Real Estate Auctions

[Spencer]

I'm just curious to hear everyone's opinons on real estate auctions. Do you believe in them? What do you think about the initial fees and buyers premium?

[spinDrAtl]

I bought a property in Park City, Utah at auction a little over two years ago. It was a developer closeout auction on a condotel property. The initial fees were only about $100 I think to register and participate in the phone auction part for all out of state participants (others were live at the auction site).

Premium was 10% of the bid, which you just need to factor into your bid to determine if that is a price you are willing to pay. I thought I got a great deal and appreciation since then has proven all prices at that particular auction to be a steal (so far).

[OnMackBayou]

I was speaking with a friend of mine earlier today. They inquired about selling their SoWal property through Roebuck Auctions. They owe about $700,000.00 on it, and have lowered the asking price to about $775,000.00, down from their original asking price of around $850,000.00.

Roebuck told them they require a non-refundable $7,500.00 listing fee to sell at auction, and that they could expect to get a bid of around $500,000.00 at the sale.

I assume this means the auctioneers get money up front, and an additional % if the property sells. In this market it seems like a great deal for the auctioneers and the buyers. If you're a seller, be prepared to get bottom dollar if you decide to sell this way.

[Spencer]

The upfront fee is for advertising. If they have 6 properties in a single auction, they may have a $60K budget. My understanding is they take that 60K and split it up among the sellers depending on value of the property. The 10% is a buyers premium. If they bid $500K, they will write the contract for $550K. The seller doesn't pay it. It's not always a bad deal for the sellers. Of course, the deciding factor on that is going to be when they bought and how much they paid. If your friend had paid $300K for the property, and it brought $500K at auction, it wouldn't be such a bad deal.

[GVM]

I'm just curious to hear everyone's opinons on real estate auctions. Do you believe in them? What do you think about the initial fees and buyers premium?

The problem with auctions is that many people think an auction will change market fundamentals...which it usually won't. The best way to sell a property is to price it so that it's attractive to a buyer. In today's South Walton market, that means turning the price clock back by about 3 years and get the widest exposure possible, and that's usually by listing with a Realtor. Say what you want about Realtors, but they're the ones with the buyers. Unless you just want to unload a property at any price --- and it's done every day by estates and other circumstances --- I think an auction would be a terrible way to sell property in South Walton under current conditions. Just my opinion.

[OnMackBayou]

I understand the % on the back end is paid by buyer. I guess what I should have said is this is a good deal for auctioneers, buyers and advertisers.

[nowgirl]

The problem with auctions is that many people think an auction will change market fundamentals...which it usually won't. The best way to sell a property is to price it so that it's attractive to a buyer. In today's South Walton market, that means turning the price clock back by about 3 years and get the widest exposure possible, and that's usually by listing with a Realtor. Say what you want about Realtors, but they're the ones with the buyers. Unless you just want to unload a property at any price --- and it's done every day by estates and other circumstances --- I think an auction would be a terrible way to sell property in South Walton under current conditions. Just my opinion.

I totally agree with this philosophy...200%, and there are still many sellers that would have this level of appreciation with this formula. :clap_1:

[Spencer]

I've been doing some research on this and have seen a lot of different views. One of the main points the auctioneers are making is that there is no better way to set a price on a property than having 10-15 people competitively bidding against eachother. A property is worth only what someone is willing to pay for it. What's your view on that?

[Diane4145]

I'm just curious to hear everyone's opinons on real estate auctions. Do you believe in them? What do you think about the initial fees and buyers premium?

I've dated a VERY successful Auctioneer,( another story...:blink: won't bore ya) that works all over. He's known for his audience participations and that's the biggest advantage, in my opinion! He can pull money, out of a rabbitt's ****!:clap_1: :clap_1: :clap_1: Anyone interested, PM me.:biggrin:

[Smiling JOe]

I've been doing some research on this and have seen a lot of different views. One of the main points the auctioneers are making is that there is no better way to set a price on a property than having 10-15 people competitively bidding against eachother. A property is worth only what someone is willing to pay for it. What's your view on that?From what I am seeing and hearing at auctions, there are not 10-15 people bidding. Most of the time, there may be 2-3 bidders, and I know of plenty with one or zero bidders. Are you suggesting that your auctions are different?

[Smiling JOe]

I've dated a VERY successful Auctioneer,( another story...:blink: won't bore ya) that works all over. He's known for his audience participations and that's the biggest advantage, in my opinion! He can pull money, out of a rabbitt's ****!:clap_1: :clap_1: :clap_1: Anyone interested, PM me.:biggrin:

Now that is an auction which I would like to see. :popcorn:

[Spencer]

I've never held an auction, just going by what others have said. I too would be suprised if auctions averaged that many bidders.

[Smiling JOe]

I have a friend who recently scored a new 2/2 townhome on 30A for under $200K at auction. :eek::lol: It seemed the bank wanted some money from the developer, so, he auctioned off a few units. I found out in hindsight, otherwise that bidder would have been wearing my nametag. A great score for the buyer. ;-)

[Spencer]

Definately a good buy!

