Real Estate Investing

In a class this morning, Mimi from our auction team was asked by another agent about how to conduct an eBay auction for a house.  Mimi’s answer was very eye opening, “You don’t.”

Her colleague Dale further explained that unless you’re the actual owner of a house, real estate agents can not auction homes on eBay unless they are licensed by the state as auctioneers.  Real estate broker Tom from St. Louis, Missouri says on the Homes & Agents site that you only have to be a licensed real estate agent to sell homes through online auctions, so this points to rules varying from state to state.

I suspect you could auction a mobile home - without the land - because it’s considered personal property rather than real property.  For example, if a seller calls me who lives in a mobile home park to list their trailer, I could not because Realtors sell LAND and any house or building on it is considered an improvement that adds value to the land.

Overall, regular real estate auctions are picking up.  Douglas Heddings of True Gotham Real Estate Blog says,

They key once again to creating the perception of value is to aggressively price the property to appeal to a larger pool of buyers.  A tricky task in today’s less heated market. 

In today’s less heated market, everything is a tricky task - from finding the right marketing strategy to pricing to figuring out how to compel a buyer to offer a fair market price when they’re under the perception that sellers are giving their homes away in a buyers’ market!

Meanwhile, I visited the real estate auctions on eBay.  In one hour, 47 minutes, the bidding will be over for a home in Flint, Michigan.  Current bid: $5300.  Two bedrooms, one bath.  “Great investment property.”

We’ve talked about home auctions. We’ve talked about Internet marketing. But what about Internet home auctions? Indeed, eBay is now the marketplace where more than 4,364 properties are sold each month, the internet auction company claims.

eBay says you can offer virtual home tours around the clock and reach a much broader and more diverse audience. Plus, you can benefit from the excitement and increased prices that an auction atmosphere can generate. Anyone who has ever found themselves blindsided with a regrettable eBay purchase understands that all too well. You just want to win so badly nothing else matters. Click now, think later.

You can purchase eBay authorized real estate signs to post, telling the local public your deadline and auction web site. It sounds like a home seller’s dream, a realtor’s nightmare. The drawback - there are apparently no contractual obligations to pay for real estate on eBay, as is the case with other purchases on the site. The cost is minimal at $150 for a 30-day ad or auction listing, $300 for a 90-day ad listing and no fees or commissions on the final sale price. Hey, it worked for Bobby Cave, owner of the 13-acre town of Albert, Texas. Cave is $3.8 million richer after an Italian buyer purchased his “town” over eBay. For frustrated home sellers at their wit’s end, eBay may be just the saving grace they need.

Homeowners who bought in with the impression that their new neighborhoods were elite are actually seeing more “For Rent” signs cropping up around their neighborhoods. Deluxe kids’ playgrounds and Mercedes are being replaced by yellowing lawns and dark windows. Newsweek had an amusing article about “Solitude Point Avenue” in Henderson, Nevada’s prestigious Black Mountain Vista community. Solitude Point is a street with former half-million-dollar duplexes, many of which now sit dark, empty and neglected. Quite an ironic street name, don’t you think?

In many cases, condos and luxury homes are going up for rent or auction, like concert promoter Jack Boyle’s McLean Mansion in the D.C. market. The $10.3 million, 25,000-square-foot home was auctioned in August for an undisclosed amount after Boyle tried unsuccessfully to sell it on the market. We’ve discussed the new home auction trend, but now it has spread to the unthinkable, pre-existing luxury homes.

Toll Brothers, one of the nation’s premier builders of luxury homes, is reporting a 36-percent revenue drop in its fourth quarter numbers. Toll Brothers has previously been able to keep its head above water by offering incentives. CEO Robert Toll accurately stated that decreasing prices only angers neighboring homeowners who bought previously at full price. Now, the company is looking at 417 cancelled contracts at an average of $788,000 each. The average value of the contracts that did not fall through was $557,000. One wonders whether Mr. Toll will change his perspective on price decreases.

So how are luxury homes faring? Not well. The picture is pretty bleak. Amongst endless speculations as to the cause and the cure, one thing’s for sure - this is going to be one fascinating train wreck to watch.