached below for you is a recap of last month’s sales activity. Please don’t hesitate to email or call me with any questions. Also, let me know if you are interested in any specific properties and I will be glad to share more detailed information with you.

If for any reason you wish to be removed from this mailing list, please reply with the “REMOVE” in the subject line. Otherwise, I hope you will enjoy these future updates.

February 2008 – Sales Activity for Gulf Shores, Orange Beach & Perdido Key

Condo
Sales/Listings Active
Listings New
Listings Avg
Listings DOM Sold
Listings Avg
Sold DOM
$0-$199,999 269 58 218 11 201
$200k-$299,999 326 41 245 7 174
$300k-$449,999 476 51 252 10 168
$450k-$599,999 547 54 250 4 134
$600k-$799,999 313 37 250 2 22
$800k-$999,999 168 16 244 0 0
$1mill-$1,999,999 127 18 272 0 0
$2 mill+ 14 1 159 1 317
Total: 2240 276 35
Avg active “List” price = $523,019
Avg “Sold” price = $371,596 & Avg “Sold” price to “List” price = 93% & Avg DOM = 182

Homes
Sales/Listings Active
Listings New
Listings Avg
Listings DOM Sold
Listings Avg
Sold DOM
$0-$199,999 108 7 181 9 101
$200k-$299,999 109 12 212 1 60
$300k-$449,999 160 27 201 3 221
$450k-$599,999 122 10 243 2 544
$600k-$799,999 94 14 246 1 67
$800k-$999,999 76 8 255 2 435
$1mill-$1,999,999 116 16 291 0 0
$2 mill+ 28 2 391 0 0
Total: 813 96 18
Avg active “List” price = $688,786
Avg “Sold” price = $353,124 & Avg “Sold” price to “List” price = 93% & Avg DOM = 203

Attached below for you is a recap of last month’s sales activity. Please don’t hesitate to email or call me with any questions. Also, let me know if you are interested in any specific properties and I will be glad to share more detailed information with you.

If for any reason you wish to be removed from this mailing list, please reply with the “REMOVE” in the subject line. Otherwise, I hope you will enjoy these future updates.

January 2008 – Sales Activity for Gulf Shores, Orange Beach & Perdido Key

Condo
Sales/Listings Active
Listings New
Listings Avg
Listings DOM Sold
Listings Avg
Sold DOM
$0-$199,999 264 30 243 11 158
$200k-$299,999 351 48 244 9 195
$300k-$449,999 489 86 252 5 167
$450k-$599,999 536 63 244 3 199
$600k-$799,999 313 24 253 2 273
$800k-$999,999 176 26 258 0 0
$1mill-$1,999,999 125 10 289 0 0
$2 mill+ 15 4 169 0 0
Total: 2269 291 30
Avg active “List” price = $522,511
Avg “Sold” price = $266,550 & Avg “Sold” price to “List” price = 91% & Avg DOM =182

Homes
Sales/Listings Active
Listings New
Listings Avg
Listings DOM Sold
Listings Avg
Sold DOM
$0-$199,999 111 18 161 3 85
$200k-$299,999 112 14 201 0 0
$300k-$449,999 148 20 210 1 241
$450k-$599,999 127 13 234 3 104
$600k-$799,999 83 7 228 1 345
$800k-$999,999 75 11 248 0 0
$1mill-$1,999,999 114 11 311 0 0
$2 mill+ 26 0 370 0 0
Total: 796 94 8
Avg active “List” price = $686,409
Avg “Sold” price = $363,023 & Avg “Sold” price to “List” price = 95% & Avg DOM = 144

Attached below for you is a recap of last month’s sales activity. Please don’t hesitate to email or call me with any questions. Also, let me know if you are interested in any specific properties and I will be glad to share more detailed information with you.

If for any reason you wish to be removed from this mailing list, please reply with the “REMOVE” in the subject line. Otherwise, I hope you will enjoy these future updates.