[mark pale]

Auctions are fantastic for a buyer in a down market, and excellent for sellers in a hot market. The absolute best time to buy is when its a buyers market, which is right now - and dont buy anything when its a sellers market. The interesting thing about this market is buyers are so skeptical and sellers are so nervous its pushing the prices down below what the equilibrium price should be. In other words - NOW IS THE TIME TO BUY! Its working for me, I bought 2 properties this year at auction and have done very well on both of them. I am not a realitor nor did I use a realitor when I turned around and sold them both.

[Smiling JOe]

Mark pale, not all auctions are great for buyers right now. Many sellers are not selling absolute, and have a substantial minimum. From what I see in auctions today, the majority of properties held at auction, are not selling at auction. I will be curious to see how much one particular property, being sold absolute auction this week, brings. We had it under contract last year for $5M+. Had the seller placed a little more realistic price on the mobile home to begin with, perhaps we would have went to close.

[Diane4145]

I've never held an auction, just going by what others have said. I too would be suprised if auctions averaged that many bidders.

I've been to numerous auctions of Jack Granger's, with Granger Thagard Auctioneers Birmingham, AL. You wouldn't believe, the turnouts!:eek: I'm certain that it's due to the advertising (lots) and their impecible reputation! And yes, he's the one that I dated!;-) In his business, he knows what he's doin', draws the crowd in & gets them to participate and is VERY successfull at it! Commercial, Residential, Farms/Equipment, Liquidations, Charities, he does it all and everywhere! :razz:

http://www.gtauction.com (http://www.gtauction.com/)




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Jack F. Granger, AL# 873, CAI

President

[Spencer]

Smiling Joe, I assume that you're talking about the acreage in Freeport. I'll be there as well.

[nowgirl]

Originally posted by Mark pale
I am not a realitor nor did I use a realitor when I turned around and sold them both.

That would be REALTOR, not the unknown profession you mention :idontno:

[SHELLY]

I understand the % on the back end is paid by buyer. I guess what I should have said is this is a good deal for auctioneers, buyers and advertisers.

So one could say that it is an "Auctioneers, Buyers and Advertisers Market."

[Spencer]

If the seller has a resonable sense of value of the property, then it's not usually a bad deal for the seller either.

[SHELLY]

If the seller has a resonable sense of value of the property, then it's not usually a bad deal for the seller either.

If the seller had a "reasonable sense of value" and applied that knowledge based on present market conditions (excessive inventory--very few buyers) when pricing their home for sale, they wouldn't need an auctioneer to sell their home.

I believe folks who go to these auctions fall into 3 categories (1) People who are actually looking to buy a place at the cheapest price possible; (2) Late-night Infomerical Devotees who think they're on their way to making a killing in the real estate market, and (3) Owners of other properties and realtors from the surrounding area who are curious to see what's happening in town (and probably farming for potential buyers).

Aside from the obvious need for an auction for the average joe selling a home (meaning they want to unload it quickly with no hassles), a lot of these folks selling their homes at auction today take the view that they are selling "fine and rare pieces of art" that are highly prized by many folks eager to out-bid each other at ever increasing prices...nothing could be further from the truth. People going to these auctions are looking for bargain-bin prices...meaning BELOW what properties sold for in the last couple of years.

There may be an odd property that fetches a fairly decent price, but that will clearly be the exception and not the rule (and probably the example the auctioneer uses when he's pushing his services to potential clients).

Too many sellers have not reached a sufficient level of financial pain to price their homes to market...and buyers (especially if they are investors) are not willing to catch a falling knife. With ever-increasing inventory hitting the market day-by-day and prices starting to show a tiny bit of softening, buyers are content to park their money in a CD and wait for the prices to come down to them.

[spinDrAtl]

From what I am seeing and hearing at auctions, there are not 10-15 people bidding. Most of the time, there may be 2-3 bidders, and I know of plenty with one or zero bidders. Are you suggesting that your auctions are different?

The auction that I participated in by phone was heavily advertised. There were probably 100 or more bidders in the hotel where it was held and another 50+ on the phones (who were assigned a bidding rep on site).

That market was in the dumps at the time and people definitely got steals, but it still may have been a good deal for the developer to finish up at the project and get his sales staff out of there, etc.

I just remember at the end there were a few units left and there was a rock bottom price set but the auctioneer was basically saying 'Anyone who wants one of these just come up to the front and sign for the minimum'. I wish I would have bought a few more units but just couldn't pull it off at the time.

[Mango]

I went to an auction as the house mortgage broker in N.Y. about 10 years ago. The people who came in for the auction were not suits, they had cash, and at that time, some properties were a steal. I had an auctioneer stay at my place early spring from TN, and he said auctions were how properties were sold in some Sotuhern States even before they were listed with realtors. Is this true?
he said he went to an auction in Destin, and was going to be coming back to look for property soon, and I imagine there may be a few deals here and there.

