Last week I attended the National Association of REALTORS® Annual Convention in Orlando, FL. I went there for a number of reasons, but mainly for Patty Nooney, 2008 Chairman of the REALTORS® Commercial Alliance Committee of the National Association of REALTORS® to pass the baton to me (or the gavel, as it were). As of this event, I am officially the 2009 Chairman of the 83,000 member strong REALTORS® Commercial Alliance Committee of the National Association of REALTORS®.
I had the opportunity to attend sessions led by top economists in our country and it gave me pause to consider what leadership role I’m going to take within the RCA and the NAR, and how I’m going to counsel potential sellers during what will prove to be a bumpy ride.
I listened to presentations from Lawrence Yun, PhD, NAR Chief Economist and Senior Vice President of Research and Mark Dotzour, Texas A&M Economist. My read of their advice is that the real estate economy is likely to continue to spiral downward for the next three to five years. Serious credibility issues regarding the government’s ability to fix the problem remain at the heart of the matter.
Given the debacle with the Resolution Trust Corporation (RTC) in the past, the NAR is working on a series of agenda items to put before Congress and the remaining powers that be and I am part of the REALTOR® group seeking to move this effort forward.
Backing up, below is a summary of the economists’ speeches, my take and suggestions for how we can all move forward productively.
VALUE OF UNDERLYING ASSETS
Property owners, especially of commercial assets, are holding their breath waiting for their turn for devaluation of their properties. The likelihood of increased vacancies, based on massive layoffs, retailers going out of business because of a halt in consumer spending and a lack of liquidity to refinance these deals make it clear that 2009 is going to be an “ugh” year for non-residential properties too.
CONSUMER CONFIDENCE, SPENDING AND DEBT
Congress put the bailout in place to send a message, “sit tight, we’re fixing it.” The message received from consumers is that the government has no real solution and that to really fix the problem will cost so much more than the first bailout package. There’s already a 90% to 20% inverse relationship of consumer spending to government spending. It’s critical to note that consumer spending isn’t the only area to watch – we need to keep an eye on consumer debt. George Bush intended for people to spend their tax rebate in the marketplace, but instead because consumer confidence is so low, they used it to pay down their debt so the effort didn’t stimulate the economy at all. The longer consumer confidence continues to erode, the less faith will be placed in any bailout packages or other government economic stimulus effort.
THE REAL REASON FOR THE BAILOUT
The bailout is also short sighted in that it’s not in place to save shareholders of corporations from failure; it’s there to protect companies for defaulting on their bonds. Right now companies are in certain financial trouble but there is still cash flow to meet these important commitments. If we get to the point where companies are defaulting on their bonds, we’ll see a triggering of further downturn.
The dollar is strengthening, which to the average consumer gives some sign of hope immediately because they see things happen like the price of oil is going down. But what the rising dollar means is that the peso to dollar ratio is down 30% -- Mexican clients want to pay in pesos and with this new development we’ll see the industrial sector slow down. This triggers layoffs and further reduced consumer spending.
THE GOVERNMENT HAS LOST CREDIBILITY
Right now there’s no infrastructure to solve the real estate problem. SELL NOW – don’t wait for the market to clear up, your assets won’t have the same value. This will no doubt stimulate our business as a real estate auction firm, but the lending policy is currently being rewritten based on the inability to pay the loans, not on the value of the collateral. We’re living with these conditions for at least the next three years unless we’re incredibly lucky. The volume of commercial transactions is down 70%, layoffs will be rampant, and companies are currently in and will continue to be under great duress.
Going back to the point made in the beginning, preserve the asset value by selling now, not waiting for the value to deteriorate further as the market declines further or the asset experiences wear and tear. This harkens back to a similar time in history when our firm was instrumental in dealing with the RTC liquidation process, one lesson learned with the government developing a liquidating agency is the time required to get the assets into the agency devalues the asset 70-80% which is enormously detrimental to the marketplace.
