Property Auctions

I would be interested in knowing how low these sellers are expected to go and the tone of your posts High, makes me think that pressure is now being exerted on them to take these really lowball offers. Regarding that beachfront lot, I got a buyer looking for a beachfront lot under $2 million about 4 weeks ago. I think that was his request but would have to check with realtor that I gave the lead to. If there are buyers out there looking for beachfront under $2 million, I'm gonna scream if that seller takes $1.25 because then this auction process is devaluing our properties. Tell me that's not the deal you're still working on High

Good morning, Cork.

Rest easy. It's not. You can also rest easy on the pressure issue. It may be overstated somewhat, but I don't want to get into that now. I think anyone in attendance Saturday will vouch for us on the pressure issue, or the lack thereof.

Let's talk about "WHY" we believe much of the nation's real estate, especially residential, is about to experience a serious readjustment in value. It's really quite simple.


The US economy has experienced significant economic growth since 1982 thanks to Ronnie & Bill (Reagan & Gates). After the S&L/RTC fiasco in the late 80s most people invested heavily in the stock market.

"Put your money in business! Support your nation's economic growth!"

Thru the 90s we had solid growth in the stock market, moderated by several adjustments, both large & small, and capped by the dot.com bust. In spite of the adjustments most people improved their financial condition thru that time period. Investors started putting significant amounts of money into land and improved real estate.

"Buy Land! They're not making it anymore!"

Due to the availability of wealth generated by Ronnie & Bill, many people "invested" in vacation homes and recreational lands. This was a good thing at first, but hype and speculation set in following the inital phase of investing. The impending rapid and unsustainable growth was fueled by low interest rates, interest only loans, IRS incentives, and the hype of everyone even remotely related to the business of real estate marketing and mortgage/money marketing.

Our nation's media fueled the fire by reporting on the stability, growth, and profit potential in the real estate market. "Flippers" started buying and selling land (often without ever having closed) at prices supported primarily by the previous transaction values and the anticipation that land values do not go down, but only go up. How soon we forget. Remember the day-trading frenzy in the dot-com scenario? The flippers are different only in the particular commodity that they are trading. The demand for these properties was created by people wanting to make a profit (artificial demand), not by people wanting to take up permanent residence (real demand). Hot Potato. Who's holding it?

Cheap money also became easy money. People buying on credit often weren't concerned about the cost of the asset, but the amount of the payment. They anticipated an unabated appreciation in value as justification for the additional expense. As interest rates increase, many buyers who anticipated a better personal financial condition five years down the road are finding that they have no more cash than before, and the note payments are rapidly increasing. The interest only loans are starting to mature or transition into P&I.

With an increase in interest rates you have an inverse reaction in property values. How often have we qualified a buyer based on what he/she can "afford"? (I don't care what it cost, just tell me how much the payments are.)

The two types of owners indicated above will be our (the real estate licensee's) sellers. They bought wrong, or at the wrong time. Unfortunately there are far too many of them to be able to reallocate the assets without significant adjustments in R/E values.

You don't make money when you sell, you only make money when you buy.

I'm throwing this in here for a little fun.

On Feb. 28th, a 2 year old Thouroughbred was sold at auction for $16 million at the Fasig Tipton Florida 2 yr. old in training auction. Average sale price was $403,812. That is basically a $16 million dollar lottery ticket purchased at auction.

I could buy a few Sowal parcels for $16 mil?

I'm throwing this in here for a little fun.

On Feb. 28th, a 2 year old Thouroughbred was sold at auction for $16 million at the Fasig Tipton Florida 2 yr. old in training auction. Average sale price was $403,812. That is basically a $16 million dollar lottery ticket purchased at auction.

I could buy a few Sowal parcels for $16 mil?

Yeah, we saw that but heard it was a 4-year-old. We're horse people, too. How screwed up are we?

Yeah, we saw that but heard it was a 4-year-old. We're horse people, too. How screwed up are we?

Nope - he's a baby- it was the 2 year old in training sale at Calder. Guess it's a bit better than paying that price for a yearling.


Being from KY, thoroughbred auction prices don't totally surprise me anymore. Doesn't everybody have $16 mil to spend on a horse??

Nope - he's a baby- it was the 2 year old in training sale at Calder. Guess it's a bit better than paying that price for a yearling.


Being from KY, thoroughbred auction prices don't totally surprise me anymore. Doesn't everybody have $16 mil to spend on a horse??

Neigh!!!!

Hi high (love that )

I don't have any real problems with the auction process because as you say it's nothing new. I do have problems with the language that the company's website uses regarding exerting persistent psycholigical pressure or something like that. Also language about the frenzied environment creating an illusion (wrong word) of an impending sale. First, I'd have concerns about allegations of undue pressure and secondly I don't pressure any buyer into a sale because its just too important of a decision to make under any sort of pressure. That's my primary beef with the marketing.and/or process.

I have not been to their website, but I can tell you that purchases made under pressure, or in a frenzied environment are not recognized as normal conditions and therefore, do not classify as true "market value."

