Let’s face it. We are not in a booming economical cycle. Unemployment is currently in excess of 8% and has been for quite some time. With regards to housing, with a hand full of exceptions, home prices continue to decline. With some commodities like food, and energy, prices are going up. Yet interest rate on savings is at an all time low. My bank wants to pay me 1% on my savings but with true inflation in excess of 4%, I’d be going broke if I did that.
And let’s not forget what is going on in the European markets. With the euro on the verge of collapse, and with many US Banks invested in the European Banks, is it any wonder banks are unwilling to lend.
Plus, Israel and the US continue to threaten to bomb Iran because of Iran’s possible nuclear capability and that will certainly affect gas prices at the pump and transportation cost to get the goods delivered. Then there is the election coming up in November With all these uncertainties, businesses are not going to hire or expand. You might ask, “What does all this have to do with an auction? Plenty. Let me explain.
We recently sold a home via auction that brought less than the seller expected. Was the seller disappointed? Yes, but not devastated, as it was the seller’s decision to sell at the last high bid price. While the seller was disappointed, I felt we had done a good job educating the seller with regards to her expectations.
You see, she had the home appraised and was given a dollar valued that was stuck in her mind. When I saw the appraisal, I told her that the appraisal was just an “opinion of value” which it really was, and that I didn’t think she would get close to that value with an auction or even with a traditional listing. The appraiser had to go pretty far out to get comps, of which none of them were recent, as this property was in a rural area.
You see, prior to the auction contract being signed, we sat down with the seller to explore her expectations, to see if they were realistic. She had bought the home during the last real estate boom, viz., she over paid in comparison to today’s market price. We explained to her unless we had a cash buyer, it would be more difficult to get a buyer qualified for a loan in today’s market because the lending requirements had changed in the last year or so. In addition, the home needed some cosmetic repair that a traditional lender would have required the seller to fix.
We even explained to her how all the other things mentioned above (world events) would affect price. While not getting the price she wanted, her disappointment was lessened because of being informed of what to really expect. I would rather turn a client down than let them down. As auctioneers or real estate agents, we must inform and educate our clients with regards to their expectations.
What are your expectations? Are they real or just a wish, want or desire?
For more information on our auction and real estate services, go to http://www.cansellnow.com or call us at 252-257-4822.
- Placement Specialist
- Senior Real Estate specialist- traditional listing versus auction
- Assisted Living Advisors
- Home Renovation Specialist
- Independent Living Advisors
- Reverse Mortgage Specialist – do I want to receive monthly payments from the equity
- Residential Care Home Advisors
- Estate Sale Coordination – tag sale versus personal property auction
- Home Health Care Specialist -Medicare supplement programs
- Financial Advisor/Planner – what to do with the 401(k) plan?
- Senior Move Managers
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I can remember all the discussion about what to do about Y2K. I was already living in the country, living on a farm, so all the suggestions about getting out of the city and living in the country did not speak to me. I was getting e-mail after e-mail about food storage. We had our own garden and either canned or froze what we grew. We had cows, goats and chickens (and deer) for our meat supply, so food storage was not a hot button for me. Admittedly, we did order extra grain, rice, salt, sugar, etc.
All of that was over eleven years ago. But what about today? Is it time to move to the country? What is different today from eleven years ago? Did we have unemployment bumping 10% ( and some say the real figure is closer to 15%)? Did we have real inflation in double digit? ( Have you bought any coffee, sugar or grains lately?). The average price of gas was $1.51 a gallon for unleaded compared to $3.65 today and is on the way up.
Our government is on a spending binge, mainly to buy votes. The current administration has accumulated more debt in the last two and a half that all previous administrations cumulative. And the debate now is about raising the debt ceiling so Congress can spend more money and buy more votes. And may I add, who is going to pay all this back? You children and mine and their children and theirs and so on.
If the local food store shelves became bare, how will/would you survive? Do you have enough land to grow your own food? Can you gut and skin a deer? Got toilet paper?
Many people will steal from their neighbor? Almost every week I read about a group of teenagers going in mass into malls or local stores, taking what they want and walking out. Is this the beginning of anarchy? If there is a economic panic, you ain’t seen nothing yet.
Never in my 65 years on this earth, would I have believed that our country would be in the state it is in now. America is no longer the America I grew up knowing. There is no faith in our government. We no longer have statesmen, but professional politicians. Just recently President Obama said, “… ‘professional politicians’ know more than the
average American,” meaning we as voters are stupid.