ACTION
NAR and the RCA Committee are assembling a summit the week of December 15th to discuss pertinent commercial legislative issues including the capital gains tax, 1031 exchange, tenants in common and create a potential commercial real estate liquidity solution scenario to be vetted through the NAR’s leadership and ultimately its membership. Many members under consideration to sit on the committee had experience with the RTC. Firsthand experience with the problems associated with creating a federal liquidating agency that simply liquidates properties on a wholesale basis, the net effect of which is to depress the markets further than they already are, is essential knowledge given today’s market conditions. Our group will seek creative solutions – the outcome of which will hopefully be better than the ones of the past.
OUR BUSINESS RECOMMENDATION
We are carefully researching sellers who can sell – starting with corporate America (retailers, big companies with assets to sell NOW). Our strong suggestion is to be aggressive with lenders that offer sellers relief. Unless accommodations are made, everyone is going to lose. We offer caution to the lenders who aren’t realistic with the outcome in workouts.
Here are some supporting documents from the NAR website and the press that lend further insight:
A chart on the US Economic Outlook from October 2008
http://www.realtor.org/wps/wcm/connect/a5fdca004ba54e93bc89fd5d696a4b5c/Outlook.pdf?MOD=AJPERES&CACHEID=a5fdca004ba54e93bc89fd5d696a4b5c
Real Estate Insights, October 2008
http://www.realtor.org/wps/wcm/connect/36d7a4004ba54e9abc95fd5d696a4b5c/currentissue.pdf?MOD=AJPERES&CACHEID=36d7a4004ba54e9abc95fd5d696a4b5c
ARTICLE: "REALTORS(r): Commercial Real Estate Sectors Disrupted By Credit Squeeze, Weak Economy" on 11/11/08 by David M. Kinchen from Huntingtonnews.net
http://www.huntingtonnews.net/columns/081111-kinchen-columnsrealtors.html
ARTICLE: "U.S. pending home sales fall, tight credit bites" on 11/7/08 by Lucia Mutikani from Guardian.co.uk
http://www.guardian.co.uk/business/feedarticle/7994376
Steve Good is Chairman and CEO of Sheldon Good & Company. He is an attorney, Accredited Auctioneer of Real Estate, licensed REALTOR in several states and author of a top-selling book; Churches, Jails and Gold Mines...Mega-Deals from a Real Estate Maverick (Kaplan, hardcover). The book features an afterword by Donald Trump.
Friday, November 14, 2008
Wednesday, September 10, 2008
Real Estate Auctions Become Critical During Extraordinary Circumstances in Housing Market
In case you haven’t read the papers, the housing industry is in a crisis.
The Government stepped in and took drastic action over the weekend, which is supposed to inspire a market turnaround http://www.azcentral.com/arizonarepublic/news/articles/2008/09/09/20080909biz-mortgages0909.html.
Apparently, the idea that everyone should be able to afford to own their own home is no longer part of the American dream … at least for many currently holding long term mortgages that are facing imminent foreclosure. And in the meantime, it’s causing a real pickle in the banking industry http://money.cnn.com/2008/09/07/news/companies/fannie_freddie_aftershocks/index.htm.
This harkens back to the late 70s, early 80s after the Savings & Loan industry collapsed, when it became apparent that holding portfolios of long term mortgages was incredibly risky. The value of mortgages with 30 year terms without government backing were vulnerable to interest rate increases. During this time, sellers heavily relied upon real estate auctions to help them find buyers for their properties.
To avoid a similar crisis, the government created Freddie Mac and Fannie Mae to hold the mortgages and create liquidity. This enabled the longest and greatest housing boom in history, and made the American dream come true for so many where otherwise this would have been out of reach. For an excellent summary on the mortgage industry click here: http://topics.nytimes.com/top/reference/timestopics/subjects/m/mortgages/index.html
Now, it seems that there is an inability or unwillingness to support the liquidity.
The news today is that big firms are looking to offload the mortgages into separate corporations in effort to get their balance sheets in a healthier state. Lehman is making the most noise in this arena, click here to read more: http://www.nytimes.com/2008/09/11/business/11lehman.html?_r=1&hp=&adxnnl=1&oref=slogin&adxnnlx=1221062427-esV5n/LUnuQvwqhqjUGKyA. Smaller banks, however, will have limited options for similar action and won’t be able to absorb the risk. Private investors are not interested in adopting the burden, either.