Cheap money also became easy money. People buying on credit often weren't concerned about the cost of the asset, but the amount of the payment.

Very good comments, High. I have lots of clients in the car and boat biz and they relate similar comments- it's all about the payment. Pick up a major city weekend newspaper and look at the big dealer ads- most pimp the monthly payment, not price of car. And most are leases.

I think overall many Americans have become "cash flow purchasers", only looking at monthly outgo vs inflow. The media and the lenders encourage this, unfortunatley. Most times a loan officer is not looking at your financial situation from any other angle than "how can I juggle the #s to get you qualified and into that house/boat/car so I can make my fee".

That creates a tightrope effect- ie: with a small change in either income or outgo, you will see a much larger spike in delinquency, BK, etc. I suspect there are owners on the Gulf right now where the numbers dont work anymore once you factor in higher insurance, monthly note, etc. Not the majority, but a few.

There will be a rebalancing, not a crash, and there will be "investors" at the margins caught in the squeeze. That will create opportunities for the rest of us, and create more business for Mr. High Bidder, IMO.

I suspect in a great place like SoWal, however, those bargains will be snapped up quickly. There will be opportunity until supply/demand rebalances. The good thing for SoWal is that due to demo trends, boomers, QOL, etc, the demand should continue to be good. Not speculative, perhaps, but good long term.

Affordable Housing In South Walton?

Maybe this Bubble Bursting in So Wal, will allow for some substantial Section 8 housing projects to take hold. Maybe Dune Allen.

Critics of Seaside, say that it is too artificial, surreal, perfect. Solution: slap a 32 story, 300 unit HUD 'project' in there at the town center ampitheater.

Affordable Housing In South Walton?

Maybe this Bubble Bursting in So Wal, will allow for some substantial Section 8 housing projects to take hold. Maybe Dune Allen.

Critics of Seaside, say that it is too artificial, surreal, perfect. Solution: slap a 32 story, 300 unit HUD 'project' in there at the town center ampitheater.

Sounds like you think that SoWal consists of only property along 30A. There is plenty of undeveloped land "stuck" in areas with low densities, which would be very suitable for affordable housing rental units. FYI- just because it is affordable, that does not degrade the level of the people living there, nor does it have to be bland in character.

Sounds like you think that SoWal consists of only property along 30A. There is plenty of undeveloped land "stuck" in areas with low densities, which would be very suitable for affordable housing rental units. FYI- just because it is affordable, that does not degrade the level of the people living there, nor does it have to be bland in character.

c'mon joe, you know sowal is really only the property below 98 :roll:

Hi high (love that )

I don't have any real problems with the auction process because as you say it's nothing new. I do have problems with the language that the company's website uses regarding exerting persistent psycholigical pressure or something like that. Also language about the frenzied environment creating an illusion (wrong word) of an impending sale. First, I'd have concerns about allegations of undue pressure and secondly I don't pressure any buyer into a sale because its just too important of a decision to make under any sort of pressure. That's my primary beef with the marketing.and/or process. ..........

Exactly. The website makes me cringe.

Reading HighBidder's posts has helped and been informative. Yet the website seems so different in tone from the posts.

I have been to auctions for boats, cars, etc where once you jump in with a bid, one of the bidding assistants (or whatever they call them) runs over to you and literally gets in your face yelling and cajoling, using all sorts of
pressure to get you to bid higher. If you dont stick to your predetermined
limits, it's easy to get caught up in the hype....

Joe, then the last 5 years here were not normal. You could not get a counter offer back fast enough to the seller before they raised the selling price.

Affordable Housing In South Walton?

Maybe this Bubble Bursting in So Wal, will allow for some substantial Section 8 housing projects to take hold. Maybe Dune Allen.

Critics of Seaside, say that it is too artificial, surreal, perfect. Solution: slap a 32 story, 300 unit HUD 'project' in there at the town center ampitheater.

Joe, then the last 5 years here were not normal. You could not get a counter offer back fast enough to the seller before they raised the selling price.

Franny, you speak much truth. Fear of not getting into the market was pressuring buyers.

c'mon joe, you know sowal is really only the property below 98 :roll:

Someone needs to tell that to Kurt because he lives NORTH of 98 in Point Washington. So is it NoWal.com?

One of the better phrases I've heard "you make your money when you buy, not when you sell'.....thanks for reminding us Highbidder

One of the better phrases I've heard "you make your money when you buy, not when you sell'.....thanks for reminding us Highbidder

:shock: I think I missed that line. Interesting twist, but far from true in my opinion. ;-)

I have not been to their website, but I can tell you that purchases made under pressure, or in a frenzied environment are not recognized as normal conditions and therefore, do not classify as true "market value."

If you use that line of reasoning, then real estate price run-ups of the past few years (goaded on by frenzied developers, realtors, the press and sellers) do not reflect "true market value" either.

"True market value" is a gimmicky phrase. In reality, true market value is unique and only applies to a single property and then, only for a fleeting second--when a payment is passed from buyer to seller--then it's gone (like a single snowflake--that melts in your hand).