[Bobby J]

I was told by John Roebuck that auctions work best in a sellers market. In a buyers market, especially like in South Walton sales at auctions are down. In a sellers market buyers really get in a bidding war. Right now the buyers just walk if they do not get the property at what they think is a steal. It could have gotten real crazy if we would have sold some of our listings last year at auctions!!! If the auction is not "absolute" I would not waste my time going.

[SHELLY]

I was told by John Roebuck that auctions work best in a sellers market. In a buyers market, especially like in South Walton sales at auctions are down.

...don't you actually have to have "buyers" to call it a "buyer's market?" :confused:

Someone told me yesterday, "Look, I've got the money in the bank...it doesn't matter what the Realtors are saying--it's not a "buyer's" market until those of us with the cash say it is....and we're still not there yet."

I can dig it.

[Just_In_Thyme]

Shelly, I know your think your a genius on the auction matter and real estate in general but until you have some actual experience on what your talking about, you might want to refrain from your simplistic comments and generalizations about the nature of the market. You remind me of the fan who sits in the nosebleed section of the stadium and screams at the players on the field about what their doing wrong.

I have made quite a nice living buying property at auction and conventially for that matter and will continue to do so while you sit in the stands.

Give him some credit Mark he is working on a thesis

[InletBchDweller]

OHHHHHH so you know that Shelly is a HE?????Give him some credit Mark he is working on a thesis

[Bobby J]

...don't you actually have to have "buyers" to call it a "buyer's market?" :confused:

Someone told me yesterday, "Look, I've got the money in the bank...it doesn't matter what the Realtors are saying--it's not a "buyer's" market until those of us with the cash say it is....and we're still not there yet."

I can dig it.

Shelly,
There are two types of markets. Buyers and Sellers markets. A year ago the seller dictated the transaction. Today, a buyer rules. It is merely a term. BTW, I have closed 3 cash transaction in the past two weeks. Tell your friend don't stand around waiting too long. His realtor could be on to something. I have made allot of money while people stand around and analyze. We call it paralysis by analysis!!!!! :confused:

[Babyblue]

I held a auction at cafe-30-A. Great turn out. Good food and a fun time by all except the sellers! :funn:

[Diane4145]

Shelly,
There are two types of markets. Buyers and Sellers markets. A year ago the seller dictated the transaction. Today, a buyer rules. It is merely a term. BTW, I have closed 3 cash transaction in the past two weeks. Tell your friend don't stand around waiting too long. His realtor could be on to something. I have made allot of money while people stand around and analyze. We call it paralysis by analysis!!!!! :confused:

Bobby J,

I'd appreciate a large loan, with a very low interest rate and in all large bills...please!;-)

[SHELLY]

Shelly,
There are two types of markets. Buyers and Sellers markets. A year ago the seller dictated the transaction. Today, a buyer rules. It is merely a term. BTW, I have closed 3 cash transaction in the past two weeks. Tell your friend don't stand around waiting too long. His realtor could be on to something. I have made allot of money while people stand around and analyze. We call it paralysis by analysis!!!!! :confused:

It doesn't surprise me that a few places are selling, since we are still in what is normally considered the "buying" season in these parts (although you wouldn't know it with all the inventory on the books that's not moving).

There are lots of folks out there holding RE now that are kicking themselves in the arse because they used the "Ready, Fire, Aim" real estate investment system. Many of them (but not all) listened to agents who told THEM last year was the right time to buy too.....I don't blame the agents, that's how they make their money...with that in mind, I certainly wouldn't take an agent's view of the market as gospel....because that's how they make their money (that's not how they would make me money.)

If you've already got a house to live in, all other real estate is discretionary. Maybe someone who takes their time analyzing a situation that seems "too good to be true" may miss a chance to end up rolling in dough (as you certainly must be by now), but they also aren't stuck with 3 pre-construction condos, $60,000 out of pocket, a HELOC on their primary residence, and a notice that all 3 are closing by the end of August. :shock: (Remember, they're not making anymore sky!)

Tulips, Dot-Coms, Tech Stocks, Beanie Babies, Real Estate......what's the next "anyone can get rich quick with no downside risk" investment? That's the mentality that fueled the run-up in the real estate market during the last couple of years--it topped off last summer and now will take several years to unwind, so there's no need to rush out in the next couple of months to buy...there will be plenty of better buys available on the way down.

[andipandi]

I do not really think it is funny for owners to have to sell their property at a loss. I suppose folks who take delight in this never think it could never be them. You never know what can happen in life.

A lot of people who bought in the last 2 yrs are really hurting. Does anyone have anything helpful to say to us????? Please if you are going to be mean spirited or insulting --DON"T!

[SHELLY]

I do not really think it is funny for owners to have to sell their property at a loss. I suppose folks who take delight in this never think it could never be them. You never know what can happen in life.

A lot of people who bought in the last 2 yrs are really hurting. Does anyone have anything helpful to say to us????? Please if you are going to be mean spirited or insulting --DON"T!