Is it time to move to the country? Only you can decide that. As a real estate broker and auctioneer, it seems the time is ripe to sell land, outside the city and in the country.
I don’t know about you, but as a real estate broker and professional auctioneer, I have to wear many hats. One of the hats we have to wear is that of working short sales for a client that is upside down financially, viz., owing more on their home than what it is worth in today’s market.
I don’t recall the exact source, I want to say it was NAR, [National Association of Realtors] but back in May-June etc., almost 30% of the homes sold were purchased by investor’s via short sales or REO. The investor bought the property with the idea of re-selling it for a profit. Now that is stimulating the economy by way of moving money around, providing liquidity, etc.
However, have you tried to work a short sale lately? Many lenders want the current owner of the property to have been on title for 30 to 90 days before they will approve a loan by a new buyer. It is called seasoning. Most investors hold property for a short period of time. They may make improvements on the property, if needed, or may sell it in an “as is” condition.
This whole process of seasoning has slowed down investor’s purchasing and stimulating the economy because they want to keep turning their money over. Having to hold onto a property for 30 to 90 days adds additional cost and cuts into the investor’s profit.
The negotiating process normally takes three to six months to go full cycle. And now the investor is told he or she must hold the property for an additional 30 to 90 days after purchase. I think you are beginning to see the picture. Less homes being purchased means more “toxic assets,” less money is available to the banks to lend out.
In looking at our records, here are some of the related industries who make money off of a successful short sale:
- Foreclosing Lender (they make far more in a short sale then when they foreclose)
- Listing Agents and Buying Agents
- Attorneys and Title Companies
- Mortgage Broker/Direct Lender
- Fannie Mae, Freddie Mac, FHA or whomever buys this loan in the secondary market
- The Appraiser
- The Home Inspector
- Cities and Towns
- Insurance Company
- The IRS
- Marketing Companies (Direct Mail and Signs)
- Printing Shops
What’s the best way to stimulate the economy? The lender’s can start by making the short sale process a lot easier.
For more information on how we work with homeowners and realtors with short sales and pre-foreclosures, go to our website at http://www.cansellnow.com .
Like many of you, I get e-mails and magazines from the National Association of Realtors and from my state association wanting me to write my representatives and endorse many things the Obama administration are proposing to “stimulate” the real estate industry.
Now the Obama administration has proposed to pay each lender $1,000 for each successful short sale. In addition, they want to pay the homeowner $1,500 as “moving” money. They will pay the first lender $1 for every $2 the second lender is allowed to receive.
While this may loosen up the lenders a little to accept more short sale, now the lenders want to put a stipulation in the closing instructions that a home cannot be resold for 90 days after their closing. How is this going to stimulate the economy?
I recently read that 40% of home sold were bought by investors. These investors bought the homes with the idea of reselling for a profit. By adding this stipulation to any closing instructions will only hurt the sale of these homes. I am thankful that many title companies have said they will not issue title insurance with that stipulation. They can’t monitor what happens to a home after closing. Secondly, I even wonder if it is legal.
The loan modification program established by the Obama administration just postpones the inevitable, viz., a foreclosure. Even with reduced payments, you still have to have a job to make the payments, plus many homeowners are finding out they don’t qualify for this loan modification program.
More foreclosure homes are coming on the market affecting the value of the one next door. Unemployment at a all time high while real estate is at an all time low. Which raise an important question? Where is the money coming from to pay for all this? You got, from you and me in the form of higher taxes.
Can anybody tell me what country or individual has ever spent their way into prosperity by going deeper into debt? Why does our government think otherwise?
For information on working with realtors through short sales, go to my web-site page at http://www.cansellnow.com/shortsaleinfo.html .
I received an interesting phone call from a realtor in California. She had read some articles I had written about using an auction as a first choice method of selling a home, rather than as a last option. Her question to me was this, “Should I become an auctioneer?”
My first tacit thought was, “Go for it!” Yes, auctioning a home is a fast way to sell it, but not all homes will qualify for an auction. But before I get into answering the question, let me discuss briefly what an auctioneer does and does not do.
Some think that an auctioneer shows up on the day of the auction, starts talking fast, sells the house, and he/she is done. Actually, the activities that take place on the auction day, represents about 5% of the total auction process.
