Premier Auction - March 10, 2007

We will be having an auction on Saturday, March 10, 2007. Please review our website for further details.

www.thepremierauctiongroup.com

Spencer Mann, President
spencer@thepremierauctiongroup.com

Hi Premier.

What's the minimum bid / reserve for these two properties?

Are they being offered for auction by an owner, a builder, or a bank?

Thanks.

The minimum bids will be determined by the bidders. When a bidder registers, he/she will write down their minimum bid. We will then take the highest minimum bid and start the auction from there.

The home in Palmeira Villas is being offered by the builder and the home in Destiny is being offered by the occupant of the home.

If you would like to register to bid, please call our office at 622-3247.

Thanks for your quick response, Premier.

The minimum bids will be determined by the bidders. When a bidder registers, he/she will write down their minimum bid. We will then take the highest minimum bid and start the auction from there. .

so ... it's an absolute auction?

what if you have 20 bidders register, and they all list their minimum as $1?

what if only one bidder registers?

are there any conditions by which the seller can pull the property prior to (or during) the auction?

I suspect that someday (when the market is right) I'll be traveling to participate in auctions. I would appreciate any wisdom/education on the process that you're willing or able to share.

It is not absolute. There is a reserve set, however I can't disclose that. The seller may pull the auction beforehand, but not after the terms of the auction have been announced. I hope this helps. Please let me know if I can answer anymore questions.

It is not absolute. There is a reserve set, however I can't disclose that. The seller may pull the auction beforehand, but not after the terms of the auction have been announced. I hope this helps. Please let me know if I can answer anymore questions.

Thanks for answering my questions, and good luck. Please update us on the outcome, if you can.

No problem. I will let you know what happens.

It is not absolute. There is a reserve set, however I can't disclose that. The seller may pull the auction beforehand, but not after the terms of the auction have been announced. I hope this helps. Please let me know if I can answer anymore questions.

You have me confused. If the seller has set a reserve, the minimum bid being "set" by the bidders, is pointless, is it not? If the seller has set a reserve price, what is the purpose of having a minimum bid being set by the buyers? Just curious.

It would be a disadvantage to the seller to disclose the reserve price and start the bidding there. The seller can still choose to accept a bid that is lower than the reserve price.

Thanks for your reply. It just seems confusing to talk about the min. bid as though it has real meaning. In my opinion, it sounds like too formal a process for such a simple thing.

I can understand your point of view. The minimum bid is however important though. For example, let's say that the seller has a reserve price of $500,000. Let's say that the highest minimum bid is at $300,000.
So bidding starts at $300,000 and ends at $450,000. The seller decides that he/she is happy with $450,000 and decides to accept the offer. If bidding had started at reserve price, we would have had no bids, and no signed contract for the seller. Hopefully, this explains it a little better. Let's also rephrase "minimum bid" to "opening bid."

I can understand your point of view. The minimum bid is however important though. For example, let's say that the seller has a reserve price of $500,000. Let's say that the highest minimum bid is at $300,000.
So bidding starts at $300,000 and ends at $450,000. The seller decides that he/she is happy with $450,000 and decides to accept the offer. If bidding had started at reserve price, we would have had no bids, and no signed contract for the seller. Hopefully, this explains it a little better. Let's also rephrase "minimum bid" to "opening bid."

I completely understand the purpose of the opening bid and how it may help make a sale, but can't the auctioneer simply start by asking, "who will give me three hundred?" All of the formal stuff seems unneccessary. I will end my comments on that point, here.

I will go ahead and pay the 450k on the Destiny house. Send me the settlement statement.

Pirate, I bet you would. That would be some kind of steal. The attention to detail is amazing in that home.

SJ, thanks for your input. Please keep us in mind if you have any clients that may be interested in auctions.

Who was the builder on that house in Palmeira?

The builder was Tim Kirby Construction.

We will be having an auction on Saturday, March 10, 2007. Please review our website for further details.

Hey Spense,

In this upcoming auction, do the sellers have to pay the Premier Auction Company a fee in order to have the right to refuse the highest bid?

____________________

i.e., In this article from today's Sun Sentinal entitled: "Some homeowners turning to auctions to unload cash-draining properties" : There's this statement,

"Nicole Hollander, president of Auction USA, said she expects plenty of below-market sales at this event as the housing slump lingers in this region.

Some sellers in the auction paid $1,500 for the right to turn down the highest bid, if they don't feel it's sufficient. But others paid nothing and have agreed to sell to the highest bidder, regardless of price.
_________________________

Anything like that going on in this auction?

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Shelley,

These are reserve auctions. If the bid meets the reserve, it will sell. The seller may not back out at that point. Even in an absolute auction, we would not offer anything like that for a seller to back out. I think it's very misleading. The seller may only choose to back out of the auction before the terms of the auction are announced on auction day.

Spencer

I've been reading a bit about real estate auctions of late ... my take is that buyers and sellers are still miles apart on what they think property values are in this market, and this is keeping most auctions from being successful (with the expection of "absolute actions, where the buyer alone determines the "market value"). When a property goes to auction, buyers are expecting an absolute steal (I offer the attached article as evidence of this observation). If auctions are being used by sellers with lofty price aspirations, then I suspect both buyers and seller will walk away from the auction process with a bitter taste in their respective mouths.

The article also addresses the "minimum bid" questions that Smiling Joe brought up.


Low bids take glow off property auction - Starting amounts possible next time

By Pete Skiba
pskiba@news-press.com
Originally posted on January 24, 2007



One Cape Coral homeowner left an auction sponsored by the Miloff Aubuchon Realty Group Inc. elated her home fetched a $400,000 bid.