January 2008 – Sales Activity for Gulf Shores, Orange Beach & Perdido Key

Condo
Sales/Listings Active
Listings New
Listings Avg
Listings DOM Sold
Listings Avg
Sold DOM
$0-$199,999 264 30 243 11 158
$200k-$299,999 351 48 244 9 195
$300k-$449,999 489 86 252 5 167
$450k-$599,999 536 63 244 3 199
$600k-$799,999 313 24 253 2 273
$800k-$999,999 176 26 258 0 0
$1mill-$1,999,999 125 10 289 0 0
$2 mill+ 15 4 169 0 0
Total: 2269 291 30
Avg active “List” price = $522,511
Avg “Sold” price = $266,550 & Avg “Sold” price to “List” price = 91% & Avg DOM =182

Homes
Sales/Listings Active
Listings New
Listings Avg
Listings DOM Sold
Listings Avg
Sold DOM
$0-$199,999 111 18 161 3 85
$200k-$299,999 112 14 201 0 0
$300k-$449,999 148 20 210 1 241
$450k-$599,999 127 13 234 3 104
$600k-$799,999 83 7 228 1 345
$800k-$999,999 75 11 248 0 0
$1mill-$1,999,999 114 11 311 0 0
$2 mill+ 26 0 370 0 0
Total: 796 94 8
Avg active “List” price = $686,409
Avg “Sold” price = $363,023 & Avg “Sold” price to “List” price = 95% & Avg DOM = 144

Dear All

I hope you had a great Xmas and look forward to a Happy, Prosperous and Healthy 2008. I do not anticipate any price rises this year but certainly hope there will be more activity as prices seem to be levelling out.

Although it has been a very tough year I am pleased to announce that RE/MAX of Gulf Shores has a 25% share of the market for both houses and condos. The ProTeam was the highest producing team with RE/MAX of Gulf Shores for 2007 and hope to maintain that position through 2008.

Condos December incorporating Perdido Key, Orange Beach, Gulf Shores and Fort Morgan

156 New listings which is 19 less than last month, 26 units sold which is 6 less than last month and 17 less than December 2006.
Average days on market 227 which is 5 less than November.
Average Sold price $393,204 which is down $14,000 from last month .

Breakdown of sales is as follows

$000,000 - $199,999 20 New Listings 04 Sold
$200,000 - $299,999 18 New Listings 02 Sold
$300,000 - $449,999 47 New Listings 06 Sold
$450,000 - $599,999 38 New Listings 10 Sold
$600,000 - $799,999 21 New Listings 04 Sold
$800,000 - $999,999 08 New Listings 00 Sold
$1mill - $1,999,999 04 New Listings 00 Sold
$ 2 million + 00New Listings 00 Sold
Total 156 26

The Table below will give you the current number of listings in each price range. The top shows you the average list price and the average Under Contract price.
CondominiumMulti-Family ~ Active & U/C
Average Active List Price: $517,904
Average Under Contract List Price: $545,294

Active Avg. DOM U/C Avg. DOM
$0-$199,999 218 226 2 207
$200k - $299,999 315 243 3 284
$300k - $449,999 443 254 1 19
$450k - $599,999 514 254 1 287
$600k - $799,999 348 231 1 319
$800k - $999,999 162 269 0 0
$1 mill - $1,999,999 158 314 0 0
$2 million + 14 238 1 309
Totals = 2144 09

The average active list price is $517,904, down $45,000 from last month with 09 units under contract 7 less than November at an average under contract price of $545,294 which is $50,000 higher than last month, A 2 million + unit being under contract will effect the average under contract price..

The average achieved sales price is 91% of asking price which is up 1% from last month. This average figure is based on the units selling most of which are the cheapest in the building as price is all that matters to Buyers at the moment.
Great Condo deals, the units below will show you some great deals at the moment.
http://www.navica2.net/displays/?n=234&i=2201995&k=BbXu7 2/2 under $290,000 Gulf Front.

http://www.navica2.net/displays/?n=234&i=2201999&k=8iK6ns 3/2 cheapest in the building Shoalwater 403 $469,900.

http://www.navica2.net/displays/?n=234&i=2202000&k=wi1yOWNr 2/2 unit with 40ft deeded boat slip navy Cove Harbor.