The perception of a realtor may be closer, viz., a contract is signed, a sign is posted in the yard, information is listed in the local MLS, and the listing agent hopes and prays that it gets sold. We know that is not always true but that is how the public portrays us.
Now back to the question “should realtors become auctioneers?” My answer is, “It depends.” Most auctioneers are a second, third or even fourth generation of auctioneers. They are in the business become they love it and have been around it since the beginning of time. Most auctioneers are specialist in a particular area such as farm equipment, heavy duty equipment, antiques, cars and trucks, land and yes, real estate, both residential and commercial.
I don’t know what the licensing laws of California are, but here in North Carolina you must go to a state approved school for pre-licensing requirements which may involve ten days to two weeks of your time, then you must past a state administered test.
There are annual renewing requirements, professional associations to join such as your state association and/or the National Association of Auctioneers [NAA] in addition to continuing education requirements [CE] each year. Add all this up plus your NAR and state dues, MLS dues and CE requirements; you can spend several thousand dollars a year on licensing and professional dues requirements.
Then you must become a marketer, that is, know how to market and get bidders to your auction. Who coordinates the marketing process? Who makes up the25 to 100 page proposal to the client? Who’s responsibility is it for placing line and display ads in which newspapers? What income range are you targeting? Who makes up the flyers and ads mats? Who checks on the cost of these things? Who sets up information on dozens of web-sites? Who draws up the Property Information Package (PIP)? Who registers the bidders and records the auction? Who keeps the client informed as to what is going on? And it goes on and on.
Rather than trying to re-invent the wheel, unless you have a real love for the auction industry, your best bet would be to partner with a local auctioneer in your area.
For more information about auctioneering, go to my website at http://www.cansellnow.com
When is an Auction not an Auction?
Over the past six months or so, I have noticed an increase in the ads in the paper about auctioning homes. Here in the state of North Carolina, you must list your auctioneer license number in the advertisements and the property owner along with the terms of the sale. When I don’t see this in the ad, I get suspicious.
Upon further investigation of these ads, I have found two things happening. First of all, there is an investor or group of investors that claim they own the home by way of a deed BUT they do not own the debt (the mortgage), that is, they took over the property “subject to” the existing mortgage.
In most cases these are homes they are about to be foreclosed. The homeowner has throw up his or her hands and have basically given up trying to stay in the home. They deeded the property over to the investor(s) with the understanding that the investor will stop the foreclosure, buy their home or get the property sold and save their credit.
In the meantime, the investor(s) work out a “short sale” with the lender. The investor(s) then try and find an end buyer to sell the home to, at a higher price than the “short sale” offer. Part of the marketing plan is to “auction” the home to the highest bidder by way of what I call a Dutch action or round robin bidding process.
Potential buyers come and look at the home and write an offer down on a list provided by the investor(s) along with their phone number. The bidding process stays open for several hours then closes. The investor(s) call everyone on the list after the bidding process closes and tells them what the highest bid was and wants to know if they want to increase their bid. A few will, most don’t.
If the highest bid does not meet what the investor(s) need or want out of the house, there is no sale, and it basically goes back to the bank through a foreclosure. The homeowner’s credit is ruined.
The second thing I see happening is that realtors are advertising a property as an auction using a form of the silent auction method. A potential buyer makes an offer through a sealed bid. The bid process may stay open for several days. Again, as in the investor group above, if the bid does not meet expectation, there is no sale.
As a professional auctioneer, I question the legality of some of these selling methods that are being advertised as “auctions.” If you are approached about selling your home via an auction, ask that person if he or she is a licensed auctioneer,(not all states require a license) a member of the National Association of Auctioneers [NAA] and/or a member of their state auctioneer organization and about their experience in the auction business. They should also be licensed to sell real estate.
For more information on real estate auctions, go to my website at www.canSellnow.com or call me with your questions at 252-257-4822.
- What are your auction or real estate sales expectations?
- Seniors Are Target of Scammers
- IS IT TIME TO MOVE TO THE COUNTRY?
- The Sky Is Falling! No It Isn’t! Yes It Is!
- Why Are Lenders Making It Hard To Stimulate The Economy?
- Get the Feds Out of the Real Estate Business!
- Is Obama Hurting or Helping the Real Estate Industry?
- Should Realtors Become Auctioneers?
- When is an Auction not an Auction?