Then the bottom fell out.

"The bid came over the Internet. They said there was a computer glitch," said Rosemarie Leibert, 79. "They put it back on auction and the bid was $250,000."
Leibert declined to take the bid.

The glitch occurred because the bidder hit $100,000 four times when the first bid didn't go through fast enough, said Marty Higgenbotham, owner of Higgenbotham Auctioneers international Ltd. since 1959.
"One glitch out of 850 bids isn't that bad," Higgenbotham said. "We said we'd like to have seller answers to the bids by Tuesday, but that doesn't mean negotiations don't continue. We probably won't know the results until Friday or Saturday."

The auction last weekend attracted more than 400 during its two-day run at the Crowne Plaza hotel in Bell Tower.

"Bidders placed 33 bids on 44 lots, 64 bids on 66 homes and bids on three out of the seven luxury homes," Higgenbotham said. "We still receive phone calls asking if the homes are sold and can they bid on them."
Neither Miloff Aubuchon officials nor auctioneers would say how many bids were accepted by 5 p.m. Tuesday. At both days of the auction everyone spoken to said the bids came in too low and no one expected them to be accepted.

Leibert was upset with the auction, calling it a "farce." She believes the bids were too low and the auction didn't deliver serious bidders.
"I think a lot of buyers thought they were going to bottom-feed. These are eager but not desperate sellers." Miloff said. "The auction tells me we are in a market correction."

Leibert's three-bedroom, two-bath, 2,200-square-foot home, valued at $255,810 on the Lee County Property Appraiser Web site Leepa.org, remains listed with Miloff Aubuchon.

One buyer who bid $400,000 a lot for each of two neighboring lots on the Caloosahatchee River wasn't surprised his bids were rejected. The lots listed at $799,900.
"I'll bet that less than 25 percent of the sellers accept," said Minnesota developer Larry Gensmer. "I think they could have had a better auction if they had announced a starting bid."

Calling the effort a learning experience, Jeff Miloff, the realty group's sales manager, said another auction planned for March could have different rules.
The bids were so unrealistic the auction showed people didn't do their homework, Miloff said.

"The next auction could have suggested opening bids," Miloff said. "People had no sense of what they were bidding. It made no sense."

bdc,

I can see where people have this opinion. A lot of companies will list and auction any property that they can get their hands on. This leads to such a wide gap between sellers and buyers. We are very selective in the properties that we take on. Our closing percentage is related directly with the our success. If we don't believe that a property has a VERY good chance of selling at the reserve price, then we will not list it. Thanks for your article.

I've been reading a bit about real estate auctions of late ... my take is that buyers and sellers are still miles apart on what they think property values are in this market, and this is keeping most auctions from being successful (with the expection of "absolute actions, where the buyer alone determines the "market value").

Most properties in these multi-property auctions are there because the seller has been unsuccessful selling the property in the conventional way. I'd bet the farm that their prices were too high for the 'conventional' market and they're having a hard time swallowing the fact that no one wants their property at the asking price.

Going to auction--where normally an item goes to the highest bidder--should serve as a reality check for the sellers. What is keeping the auctions from being successful isn't the buyers....it's the sellers. The market price for their piece of property in an auction is the highest price a buyer is willing to pay before the hammer goes down; and if the seller doesn't like it.......

bdc,

Our closing percentage is related directly with the our success.

That's interesting. Is "closing percentage" the industries standard measurement? Is this something that a reputable auction house should be willing to disclose to either a buyer or a seller?

Can you give us your closing percentage (as well as your number of auction listings) for '06?

Most properties in these multi-property auctions are there because the seller has been unsuccessful selling the property in the conventional way. I'd bet the farm that their prices were too high for the 'conventional' market and they're having a hard time swallowing the fact that no one wants their property at the asking price.

Going to auction--where normally an item goes to the highest bidder--should serve as a reality check for the sellers. What is keeping the auctions from being successful isn't the buyers....it's the sellers. The market price for their piece of property in an auction is the highest price a buyer is willing to pay before the hammer goes down; and if the seller doesn't like it.......

I see it a bit differently than you do, Shelly.

A market price is determined when you have a seller AND a buyer agree to a price. We pretty much don't even have a "market" right now, because there is no agreement (and nothing is selling). At some point, one of the two sides will decide that they can't wait any longer. Will it be the Buyers that flinch? The Seller? We all have to decide that for ourselves and place our bets accordingly.

I see it a bit differently than you do, Shelly.

A market price is determined when you have a seller AND a buyer agree to a price. We pretty much don't even have a "market" right now, because there is no agreement (and nothing is selling). At some point, one of the two sides will decide that they can't wait any longer. Will it be the Buyers that flinch? The Seller? We all have to decide that for ourselves and place our bets accordingly.

It's already happening and the sellers are the ones flinching. Just look at recent selling prices compared to prices one or two years ago. Many sellers are taking losses on property in order to get out. I have seen no examples of buyers flinching--except of course, the developers of Redfish Village that way overpaid for the lot in Blue Mountain in order to set the record straight on the product offering for the RV condos.

I see it a bit differently than you do, Shelly.

A market price is determined when you have a seller AND a buyer agree to a price. We pretty much don't even have a "market" right now, because there is no agreement (and nothing is selling). At some point, one of the two sides will decide that they can't wait any longer. Will it be the Buyers that flinch? The Seller? We all have to decide that for ourselves and place our bets accordingly.

Point taken...so it's neither a seller's market....nor a buyer's market....nor an auction. <insert cricket soundbite here>

With the sellers experiencing death by a thousand payments--my money is riding on the sellers blinking first.


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