If you need more info on these or any other condos please do not hesitate in asking I will be happy to help.

Single Family Homes October 07 incorporating Gulf Shores, Orange Beach, Fort Morgan, Ono Island & Perdido Key

85 New Listings 4 more than last month, 23 sold which is 8 more than last month and 10 more than November 2006.
Average Days on market 164 which is 18 less than October and 80 less than November 06.
Average sold price $329,975 which is down $15000 from last month.

Sales breakdown for July 2007

$000,000 - $199,999 07 New Listings 05 Sold
$200,000 - $299,999 11 New Listings 01 Sold
$300,000 - $449,999 11 New Listings 02 Sold
$450,000 - $599,999 05 New Listings 00 Sold
$600,000 - $799,999 08 New Listings 01 Sold
$800,000 - $999,999 04 New Listings 00 Sold
$1mill - $1,999,999 10 New Listings 00 Sold
$ 2 million + 01 New Listings 00 Sold
Total 57 09

Very little activity on singel family homes which is a national trend at the moment. Condos are doing better as it is easier to create an income from vacation rentals which will help cover the running costs.
I look forward to servicing you in 2008, Whether you wish to buy or sell please contact me first.

Thank you - James Calvert

Dear All,

What a month we had a fantastic turnout for the shrimp fest with 4 glorious days of clear whether yet the week before we had 16 inches of rain cooling the hot summer whether to far more pleasant temperatures in the 70`s.

I have a new feature if you wish to call me please hit the TALK to me now logo above my signature and speak directly. This is a new feature on our emails and all websites giving our clients etc even easier access to their agent.

Condos October incorporating Perdido Key, Orange Beach, Gulf Shores and Fort Morgan

248 New listings which is 32 more than last month, 40 units sold which is 2 less than last month and 10 less than October 2006.

Average days on market 219 which is 10 less than September and 40 days more than October 06.

Average Sold price $396,761 which is down $47,000 from last month .

breakdown of sales is as follows

$000,000 - $199,999 30 New Listings 04 Sold

$200,000 - $299,999 24 New Listings 04 Sold

$300,000 - $449,999 46 New Listings 13 Sold

$450,000 - $599,999 68 New Listings 09 Sold

$600,000 - $799,999 49 New Listings 06 Sold

$800,000 - $999,999 16 New Listings 01 Sold

$1mill - $1,999,999 13 New Listings 03 Sold

$ 2 million + 02 New Listings 0 Sold

Total 248 40

The Table below will give you the current number of listings in each price range. The top shows you the average list price and the average Under Contract price.

CondominiumMulti-Family ~ Active & U/C
Average Active List Price: $561,430
Average Under Contract List Price: $651,532

Active Avg. DOM U/C Avg. DOM
$0-$199,999 234 202 0 0
$200k - $299,999 351 224 2 329
$300k - $449,999 498 244 5 251
$450k - $599,999 578 229 7 114
$600k - $799,999 401 202 4 289
$800k - $999,999 189 232 0 0
$1 mill - $1,999,999 166 297 1 182
$2 million + 22 263 1 248
Totals = 2439 20

The average active list price is $561,430, down $2,000 from last month with 20 units under contract 8 less than September at an average under contract price of $651,430 which is $150000,00 more than last month. The reason why the average under contract price is higher than the average list price is because there is 1 unit under contract over $1,000,000 and 1 under contract over $2,000,000. This is great news as it confirms this area has the ability to attract big money buyers.

The average achieved sales price is 90% of asking price which is down 2% from last month. This average figure is based on the units selling most of which are the cheapest in the building as price is all that matters to Buyers at the moment.