The impact in the real estate auction market is on the sell side. This reduction in liquidity makes it harder to sell properties and there are a reduced number of buyers who can obtain financing. The fewer options each side has, the more they will consider unconventional methods of real estate disposition, such as real estate auctions.
Attorney Wallace J. Wolff, Chief Operating Officer of Sheldon Good & Company, has over 25 years of experience in dealing with real estate as the head of several bank trust and wealth management departments. Prior to joining Sheldon Good & Company, Mr. Wolff managed the trust department for a 50+ branch, $2.5 billion Chicago area bank for 22 years. Mr. Wolff also served as a bank director for many years.
The Government stepped in and took drastic action over the weekend, which is supposed to inspire a market turnaround http://www.azcentral.com/arizonarepublic/news/articles/2008/09/09/20080909biz-mortgages0909.html.
Apparently, the idea that everyone should be able to afford to own their own home is no longer part of the American dream … at least for many currently holding long term mortgages that are facing imminent foreclosure. And in the meantime, it’s causing a real pickle in the banking industry http://money.cnn.com/2008/09/07/news/companies/fannie_freddie_aftershocks/index.htm.
This harkens back to the late 70s, early 80s after the Savings & Loan industry collapsed, when it became apparent that holding portfolios of long term mortgages was incredibly risky. The value of mortgages with 30 year terms without government backing were vulnerable to interest rate increases. During this time, sellers heavily relied upon real estate auctions to help them find buyers for their properties.
To avoid a similar crisis, the government created Freddie Mac and Fannie Mae to hold the mortgages and create liquidity. This enabled the longest and greatest housing boom in history, and made the American dream come true for so many where otherwise this would have been out of reach. For an excellent summary on the mortgage industry click here: http://topics.nytimes.com/top/reference/timestopics/subjects/m/mortgages/index.html
Now, it seems that there is an inability or unwillingness to support the liquidity.
The news today is that big firms are looking to offload the mortgages into separate corporations in effort to get their balance sheets in a healthier state. Lehman is making the most noise in this arena, click here to read more: http://www.nytimes.com/2008/09/11/business/11lehman.html?_r=1&hp=&adxnnl=1&oref=slogin&adxnnlx=1221062427-esV5n/LUnuQvwqhqjUGKyA. Smaller banks, however, will have limited options for similar action and won’t be able to absorb the risk. Private investors are not interested in adopting the burden, either.
The impact in the real estate auction market is on the sell side. This reduction in liquidity makes it harder to sell properties and there are a reduced number of buyers who can obtain financing. The fewer options each side has, the more they will consider unconventional methods of real estate disposition, such as real estate auctions.
Attorney Wallace J. Wolff, Chief Operating Officer of Sheldon Good & Company, has over 25 years of experience in dealing with real estate as the head of several bank trust and wealth management departments. Prior to joining Sheldon Good & Company, Mr. Wolff managed the trust department for a 50+ branch, $2.5 billion Chicago area bank for 22 years. Mr. Wolff also served as a bank director for many years.
Wednesday, August 27, 2008
Welcome to the Market, LA Times Media Group
We’re pleased to see the Los Angeles Times Media Group embracing the use of auctions for the sale of non distressed real estate. http://www.latimes.com/business/la-fi-times23-2008aug23,0,3290447.story
From what we can tell they are basically following the same model that eBay and other auction posting organizations are doing. They’re not adhering to the traditional real estate auction model which requires knowledgeable professionals to evaluate the real estate, select the proper auction process, create viable minimum bids and or reserve prices and create credibility that at the end of the auction process the property will in fact be sold.
Kudos to them – in our experience of being the leader in the real estate auction industry for some 40 years plus, the ZetaBid venture will simply expand the acceptance of the auction process for selling quality US real estate as is the case in other parts of the world like Australia and the U.K. (Click here to read the article in National Real Estate Investor Magazine that ranks us as the top real estate auction company: http://nreionline.com/finance/investors/real_estate_hear_bid_0701/index.html)
Integrating Live With Broadcast
There are many ways to integrate online and offsite bidding for real estate auctions beyond just conducting the whole auction online. Sheldon Good & Company has done this successfully on several occasions.