If you use that line of reasoning, then real estate price run-ups of the past few years (goaded on by frenzied developers, realtors, the press and sellers) do not reflect "true market value" either.

"True market value" is a gimmicky phrase. In reality, true market value is unique and only applies to a single property and then, only for a fleeting second--when a payment is passed from buyer to seller--then it's gone (like a single snowflake--that melts in your hand).

True. Wrong word choice on my part. I was really thinking of "normal market conditions" as it relates to pressured selling / buying, and your statement holds much truth to the recent few years where Buyers bought out of fear. However, that was the normal market for a broad range of time and location, so it could also be said that those were normal market conditions.

Someone needs to tell that to Kurt because he lives NORTH of 98 in Point Washington. So is it NoWal.com?

me too. midwal?

If you use that line of reasoning, then real estate price run-ups of the past few years (goaded on by frenzied developers, realtors, the press and sellers) do not reflect "true market value" either.

"True market value" is a gimmicky phrase. In reality, true market value is unique and only applies to a single property and then, only for a fleeting second--when a payment is passed from buyer to seller--then it's gone (like a single snowflake--that melts in your hand).

I think that the point was that pressured sales are generally not considered qualified sales for the purposes of assessing market value.

I think that the point was that pressured sales are generally not considered qualified sales for the purposes of assessing market value.

Cork, et al.,

All sales are qualified with the possible exception of family (non arms-length) transactions.

Our "pressure" as you like to dwell on so, doesn't involve anything more than you advising your buyers that they "...may not want to miss this opportunity. Better get in now. At the rate property values are escalating you may not have this opportunity again."

There are many ways to apply the pressure you are so quick to criticize. If you have never said anything of this nature to a buyer then you are positively without reproach and free to cast all the stones you wish.
If you had been at our auction Saturday March 4th you would have been able to see us conduct our auction, and therefore able to speak more knowledgably.

It is also wrong to attempt to convince sellers that they should not sell because their property is worth more or due to the fact that it would devalue nearby properties. Each seller should be advised in a manner that is consistent with their own best interest. Unless you are privy to their personal financial condition you are probably not qualified to make this judgement. As a professional auction firm, we work with attorneys and accountants and are more than occasionally privy to that confidential financial information.

As far as "frenzied environment" is concerned, you will often see that sort of energy in auctions where the demand exceeds the supply. Watch the Barrett-Jackson Classic Auto Auction on Speed Channel in a few weeks. You'll see a very energized group of buyers eager to own some incredible automobiles. Much like real estate buyers, car buyers are experienced, knowledgeable, and savvy in both the car values and the auction process. It is exciting and energetic, but they will bid according to their level of interest in each respective item. Unfortunately, SoWal (and all of Florida, Alabama, & Mississippi) has an excessive supply of available Gulf Coast properties and at today's prices, very little demand. Regardless of the method of marketing, you're not likely to see any frenzied buying for quite some time. Translation: It's a buyers market.

Why is this occurring? Supply & demand. Sellers in the market expect to reap the benefit of the previous market escalations. The challenge is that, at the seller's expected values, buyers just aren't interested. The bubble is rapidly leaking, maybe even burst.

The auction process is not the problem here, but part of the solution. With properly motivated sellers we can bring the buyers to the table and reestablish market values while bringing the highest & best dollar for each individual seller. Read my earlier posts. Anyone who bought more than 5 years ago should be in fine shape if they haven't refinanced to the hilt. Purchases 3-5 years ago should be in decent shape and should not need to sell if they bought on an FRM or can afford the ARM payment as it increases or adjusts from interest only to P&I. IMO, anyone who bought in the last 2-3 years had better be able to hold their property for a while if they don't want to take a hit. Those that bought recently with the intent to flip are now holding the proverbial "Hot Potato". We're getting those calls every day now. Sometimes we can help, sometimes not. We don't have a magic wand. We can only provide the buyers. They set their own spending limits.

Demand=Supply divided by Market Conditions.

Right now market conditions include increasing interest rates, increasing insurance rates, increasing cost of travel, record high property listing prices, and record numbers of properties listed for sale. Oh yeah, don't forget the hurricane fear factor. It's a buyers market.

Once reality sets in, property values adjust, and properties start to change hands again, then property value appreciation will begin again, though probably at a more moderate and sustainable level (for a while).

Read Shelly's posts in this and other threads. She is a realist and probably has a better understanding of what is happening than most do. It's not the end of the world, just an adjustment.

Due to the nature of the real estate auction business and the professionalism of our firm in particular, we probably conduct more successful sales (closings) in any given time period than any other R/E marketing firm in the US. This allows us to keep our finger on the pulse of the R/E industry nationwide. Trends are much more apparent to us than to many other people. Not pessimistic, just realisitic. I don't mean to ruffle anyone's feathers, but the times they are a changin'.

So is an auction an auction if nothing is sold?

Highbidder, you were so eager to pump the auction, then after the auction, you were soliciting feedback from people on this board who did not attend before you were willing to tell us the results. Did you ever tell us the results?

I strongly question a few of your statements, but I have beat this dead horse enough to let it rest.