I'm sorry you made a bad investment decision...usually people who've walked in those shoes--if they've learned a lesson (every investor loses sometime)--take a more cynical view of all the "hype" surrounding the latest and greatest way to make tons of money without breaking a sweat.

There are lots of folks out there still under the impression that real estate investing is riskless and has no downside. The comeback always goes something like this: "Real estate is better than the stock market--you can't live in stock certificates; real estate has NEVER lost value in the history of man; or, if I can't sell it I can always rent it out to cover my expenses."

Believe me, I'm well aware that losing money on an investment isn't a picnic--but if you had it to do all over again, would you have made the same investment decision? If so, then you should be fine with your present situation. But if you would not, what would have made you decide against it? Didn't your financial advisor, realtor or banker advise you about the downside risk of investing in real estate?

You've obviously come to the realization that your investment isn't meeting your expectations, so now you've gotta step up to the plate and deal with it...when it comes to investing it's a game of "Risk and Reward," you can't have one without the other. Investors are one thing, but there are many, many people who are going to lose their primary residences as a result of this RE money grab--my heart goes out to the naive and defrauded among them.

There are others on the board who believe that what we are experiencing is a temporary lull in real estate and the market will come roaring back "bigger and better than ever before" next Spring if you can just hang on...if that is "helpful" for you, then believe them, maybe they could be right--but you can't take "feel good chit-chat" to the bank....I'd do some REAL number crunching in the interim.

[TooFarTampa]

Though SHELLY often appears to be mocking those who have made a miscalculated investment, I agree with the sound economic advice above. I will add, andipandi, that if you are an END USER (ie SoWal is a place you want to be in the mid to long term) and you can truly afford your purchase, try not to worry much about it. That is easier said than done, certainly, but at some point, assuming you do not need to sell, the market will recover and even continue strengthening. But there seem to be too many variables for anyone to reasonably predict when that may be. Meantime, enjoy your purchase, because with a place in SoWal, that is one thing you can surely do. ;-)

[Amp22]

Shelly - there are plenty here who made good, even great gains by investing in the "next hot thing" when it was SoWal. We are the ones who think you are cruel and rubbing it in to the less fortunate.

There are plenty here who were not so fortunate and might take losses. They are the ones who think you are cruel and rubbing it in their face.

I suspect you hang around, even after resigning from this forum once, because all the sunny people on this forum drive you insane. You long ago passed from the "I told you so" phase to the "just plain ugly and cruel" phase. Give it a rest before you get visited by 3 ghosts and end up in H E double toothpicks.

[SHELLY]

I suspect you hang around, even after resigning from this forum once, because all the sunny people on this forum drive you insane.

Not really--my priest insisted that I give something up for lent so I wouldn't go to H-E-double-toothpick. I had to make a choice between giving up posting on the RE forum and pulling wings off of flies... ;-)

P.S. In my case, insanity is more of a long putt than a drive.<rimshot> :biggrin:

[Unplugged]

Though SHELLY often appears to be mocking those who have made a miscalculated investment, I agree with the sound economic advice above. I will add, andipandi, that if you are an END USER (ie SoWal is a place you want to be in the mid to long term) and you can truly afford your purchase, try not to worry much about it. That is easier said than done, certainly, but at some point, assuming you do not need to sell, the market will recover and even continue strengthening. But there seem to be too many variables for anyone to reasonably predict when that may be. Meantime, enjoy your purchase, because with a place in SoWal, that is one thing you can surely do. ;-)Agreed TFT - I find SHELLY's comments enlightening and I try not to take them personally.
___________________________________

[sberry123]

Shelly's insights may have helped many people in terms of realestate investing by giving a different view point. Who knows what the market is going to do, if I knew, I would be a billionaire. He/She does have a right to boast since she predicted this way back when and he/she took the beating on the forum from the naysayers.

[andipandi]

Shelly you did predict this. I agreed with you as I watched the daily sale, pending and sold listings--but it was too late for us. I had watched south walton property soar for 10 yrs. I do not even understand the numbers that SJ is kind enough to post. I am a novice and did make a bad investment sadly as it turns out. My husband and I are not risk takers we have never even put $20 in a slot machine or gambled. I think I have bought 5 lotto tickets in my life. We have worked in health care our entire life. We hoped to retire soon. We are much better at taking care of the sick than investing obviously.
What makes me so sad is I talked my husband into this. As hard as I work, he works even harder. I love south walton:wub: and based this venture more on love than finanical advise. We are not able to travel there due to illness and work as much as we would like.
I am serious about any creative thoughts anyone would be so kind to share about what folks are doing who have a home they need to sell with an interest only loan(Please do not kick me --down already--got it dumb dumb dumb). It has not sold at $100K loss and it is not overpriced. We will work two jobs before we give it away. if we had flipped it immediately , we would have made a profit. But no we had to wait a year!!!

Here are some things I have considered:
Sell our primary home and live in a tent.:eek:

Move the house from South Walton to our hometown and sell our primary . I guess the bank would not like that since we have a 300% mortgage now.

Or if everyone on the board and all the realtors, investors would go buy one piece of property in the area to reduce the inventory the market would improve.
As you can see my best thinking got me here.