Simulcasting Online
In Jackson Hole, WY we simulcast the live real estate auction online. 85% of the bids came in online from buyers who saw the property but it felt it was not convenient to return for the auction. We had similar results for two subsequent auctions of fractional at the Teton Club. Click here for an article that helped promote the auction and the online bidding component http://www.snowboard-revolution.com/news/Properties-to-be-auctioned-at-Jackson-Hole.html and here to see how the online component of the auction worked and to view results of the auction: http://www.proxibid.com/asp/AuctionsByCompany.asp?ahid=1206.
Phone Bank Bidding
We’ve employed phone bank bidding in several real estate auctions. At Grand Summit in Park City, UT, the auction was conducted in Salt Lake City but we operated a phone bank with 6 people taking bids which worked really well. Click here to read all about it http://lhonline.com/mag/auctions_redux/.
Phone Patch
A similar tactic was integrated when Sheldon Good & Company conducted three auctions of large portfolios of real estate, this time manufactured homes for the client Affordable Residential Communities. Click here to read the press release http://www.sheldongood.com/news.php?id=7&listing=206 and an article about the auction http://www.bizjournals.com/denver/stories/2005/10/31/daily69.html. The properties were located all over the US. For the second and third auctions, we employed a phone bank where bidders called in and were patched in to the auction via conference call, then bid by hitting pound. An operator manned a computer at the auction would connect to the person to get information about their bids.
Simulcasting
This technology helped sell the Trump Plaza via real estate auction in West Palm Beach, FL. The market was scattered across the Eastern seaboard. Therefore, we conducted the physical auction in Palm Beach, and then simulcast it in New York and Chicago. 60% of the bids were from Palm Beach, 25% from New York and 15% from Chicago. This auction is mentioned in this article, click here http://sf.therealdeal.com/articles/real-estate-auctions-spark-sales.
Steve Good is Chairman and CEO of Sheldon Good & Company. He is an attorney, Accredited Auctioneer of Real Estate, licensed REALTOR in several states and author of a top-selling book; Churches, Jails and Gold Mines...Mega-Deals from a Real Estate Maverick (Kaplan, hardcover). The book features an afterword by Donald Trump.
From what we can tell they are basically following the same model that eBay and other auction posting organizations are doing. They’re not adhering to the traditional real estate auction model which requires knowledgeable professionals to evaluate the real estate, select the proper auction process, create viable minimum bids and or reserve prices and create credibility that at the end of the auction process the property will in fact be sold.
Kudos to them – in our experience of being the leader in the real estate auction industry for some 40 years plus, the ZetaBid venture will simply expand the acceptance of the auction process for selling quality US real estate as is the case in other parts of the world like Australia and the U.K. (Click here to read the article in National Real Estate Investor Magazine that ranks us as the top real estate auction company: http://nreionline.com/finance/investors/real_estate_hear_bid_0701/index.html)
Integrating Live With Broadcast
There are many ways to integrate online and offsite bidding for real estate auctions beyond just conducting the whole auction online. Sheldon Good & Company has done this successfully on several occasions.
Simulcasting Online
In Jackson Hole, WY we simulcast the live real estate auction online. 85% of the bids came in online from buyers who saw the property but it felt it was not convenient to return for the auction. We had similar results for two subsequent auctions of fractional at the Teton Club. Click here for an article that helped promote the auction and the online bidding component http://www.snowboard-revolution.com/news/Properties-to-be-auctioned-at-Jackson-Hole.html and here to see how the online component of the auction worked and to view results of the auction: http://www.proxibid.com/asp/AuctionsByCompany.asp?ahid=1206.
Phone Bank Bidding
We’ve employed phone bank bidding in several real estate auctions. At Grand Summit in Park City, UT, the auction was conducted in Salt Lake City but we operated a phone bank with 6 people taking bids which worked really well. Click here to read all about it http://lhonline.com/mag/auctions_redux/.