Single Family Homes October 07 incorporating Gulf Shores, Orange Beach, Fort Morgan, Ono Island & Perdido Key

81 New Listings 1 more than last month, 15 sold which is 5 less than last month and 1 less than October 2006.

Average Days on market 187 which is 31 less than September and 30 less than October 06.

Average sold price $342,167 which is down $46000 from last month down approx $160,000 from October 06.

Sales breakdown for July 2007

$000,000 - $199,999 22 New Listings 04 Sold

$200,000 - $299,999 15 New Listings 05 Sold

$300,000 - $449,999 16 New Listings 01 Sold

$450,000 - $599,999 10 New Listings 02 Sold

$600,000 - $799,999 06 New Listings 02 Sold

$800,000 - $999,999 05 New Listings 01 Sold

$1mill - $1,999,999 07 New Listings 00 Sold

$ 2 million + 00 New Listings 00 Sold

Total 81 15

There are 906 active listings with 11 under contract, the average achieved sale price is 90% of asking price which is down 2% from last month.

Table below will give a breakdown of number of listings etc.

SingleFamilyResidence ~ Active & U/C
Average Active List Price: $713,604
Average Under Contract List Price: $280,336

Active Avg. DOM U/C Avg. DOM
$0-$199,999 111 131 5 99
$200k - $299,999 130 173 3 213
$300k - $449,999 160 204 1 217
$450k - $599,999 136 206 1 22
$600k - $799,999 109 244 1 65
$800k - $999,999 90 240 0 0
$1 mill - $1,999,999 135 304 0 0
$2 million + 35 315 0 0
Totals = 906 11

The average list price is $713,604 down $20000 from last month , the average Under Contract price is $280,336 down $112,000 from last month.

There has been almost no lots sold in October

Oct. 17–Realtors often warn sellers about the danger of overpricing a house. Now they have evidence to show skeptical clients: research by Jeffrey Otteau, an East Brunswick appraiser.

He found that in a market where prices are declining, sellers who “test the market” with a high price usually end up with a lower price than those who price realistically.

“Houses that are priced right are selling,” said Otteau, who shared his results with real estate professionals this week at an East Hanover seminar. “Overpricing extends days on the market and guarantees that you will sell your home for less in a declining market.”

Otteau also said that by his measure, house prices in New Jersey will fall about 7 percent this year, after dropping 8 percent last year. He predicted prices will decline about 4 percent next year, and will not begin to rise again until 2011 — and in that year, will rise only 3 percent.

Otteau, of Otteau Valuation Group Inc., studied about 4,500 home sales that took place in the first half of 2007, largely in northern and central New Jersey. Most of the houses were priced between $500,000 and $750,000.

He looked at houses that sold in less than a month, and found that they had a median asking price of $599,900 and sold for almost full price — a median of $599,000. When he looked at houses that lingered on the market for more than a month, however, he found that they were priced higher — at a median of $634,900 — but actually sold for less, a median of $585,000. The median is the point at which half the sale prices are above and half below.

“Everything’s a function of price,” Otteau said.

With a high price, the house stays on the market as buyers ignore it in favor of lower-priced competitors. And in an environment of falling prices, a house that sells three months from now is going to command a lower price than one that sells today.

Otteau said that pricing a house a little below the competition not only catches buyers’ interest — it also reassures them that they won’t kick themselves later for overpaying if, as expected, home prices drift lower in 2008.

Otteau said that to find the right price, real estate agents should look at recent sales of similar properties, as well as what’s currently on the market nearby. Then adjust for such factors as the amount of living space, number of bathrooms and bedrooms and the condition of the house. And if an agent sees that prices are trending downward, he or she should adjust for that, too. They should aim to underprice the competition.

“You can’t just try for a higher price because you really want it,” he said. “The way to get a higher price is to create a sense of urgency by setting a lower price.”

(c) 2007 The Record (Bergen Co., NJ)/Kathleen Lynn
www.northjersey.com

Dear All,

The summer season is officially over, what a great one it was, the weather was amazing, the number of visitors was up helping rental investors increase their yields and the number of enquiries from potential buyers is up, prices seem to be settling down as confidence grows that we do not get wiped out every year from hurricanes.