[SHELLY]

What makes me so sad is I talked my husband into this. As hard as I work, he works even harder. I love south walton:wub: and based this venture more on love than finanical advise. We are not able to travel there due to illness and work as much as we would like.
I am serious about any creative thoughts anyone would be so kind to share about what folks are doing who have a home they need to sell with an interest only loan(Please do not kick me --down already--got it dumb dumb dumb). It has not sold at $100K loss and it is not overpriced. We will work two jobs before we give it away. if we had flipped it immediately , we would have made a profit. But no we had to wait a year!!!

Here are some things I have considered:
Sell our primary home and live in a tent.:eek:

Move the house from South Walton to our hometown and sell our primary . I guess the bank would not like that since we have a 300% mortgage now.

Or if everyone on the board and all the realtors, investors would go buy one piece of property in the area to reduce the inventory the market would improve.
As you can see my best thinking got me here.

AP,

Sorry to hear about your story--novices usually do break the #1 rule of money and investing, which is: "Think with your head, not your heart. " Believe it or not--some folks who walk on the shady side of investing/speculation actually rely on that "novice thought process" to make lots and lots of money.

Guilt over the situation is not going to solve the problem--its water under the bridge (you're certainly deserving of a very short Pity Party, but try to dispense with it as quickly as possible so you can start concentrating on finding a solution).

From what I've read, you really need to do some reading (about real estate and mortgages) and seek some solid professional financial advice quickly. Hopefully you can find a good finanical advisor, RE attorney, or CPA (maybe check with some doctors you trust) -- and make sure they don't steer you toward some snake oil salesman who is trying to sell annuities or whole life insurance (don't get me started on those folks! :roll: ).

Most folks are getting out from under IO loans by refinancing to a fixed, but it sounds as if this may not be an option for you. I applaud your courage in speaking up about your situation--the first step to tackling a problem is to admit you're aware of it in the first place, so you see, you ARE on your way to solving it. I sincerely wish you luck as you go forward.

[SHELLY]

Shelly's insights may have helped many people in terms of realestate investing by giving a different view point. Who knows what the market is going to do, if I knew, I would be a billionaire. He/She does have a right to boast since she predicted this way back when and he/she took the beating on the forum from the naysayers.

It was more a matter of "connecting the dots" than "predicting." I follow the economy and also know just a bit about the markets--so when the real estate market fundamentals started getting WAY out of whack, it was more like watching a seismograph that showed ever-increasing activity and knowing that something unpleasant was about to happen sooner rather than later.

Most telling was when folks were lining up at O'dark-thirty for a "chance" to "win a chance" to get into a lottery, to get to buy a reservation, to buy a condo that hadn't been built yet :idontno: It reminded me of the time I went to a McDonalds several years ago with a line down the block at 5am--found out these people got up at 3am, grabbed their kids and stood in line for hours to buy Beanie Baby Meals!...AND they threw away the food (can't really fault them for that). Believe it or not...both types of “investors” experienced the same mental thought process, just at opposite ends of the economic spectrum--fascinating stuff!

[Diane4145]

Please if you are going to be mean spirited or insulting --DON"T!

:clap_1: :clap_1: :clap_1:

[Mango]

Andi Pandi,
like Shelly says, have your quick Pity Party and speak to several different mortgage professionals and a CPA. It's possible if you have any equity in your primary residence, to cash out on your primary (to a FIXED rate please)
and reduce the principle on the interest only ARM so that your payments are significantly lower, since when you apply principle to the Adjustable loan, when the loan recasts itself, your payment will be based on the lower principal remaining balance. This may be a viable option since now your loan to the value on the SoWal property is higher than a Bank will allow once appraised. There are also interest only fixed rate loans available if you think you will have problems swinging the fully amortized payment.
There are also 40 year loans available now. Just make sure you speak to someone knowledgeable who will act as a trusted adviser, not someone just trying to put you in any loan, hence speak to several different people until you find someone you are comfortable with.

Maybe with some of these options, if they are viable for your situation, you can hang on to the SoWal property longer and wait out the market longer.

Good luck.

[SHELLY]

Andi Pandi,
like Shelly says, have your quick Pity Party and speak to several different mortgage professionals and a CPA. It's possible if you have any equity in your primary residence, to cash out on your primary (to a FIXED rate please)
and reduce the principle on the interest only ARM so that your payments are significantly lower, since when you apply principle to the Adjustable loan, when the loan recasts itself, your payment will be based on the lower principal remaining balance. This may be a viable option since now your loan to the value on the SoWal property is higher than a Bank will allow once appraised. There are also interest only fixed rate loans available if you think you will have problems swinging the fully amortized payment.
There are also 40 year loans available now. Just make sure you speak to someone knowledgeable who will act as a trusted adviser, not someone just trying to put you in any loan, hence speak to several different people until you find someone you are comfortable with.

Maybe with some of these options, if they are viable for your situation, you can hang on to the SoWal property longer and wait out the market longer.

