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.
Monday, July 28, 2008
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