It is still a buyers market with over 5 years of inventory for sale.
Condos September incorporating Perdido Key, Orange Beach, Gulf Shores and Fort Morgan

216 New listings which is 17 less than last month, 43 units sold which is 10 less than last month.(September is typically one of the quietest months of the year for the sales market)..

Average days on market 229 which is 43 more than August and 60 days less than September 06.

Average Sold price $461,500 which is up $43,000 from last month .

breakdown of sales is as follows

$000,000 - $199,999 30 New Listings 03 Sold

$200,000 - $299,999 41 New Listings 02 Sold

$300,000 - $449,999 34 New Listings 15 Sold

$450,000 - $599,999 43 New Listings 11 Sold

$600,000 - $799,999 35 New Listings 08 Sold

$800,000 - $999,999 23 New Listings 04 Sold

$1mill - $1,999,999 10 New Listings 00 Sold

$ 2 million + 00 New Listings 0 Sold

Total 216 43

The Table below will give you the current number of listings in each price range. The top shows you the average list price and the average Under Contract price.

CondominiumMulti-Family ~ Active & U/C
Average Active List Price: $542,301
Average Under Contract List Price: $489,532

Active Avg. DOM U/C Avg. DOM
$0-$199,999 265 200 1 124
$200k - $299,999 396 214 8 635
$300k - $449,999 549 239 9 185
$450k - $599,999 582 224 4 218
$600k - $799,999 404 213 4 145
$800k - $999,999 190 223 0 0
$1 mill - $1,999,999 160 292 1 195
$2 million + 20 258 1 218
Totals = 2571 28

The average active list price is $563,811, down $21,000 from last month with 28 units under contract 3 less than August at an average under contract price of $489,532 which is $50000,00 less than last month.

The average achieved sales price is 92% of asking price which is down 1% from last month. This average figure is based on the units selling most of which are the cheapest in the building as price is all that matters to Buyers at the moment.

Single Family Homes September 07 incorporating Gulf Shores, Orange Beach, Fort Morgan, Ono Island & Perdido Key

80 New Listings 37 less than last month, 20 sold which is 4 less than last month and 5 more than september 2006.

Average Days on market 208 which is 43 more than August and 70 less than September 06.

Average sold price $386,150 which is down $65000 from last month down approx $200,000 from September 06.

Sales breakdown for July 2007

$000,000 - $199,999 10 New Listings 04 Sold

$200,000 - $299,999 24 New Listings 08 Sold

$300,000 - $449,999 13 New Listings 01 Sold

$450,000 - $599,999 10 New Listings 02 Sold

$600,000 - $799,999 08 New Listings 04 Sold

$800,000 - $999,999 06 New Listings 00 Sold

$1mill - $1,999,999 09 New Listings 01 Sold

$ 2 million + 00 New Listings 00 Sold

Total 80 20

There are 922 active listings with 18 under contract, the average achieved sale price is 92% of asking price which is the same as last month.

Table below will give a breakdown of number of listings etc.

SingleFamilyResidence ~ Active & U/C
Average Active List Price: $735,757
Average Under Contract List Price: $396,632

Active Avg. DOM U/C Avg. DOM
$0-$199,999 99 134 7 165
$200k - $299,999 137 174 5 204
$300k - $449,999 162 207 3 169
$450k - $599,999 127 188 1 27
$600k - $799,999 122 235 0 0
$800k - $999,999 93 228 0 0
$1 mill - $1,999,999 142 279 2 280
$2 million + 42 276 0 -
Totals = 922 18

The average list price is $735,757 down $10000 from last month , the average Under Contract price is $396,632 up $12,000 from last month.

There has been almost no lots sold in August, vacant land is currently the most difficult Real Estate to get financed at the moment.

If you have any questions or wish to know sales history on a specific condo or subdivision i will be more than happy to help. All the above figures give average figures if you want to know the highest and lowest i will supply on specific request.