Phone Patch
A similar tactic was integrated when Sheldon Good & Company conducted three auctions of large portfolios of real estate, this time manufactured homes for the client Affordable Residential Communities. Click here to read the press release http://www.sheldongood.com/news.php?id=7&listing=206 and an article about the auction http://www.bizjournals.com/denver/stories/2005/10/31/daily69.html. The properties were located all over the US. For the second and third auctions, we employed a phone bank where bidders called in and were patched in to the auction via conference call, then bid by hitting pound. An operator manned a computer at the auction would connect to the person to get information about their bids.
Simulcasting
This technology helped sell the Trump Plaza via real estate auction in West Palm Beach, FL. The market was scattered across the Eastern seaboard. Therefore, we conducted the physical auction in Palm Beach, and then simulcast it in New York and Chicago. 60% of the bids were from Palm Beach, 25% from New York and 15% from Chicago. This auction is mentioned in this article, click here http://sf.therealdeal.com/articles/real-estate-auctions-spark-sales.
Steve Good is Chairman and CEO of Sheldon Good & Company. He is an attorney, Accredited Auctioneer of Real Estate, licensed REALTOR in several states and author of a top-selling book; Churches, Jails and Gold Mines...Mega-Deals from a Real Estate Maverick (Kaplan, hardcover). The book features an afterword by Donald Trump.
Monday, August 18, 2008
The World Loves Auctions
On July 27, 2008, an article appeared in the St. Petersburg Times (http://www.tampabay.com/news/business/relaestate/article742807.ece) called, “Desperation Bid.”
In this article the reporter references several people who have tried to sell their homes conventionally without success, so they turned to eBay.
One of the homeowners is quoted as saying, “The exposure you get on eBay is priceless.”
This point is illustrated perfectly in my article, “The eBay Effect” http://www.sheldongood.com/news.php?listing=253.
I wrote the article in 2007 for the Certified Commercial Investment Member (CCIM) Institute in conjunction with one of our associates here at Sheldon Good & Company. We addressed how eBay’s popularity has improved the appetite for using auctions to sell all sorts of goods, and that the regular use of auctions to sell personal property and other like items has basically removed the taint of distress historically associated with real estate auctions.
In a nutshell, the world loves auctions.
It is therefore curious that the author of this article equates the use of auctions for real estate via eBay as an indicator of distress sales.
Simply put, if everything else listed on eBay is being sold for good reason without distress, why is real estate sold on eBay automatically assumed to be distressed?
The fact is, it isn’t.
Our firm has vast experience conducting real estate auctions for all sorts of properties – we’ve handled over 40,000 auctions since 1965 in over 100 different asset classes, often to sell commercial or industrial property, real estate that’s difficult to value or high end trophy residential property.
There are plenty of times when a seller opts to use an auction because their property is difficult to value, or to expand the market beyond a certain geography. An auction can help a property owner understand where the market lies for the property. The competitive nature of an auction is exciting because the buyer can compete directly with the other potential buyers, and the seller benefits because they obtain maximum value for their property.
As pointed out in our CCIM Magazine article, using eBay as a real estate auction tool isn’t really a binding process. It is merely a posting mechanism for sellers and buyers. No binding bids are received, it is simply an invitation to negotiate which may or may not produce results.
The reality is that the process eBay uses for real estate is not consistent with the auction process being used by companies like ours. There is a difference in quality of auctions. The sellers in the Tampa Bay area may not have had success with eBay simply because that wasn’t the right auction methodology or sales venue for their property. In 2007, according to the National Auctioneers Association, the amount of real estate sold at auction was $58.5 billion dollars – that’s an increase of over 25% since 2003.
Steve Good is Chairman and CEO of Sheldon Good & Company. He is an attorney, Accredited Auctioneer of Real Estate, licensed REALTOR in several states and author of a top-selling book; Churches, Jails and Gold Mines...Mega-Deals from a Real Estate Maverick (Kaplan, hardcover). The book features an afterword by Donald Trump.
In this article the reporter references several people who have tried to sell their homes conventionally without success, so they turned to eBay.
One of the homeowners is quoted as saying, “The exposure you get on eBay is priceless.”