Good luck.

Heed Mangos warning and visit a pro (someone with YOUR interests in mind, and not just dollar signs in their eyes) before trying to engineer any of this stuff on your own.

You mentioned that you were a novice...all the more reason you need to do some THOROUGH reading on mortgages and the RE market. I'm hesitant to give any concrete advice because there may be many moving parts to your present finances we don't know about (outstanding bills, loans, savings, 401Ks, money stuffed in your Serta)....

But I would be very careful when screwing around with your primary home mortgage in order to finance an investment property--otherwise you may be putting TWO properties in jeopardy, one of which will only go back to the bank, but the other can put you on the street.

Just say you took a large chunck of money ($200,000 + broker's commission) out of your primary home and plunked it into your investment property to bring your vacation home mortgage down from $800,000 to $600,000 and your IO payment down as well. Now you've got to pay the IO AND now you've added an equity loan or extended your mortgage (depending on how you do it). Did you mean to say you had a 300% mortgage??

Now let's say next year comes along and RE is still in the ditch and the vacation property appraises at $500,000 and you still don't want to sell, so you continue to carry (with taxes, insurance, etc.) and then one of you lose your job or can't work for some reason. It just gets doesn't get any better from that point on.

Keep the faith and go out there and get some answers.

[Rocco]

I have sold AND purchased property from auctions. My philosphy is this...if you want to sell your property at an auction, it can be advantageous if you are ready to be done with it and you have enough money in the house that will allow you to still make money if it sells at a price below appraisal.

In my opinion, the best feature of auctioning your house is that the auction company advertises your home all over the country. People in California might think S. Walton properties are cheap compared to theirs. You are not limited JUST to the existing people who visit South Walton. I get flyers from auctions held all over in places I never heard of before and if its something I am interested in, I might go.

I do not think auctions are a good way to sell a home if you are wanting to get over $1 million. This is a huge hurdle for auction companies. I also agree that "absolute auctions" are the best way to go....whether you are selling or buying. "Absolute" means the buyer HAS to sell the property, regardless of price, as long as the auction actually begins. One trick the auction companies do well is to check out the register bidders to find out how much of an opening bid will be made. This information is then given to the seller to make his decision on whether or not to proceed with the auction. The owner can back out upto the point when the auctioneer starts reading all the terms and conditions. Of course, the actual final number is usually much higher than the opening bids, but it is a gamble you take.

The BEST thing about selling a house with an auction company is that you can sell it "AS IS" and that includes any wierd property line disputes, Mold problems, etc. You have to disclose these items, but you don't have to fix them.

Buying a property at an auction can also be a good deal. Even if the owner pulls the property from the auction because he doesn't think he will get what he wants on the price, the auction company usually will contact you (if you were a register bidder) afterwards to see if you would like to make an offer. If an auction company does not get many people to attend the auction, then they are not a good company to use. The good companies know their business and do it well. I can tell you some that are good and at least one that is horrible.

I like to think that auction companies are just a different type of marketing tool for sellers and buyers. You have to know the risks involved but as long as you do, you can benefit in either role you may play. Realtors can still be involved too and get a commission. The seller pays the advertising cost, but this is similar to the costs of paying the real estate commission.

[Rocco]

Mango:

Glad you provided some helpful information to this distressed owner.

Andipandi, you are not alone...there are many people in the same situation as you.
Anyone could have predicted the overpriced market would have to adjust.......BUT no one knew when it was going to happen. Or did Shelly actually predict that Hurricane Season was the culprit? or did she predict the increase in interest rates? or was it the increase in gas prices? or was it the increase of insurance costs? or was it all of the above...

Point is...none of us have a crystal ball (except SJ)...you didnt make a bad decision, you just got caught with bad timing. Just hang in there a little longer...it will get better (thats my prediction)..."Good things come to those who wait"---unless you are waiting in a MacDonald's line !

[Mango]

Heed Mangos warning and visit a pro (someone with YOUR interests in mind, and not just dollar signs in their eyes) before trying to engineer any of this stuff on your own.

You mentioned that you were a novice...all the more reason you need to do some THOROUGH reading on mortgages and the RE market. I'm hesitant to give any concrete advice because there may be many moving parts to your present finances we don't know about (outstanding bills, loans, savings, 401Ks, money stuffed in your Serta)....

But I would be very careful when screwing around with your primary home mortgage in order to finance an investment property--otherwise you may be putting TWO properties in jeopardy, one of which will only go back to the bank, but the other can put you on the street.

Just say you took a large chunck of money ($200,000 + broker's commission) out of your primary home and plunked it into your investment property to bring your vacation home mortgage down from $800,000 to $600,000 and your IO payment down as well. Now you've got to pay the IO AND now you've added an equity loan or extended your mortgage (depending on how you do it). Did you mean to say you had a 300% mortgage??

Now let's say next year comes along and RE is still in the ditch and the vacation property appraises at $500,000 and you still don't want to sell, so you continue to carry (with taxes, insurance, etc.) and then one of you lose your job or can't work for some reason. It just gets doesn't get any better from that point on.