I hope you continue to enjoy my market updates, if for any reason you wish to be removed from the mailing list please respond with REMOVE in the subject section.

Thank you

James Calvert

AUCTIONS – DEAL OR NO DEAL?

By Buzz Farias, GRI, ABR, RECS

When I was younger, back in the 1970’s! I used to live in the country and kept a few animals, owned my own tractor and grew a garden. One of the things I used to enjoy was traveling to near by farm communities whenever I saw an auction notice. These were usually called estate sales. The estate auction derives its name from probating the estate of a deceased individual. The name expanded to include farm liquidations and other types of property which had failed due to a number of reasons. These sales included everything from the farm equipment, household items, and the real estate to even the animals. Everything was sold. They were popular family outings. There were pony rides for the kids, hot dogs and hamburgers, lemonade; even cotton candy! A grand old time!

These types of sales brought many individuals who were all potential buyers but not necessarily for the real estate. A buyer who may have come to bid on a tractor might end up getting caught up in the excitement and actually bid on the real estate. The more potential buyers you have bidding the property “up” at an auction the better the chances of a sale. We have all heard stories of a seller getting more for their property than it was worth. We have all also heard stories of buyers getting a property for a real “steal.” Sometimes these “dreams” really do come true. More often however, they become “nightmares” for the seller when it comes to the real estate.
Whenever the real estate market is in an extreme position; either a strong sellers market where properties bring multiple offers and actually sell for more than the asking price or, a strong buyers market such as we now have, the number of auctions increase.

ABSOLUTE OR NOT?

The term absolute auction means that the property is going to be sold no matter what price is bid! At least that is what it is supposed to mean. In theory, if $10.00 is the highest bid then, the property would be sold to the highest bidder. Everyone who attends an auction dreams of getting the deal of a lifetime. Maybe not for $10.00 but you get the idea. On the other hand, Sellers dream of getting multiple bidders raising each other’s bids ultimately selling the property for more than they had hoped for. To be sure, in a very few extreme cases, both the Buyer’s dream and the Seller’s dreams have come true. Unfortunately for both sides, this almost never happens.

Whenever Sotheby’s holds an art auction such as those viewed on PBS, there is usually a reserve. This means that the Seller has a price below which they will not or cannot sell. If a property has a reserve price and no one bids that or more, then the property is not sold and the whole exercise was for not. Most auction companies will advise the Seller not to place a reserve on the property in order to create the sense of a “deal” to be had by the prospective Bidders. How then can the Seller protect himself from being forced to sell if he is not satisfied with the highest bid? There are three ways in which the Seller can accomplish this. First, he can bid more than the highest bid and keep bidding if anyone bids against him until the bid reaches a point acceptable to him. If no one bids more than the minimum the Seller is willing to accept or more than his highest bid, the property does not sell since the Seller already owns the property. The second less obvious way is for the Seller to have one or more “plants” in the audience. This is usually a relative or a friend of the Seller who bids in the hopes of raising the amount of the bid and increasing the amount Bidders might offer. If the “plant” is the successful bidder, the “plant” does not have to proceed with the purchase and again, the property does not sell. The third way is for either the Seller or his “plant” to start the bidding a little higher than what the Seller is willing to accept in hopes of getting a higher bid thereby meeting at least the Sellers minimum expectations.

Even if a legitimate Bidder makes the highest bid, the sale may never materialize for any number of reasons. Usually all potential bidders must register in advance and provide evidence of certified funds in a specific amount before being given a bidders number. These certified funds are usually a minimum of $5,000 but more often higher depending on the value of the property. The terms of sale are explained upon registration, in all the advance auction advertising and at the beginning of the auction. For real estate, most auction companies charge a buyer’s premium of up to 10% of the successful bid. For example if the successful bid is $100,000, the effective purchase price will be $110,000. Often bidders are not clear on this point. The terms of sale require the transaction to be closed no later than 30 days after completion of the auction. If the successful bidder balks at the 10% buyers premium, the sale could be delayed or not occur at all. An auction contract is NOT contingent upon the successful bidder’s ability to obtain financing. If the successful bidder is unable to proceed with the closing within 30 days, he may have to forfeit the certified funds he brought to the auction. If the successful bidder cannot qualify for a loan to purchase the property, he is in default but, as the old saying goes, “you can’t get blood out of a turnip.” Again, no sale for the Seller. As with a conventional sale, the real estate agent or in this case, the auction company does not get the 10% buyers premium if the property does not actually close.