This point is illustrated perfectly in my article, “The eBay Effect” http://www.sheldongood.com/news.php?listing=253.
I wrote the article in 2007 for the Certified Commercial Investment Member (CCIM) Institute in conjunction with one of our associates here at Sheldon Good & Company. We addressed how eBay’s popularity has improved the appetite for using auctions to sell all sorts of goods, and that the regular use of auctions to sell personal property and other like items has basically removed the taint of distress historically associated with real estate auctions.
In a nutshell, the world loves auctions.
It is therefore curious that the author of this article equates the use of auctions for real estate via eBay as an indicator of distress sales.
Simply put, if everything else listed on eBay is being sold for good reason without distress, why is real estate sold on eBay automatically assumed to be distressed?
The fact is, it isn’t.
Our firm has vast experience conducting real estate auctions for all sorts of properties – we’ve handled over 40,000 auctions since 1965 in over 100 different asset classes, often to sell commercial or industrial property, real estate that’s difficult to value or high end trophy residential property.
There are plenty of times when a seller opts to use an auction because their property is difficult to value, or to expand the market beyond a certain geography. An auction can help a property owner understand where the market lies for the property. The competitive nature of an auction is exciting because the buyer can compete directly with the other potential buyers, and the seller benefits because they obtain maximum value for their property.
As pointed out in our CCIM Magazine article, using eBay as a real estate auction tool isn’t really a binding process. It is merely a posting mechanism for sellers and buyers. No binding bids are received, it is simply an invitation to negotiate which may or may not produce results.
The reality is that the process eBay uses for real estate is not consistent with the auction process being used by companies like ours. There is a difference in quality of auctions. The sellers in the Tampa Bay area may not have had success with eBay simply because that wasn’t the right auction methodology or sales venue for their property. In 2007, according to the National Auctioneers Association, the amount of real estate sold at auction was $58.5 billion dollars – that’s an increase of over 25% since 2003.
Steve Good is Chairman and CEO of Sheldon Good & Company. He is an attorney, Accredited Auctioneer of Real Estate, licensed REALTOR in several states and author of a top-selling book; Churches, Jails and Gold Mines...Mega-Deals from a Real Estate Maverick (Kaplan, hardcover). The book features an afterword by Donald Trump.
Friday, August 1, 2008
Auctions Are Here To Stay
On July 31, 2008 the Mobile Press-Register wrote an article about real estate auction activity taking place on the Alabama Gulf Coast.
http://www.al.com/business/press-register/index.ssf?/base/business/121715022486380.xml&coll=3
Sheldon Good & Company President Alan Kravets offers some pertinent commentary on this article:
Auctions are here to stay. They are not increasing in use just because of a down market. Auctions work well in a rising or falling market.
In a market like Baldwin County where supply exceeds demand and it’s acknowledged as a great place to own a residence on one of the best beaches in America, the auction provides the buyer with the opportunity to name their own price without negotiation. The Seller can use the auction as a call to buyers that they are ready and willing to sell – at San Carlos – at least 15 units.
The auction price will be the market for those units and will be accepted as such by appraisers and lenders.
According to the National Auctioneers Association 2007 report, the auction industry grew 5.3% to $270 billion dollars in 2007. This is a more than 30% increase since 2003. Real estate comprises 22% of the $270 billion industry with a whopping $59 billion in real estate sold at auction.
Please note that any time there is this volume of sales, there is a commercial and legal framework by which this is accomplished.
Alan Kravets is President and General Counsel of Sheldon Good & Company. He is a licensed real estate broker in 15 states.
Monday, July 28, 2008
Real Estate Auctions for Developer Closeouts
On 7/25 The Chicago Tribune wrote an article about real estate auctions in the Chicagoland market, featuring an auction of 53 homes belonging to Neumann Homes following their bankruptcy filing.
http://www.chicagotribune.com/classified/realestate/advice/chi-local-scene_chomes_0725jul25,0,2004201.story
The article only reveals part of the story. Steve Good, Chairman and CEO of Sheldon Good & Company, comments on the article:
“The Neumann Homes case is typical to the ones that we’re seeing regularly in Greater Chicago as well as throughout the country. Basically, whether the circumstances are for new home product or conversion product, the real estate development community uses auctions to launch or close out non-distressed existing developments.