Keep the faith and go out there and get some answers.

I am not saying that cashing out on someones primary residence to finance another property is the best solution for everyone. People have to look at all possible scenarios in a case like this. Are you approaching retirement, moving to a fixed income, etc.? That is why speaking to numerous professionals is the wisest course of action. You never know what is going to happen, which is why I tend to err on the side of conservatism. Even though someone may qualify for specific loan, if I dont feel comfortable doing it by looking at spending patterns, and credit, I recommend they dont refinance.

Worst case is you hand the keys to the Bank back on the second home, but at least you have a roof still over your head.

[spinDrAtl]

Andi, you need to take a good look at what it is that you are trying/need to accomplish to right your situation. Is it lowering your monthly outflow? Is the situation just too dire such that no type of refinance would solve it and you must get out? Can it be managed by making some adjustments? I agree with others - you need to do a thorough analysis of all your factors and determine the best course of action for you.

Make sure you are not concentrating on just one factor that gets in the way of doing a good analysis. I know of someone who had 200k in CREDIT CARD DEBT (mortgage and car additional). This person had the opportunity to take a fixed rate 2nd mortgage and reduce their monthly outflow by $1300 or more dollars per month by paying off other debt. They decided not to do it because 'the interest rate was too high' - 13% on a fixed rate second to 115% of their home's value. Now mind you, they were paying 22-28% on these credit cards if not more, but because they had seen ads touting 6-7% interest rates, they thought this program was too high. This program is not for everyone of course as you get negative equity in your home and if you had to sell in the near future, you could be in trouble. But if you are about to start fouling up your credit report and you have made the commitment to clean things up and plan to stay put in your home, that can be the way to go.

Another lady who was not in so much trouble, but was tight on meeting monthly obligations went to her local bank for advice. She was probably a couple months away from getting a 30 day late on her mortgage (BAD,BAD,BAD) but not in such a dire situation that it could not be solved. Lo and behold, they advised her to DECLARE BANKRUPTCY. This lady had no more need to declare bankruptcy than Bill Gates. There was another program that worked for her and she has reduced her bills to a manageable level PRIOR to ruining her credit. If she had listened to her local banker and not looked around for more advice, she would have been screwed for years.

So do some homework and talk to some trusted friends and professionals.

My two cents.

[andipandi]

Mango, Shelly, Rocco, Spin Dr.,
Blessings and thanks to all of you who donated time and ideas. There are many sharp, savvy folks here. I did not mean to sound destitute or whine:lolabove: I am not alone. Smarter, wealthier people than us seem to be in the same shape over south walton real estate . I bet they may be reading at this very minute. Thank you for using your powers for good and not evil.

Sorry, I was off thread subject. I see the auction route is not a viable option as we have little or no equity. I was making a funny about the 300% mortgage. Got the standard 20% down 2yrs ago. Just did not expect it to depreciate! We have no debt except mortgages and do not spend much money. We are luckier than those people who may forfeit a primary residence or file bankrupcy.

I had planned to speak with an advisor. Yes, more than one advisor is an excellent idea . Do you know the fee for SJ's crystal ball therapy?? My main questions are when do you stop throwing good money after bad ?? How do you stop the hemorrhaging? When will this flipping market turn around????
Thanks again!

Have you heard of trading homes???? If we could trade this home for one in our city , we could sell our primary(which has alot of equity). We have many second home owners in our area. Just curoius how that might work???

[njackie]

Where is your home is South Walton located?

[andipandi]

Near Alys and Seacrest area. No disrespect but we would like to sell it not give it away.

[Pirate]

Near Alys and Seacrest area. No disrespect but we would like to sell it not give it away.

Just an observation Andi. When you bought this home I assume you weren't planning to move to the area immediately. I realize the market is down and may go down further but this really is only a problem if you sell. The market will come back although it may be a long time. Why not put the house on a rental program and see if you can cover some of your expenses with a fixed mortgage? It would be worth the time to look at the numbers anyway. I realize the rent won't cover the expenses but it may make the bleeding tolerable in the meantime and you may not have to make any adjustments.

I feel strange being so positive. :floor:

[TooFarTampa]

Just an observation Andi. When you bought this home I assume you weren't planning to move to the area immediately. I realize the market is down and may go down further but this really is only a problem if you sell. The market will come back although it may be a long time. Why not put the house on a rental program and see if you can cover some of your expenses with a fixed mortgage? It would be worth the time to look at the numbers anyway. I realize the rent won't cover the expenses but it may make the bleeding tolerable in the meantime and you may not have to make any adjustments.

I feel strange being so positive. :floor:

I was thinking the same thing. Even if you do rent the house already, there are ways to maximize your renters and/or income. It just takes some strategerizing. :lol: Not that I have all the answers, but PM me if you are looking for any ideas. Also search the forums ... there are many members here who rent their homes and are great at it! I'm sure any of them would be happy to give you advice.