HOW THEN CAN THE AUCTION COMPANY RECOUP ITS EXPENSE FOR HOLDING THE AUCTION?

Auction companies pass most if not all of the marketing expense on to the Seller up front. We’ve discussed the cost to a successful bidder but what is the cost to the Seller. Many auction companies produce full color high quality flyers and mails them to people within the zip code of the property being sold and beyond. These brochures are quite expensive even before postage. There are several auction companies that mail brochures to all licensed real estate agents in the state. This could mean up to as many as 25,000 licensees in the State of Alabama! Even if using bulk mail, postage alone would be significant to say the least not to mention the cost of producing the brochures!

The Seller agrees to this in the Auction Agreement which they sign before the auction company proceeds. This number could easily be higher than a commission charged by a conventional real estate company if the property were sold in the traditional way. Some auction companies split the cost of the advance advertising and promotion but may require the Seller to pay a fee of 2% of the highest bid (whether it closes or not). In this case, let’s use our example from above. The highest bid is $100,000 plus the $10,000 buyer’s premium plus 2% ($2,000) charged to the Seller in addition to the marketing costs bringing the total sales price of the property to $112,000 plus marketing costs. Most real estate commissions are significantly less than 12%!

FACT OR FICTION?

In almost 30 years as a real estate professional, I have attended many auctions. Most of them never proceeded to closing and those that did were renegotiated after the fact as the closing date neared. In some cases regardless of whether the seller is willing to take the highest bid or not, the lender holding the lien on the property may not allow the sale to proceed. This happened at an auction I attended recently. I have even attended auctions where my wife and I were the only 2 people there! We were not interested in bidding but in seeing the outcome. Needless to say, this auction was a disaster that cost the Seller money up front with zero to show for it. Sellers often price their property above the current market which causes frustration on their part, stagnation of the product while on the market and a great deal of time and money being wasted. By the time the Seller decides to go the auction route, even if the property sells, the price he receives usually is less than he would have received had he priced the property within the current market with a professional real estate agent.

Not all real estate agents are created equal! Many lack experience, training or proper knowledge of the market to advise their clients effectively. A full time real estate professional who is knowledgeable about marketing, financing, the intricacies of property insurance and a myriad of other factors is invaluable to a Seller or a Buyer for that matter in making an informed decision whatever the particular market may be in a specific area at the time.

FOR WHAT IT’S WORTH

Real estate agents do not set the market. The definition of value is what a ready willing and able buyer is willing to pay to a ready willing and able Seller. What the Seller paid for the property or what he owes on the property is irrelevant! If a Seller is unrealistic in his asking price, the property probably will not sell. In fact, if a Seller actually receives an offer on over priced property, it is usually lower than they might have received had they priced it right for the current market. The same is true of a buyer. If the market indicates a higher price than a buyer is willing to pay for the type of property he is looking for, then he will not be buying!

WHAT’S THE CONCLUSION?

The old saying; “You get what you pay for” is appropriate in this situation. The knowledgeable, well informed real estate agent is crucial in the sale or purchase of real estate. If you are not from the particular geographic area where the property is located, as is usually the case in our particular market, this is even more true. Different states, areas and jurisdictions have a vast difference in laws and practices of which the consumer may not be aware.

These are just some examples of what a real estate agent should know and can address before they become a major problem for either party. From a point of peace of mind knowing that someone else, a professional, is responsible for all these minute details, a real estate commission is a small price to pay for a Seller.