While the auction methodology can be beneficial to some sellers in financial distress, this is not the only application where a real estate auction makes sense for a residential home developer.
Our company recently worked with a seller in Highland Park, IL. This was the owner of a brand new luxury condominium property in an elite area. Unlike the Neumann Homes situation, the owners of Ravinia Crossings had no debt of any kind on this property, owning it free and clear despite the fact that there had been no sales using traditional brokerage methods for a year and a half. Basically, the local brokerage community could not find the market price points for this inventory. The sellers engaged Sheldon Good & Company to auction all nine units, subject to stated minimum bids in order to find the market and sell out the building. The minimum bids at the auction were exceeded by an average o f 70% and the entire building was sold out in one day. Two-thirds of the units closed within 10 days of the auction. See the post-auction press release here: http://www.sheldongood.com/news.php?listing=254.
A similar situation handled by our firm last December when Sheldon Good & Company worked with the developer of Aspen Shores, a condominium product with waterfront views in Wauconda, IL. This seller used the auction as a closeout device. They had previously sold approximately 75% of the units in the building via traditional brokerage. The seller used the auction to successfully sell 18 of the remaining units – nine were sold at the auction, nine more after the auction.
In both cases the majority of the buyers were owner occupants as opposed to deep discount speculators or investors.
Sheldon Good & Company expects over the next 60 days to see another $100 million in this type of product come through our pipeline. “
Steve Good is Chairman and CEO of Sheldon Good & Company. He is an attorney, Accredited Auctioneer of Real Estate, licensed REALTOR in several states and author of a top-selling book; Churches, Jails and Gold Mines...Mega-Deals from a Real Estate Maverick (Kaplan, hardcover). The book features an afterword by Donald Trump.
http://www.chicagotribune.com/classified/realestate/advice/chi-local-scene_chomes_0725jul25,0,2004201.story
The article only reveals part of the story. Steve Good, Chairman and CEO of Sheldon Good & Company, comments on the article:
“The Neumann Homes case is typical to the ones that we’re seeing regularly in Greater Chicago as well as throughout the country. Basically, whether the circumstances are for new home product or conversion product, the real estate development community uses auctions to launch or close out non-distressed existing developments.
While the auction methodology can be beneficial to some sellers in financial distress, this is not the only application where a real estate auction makes sense for a residential home developer.
Our company recently worked with a seller in Highland Park, IL. This was the owner of a brand new luxury condominium property in an elite area. Unlike the Neumann Homes situation, the owners of Ravinia Crossings had no debt of any kind on this property, owning it free and clear despite the fact that there had been no sales using traditional brokerage methods for a year and a half. Basically, the local brokerage community could not find the market price points for this inventory. The sellers engaged Sheldon Good & Company to auction all nine units, subject to stated minimum bids in order to find the market and sell out the building. The minimum bids at the auction were exceeded by an average o f 70% and the entire building was sold out in one day. Two-thirds of the units closed within 10 days of the auction. See the post-auction press release here: http://www.sheldongood.com/news.php?listing=254.
A similar situation handled by our firm last December when Sheldon Good & Company worked with the developer of Aspen Shores, a condominium product with waterfront views in Wauconda, IL. This seller used the auction as a closeout device. They had previously sold approximately 75% of the units in the building via traditional brokerage. The seller used the auction to successfully sell 18 of the remaining units – nine were sold at the auction, nine more after the auction.
In both cases the majority of the buyers were owner occupants as opposed to deep discount speculators or investors.
Sheldon Good & Company expects over the next 60 days to see another $100 million in this type of product come through our pipeline. “
Steve Good is Chairman and CEO of Sheldon Good & Company. He is an attorney, Accredited Auctioneer of Real Estate, licensed REALTOR in several states and author of a top-selling book; Churches, Jails and Gold Mines...Mega-Deals from a Real Estate Maverick (Kaplan, hardcover). The book features an afterword by Donald Trump.
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