[andipandi]

No, we strictly bought it as an investment. Kept it for a year--that has been the biggest mistake!!!! Has been for sale most of the last year. Reduced the price $225K in that time. It will not rent as a short term without a pool. We do not want the agony of a pool. Rentals were down this year anyway.Thanks for the suggestion. We will probably open it up for long term rental soon. It is just like new , so immaculate we know it will be damaged. But at this point we must make some changes. Once we convert to a fixed the payment will skyrocket. It is already a nose bleed payment.

[Rocco]

Still not sure exactly where your property is located...but if its not in a subdivision, you could possibly look at selling it as a commercial property (assuming you could get zoning). Pool issue is resolved. A lot of businesses need locations. Just a different thought.

[dsilvar]

No, we strictly bought it as an investment. Kept it for a year--that has been the biggest mistake!!!! Has been for sale most of the last year. Reduced the price $225K in that time. It will not rent as a short term without a pool. We do not want the agony of a pool. Rentals were down this year anyway.Thanks for the suggestion. We will probably open it up for long term rental soon. It is just like new , so immaculate we know it will be damaged. But at this point we must make some changes. Once we convert to a fixed the payment will skyrocket. It is already a nose bleed payment.
Hi..can you provide the listing details and pics. I'm looking..right now just looking..thanks

[njackie]

Does anyone know what is up with the two huge gulf front villas in Santa Rosa Beach, aka Seagrove right next to Sugar Dunes that are selling at auction Sept. 7? Just saw them in the Wall Street Journal Distinctive Properties, I watched them being built and they seem to always be rented or occupied?

[Spencer]

I went to an absolute auction in Freeport tonight of 40.5 acres that allowed for 80 units. It sold for 700,000. Maybe 50-60 people, about 4 or 5 bidders. Winning bidder was a call in.

[SHELLY]

I went to an absolute auction in Freeport tonight of 40.5 acres that allowed for 80 units. It sold for 700,000. Maybe 50-60 people, about 4 or 5 bidders. Winning bidder was a call in.

50-60 people with only 4-5 bidders?--I guess there wasn't a good flick playing at the Freeport Bijou tonight. :D

[SHELLY]

Does anyone know what is up with the two huge gulf front villas in Santa Rosa Beach, aka Seagrove right next to Sugar Dunes that are selling at auction Sept. 7?

Two words: Negative Cashflow.

[njackie]

Possibly you are correct about the villas and toe issue too.

[andipandi]

Disilvar,
If you are looking --just looking. I have seen some good buys/sales IMHO. Good thing I am house poor or might try to buy something myself.
You may be a realtor or investor and do not need my 2 cents. Of course there are some honest, sharp realtors like Bobby and SJ who could help if you are not.
Things of interest:
Lot on San Juan $215k this am
A nice house sold in Sand Cliffs (south of 30A) for $550K. There is another good buy there.
I think there have been some deals in Seacrest and White's Gulfview Estates. Houses selling for what lots did in the past. Good luck! Buy something everybody lets' get this inventory down.

[Smiling JOe]

I went to an absolute auction in Freeport tonight of 40.5 acres that allowed for 80 units. It sold for 700,000. Maybe 50-60 people, about 4 or 5 bidders. Winning bidder was a call in.So I guess my guys who had it under contract for $5M+ and backed out are happy now. That was prior to the higher density zoning. I know the sellers are a little freaked out now for selling absolute. Let's see $700K + $70K buyers premium for auction, + another 3% ish for closing costs, divided by 80 lots = raw land cost of ~ $9,500 per lot -- not a bad deal for the buyers, and since Ms Cuchens probably paid very little for the property, she should be happy, but is probably more disappointed that it didn't close ealier at the premium price.

[SHELLY]

So I guess my guys who had it under contract for $5M+ and backed out are happy now. That was prior to the higher density zoning. I know the sellers are a little freaked out now for selling absolute. Let's see $700K + $70K buyers premium for auction, + another 3% ish for closing costs, divided by 80 lots = raw land cost of ~ $9,500 per lot -- not a bad deal for the buyers, and since Ms Cuchens probably paid very little for the property, she should be happy, but is probably more disappointed that it didn't close ealier at the premium price.

Does that mean that "market price" for Freeport land has dropped a smidge? :confused:

[Spencer]

I wouldn't have a problem making that assumption.

[dsilvar]

Disilvar,
If you are looking --just looking. I have seen some good buys/sales IMHO. Good thing I am house poor or might try to buy something myself.
You may be a realtor or investor and do not need my 2 cents. Of course there are some honest, sharp realtors like Bobby and SJ who could help if you are not.
Things of interest:
Lot on San Juan $215k this am
A nice house sold in Sand Cliffs (south of 30A) for $550K. There is another good buy there.
I think there have been some deals in Seacrest and White's Gulfview Estates. Houses selling for what lots did in the past. Good luck! Buy something everybody lets' get this inventory down.
Thanks AP..not a realtor or investor. Just someone who likes the area. With insurance on homes so "up in the air" I might wait a while. I have a 1031 I have to deal with. Good luck on your place. Regards.