Follow-Up: This Weekend’s Waterfront Property Auction
Posted on November 5th, 2007 by Jonathan Dalton
Remember the Gilbert home with a list price in the MLS of $199,000 that actually was the subject of a weekend-long auction? My clients received a call yesterday notifying them that the high bid was $275,000.
Considering the list price was $349,000 before the auction it remains to be seen whether the sellers really will accept $75,000 less than they wanted only a week ago. Since there is no apparent financial distress I’d tend to lean toward “no, they won’t.”
There are two interesting sidelights to this one …
1) My clients mentioned they had an agent and asked what I presume were the sellers if that would pose a problem. The sellers said paying a second agent could cut into their margin. The house is listed with a variable commission - one commission rate if there are two agents, the other if there’s only one. But this puts the lie to the myth that buyers will save money by going directly through the listing agent; the difference in commission goes back to the seller, not the buyer.
2) On one of the bubble blogs a few months back there was a soon-to-be-licensee lecturing that the best possible selling strategy for a home on the market for an extended period was an auction. The tone was that those of us in the profession clearly either weren’t smart enough to come up with the concept or were so worried about the money we’d “lose” at a lower selling price that we’d never broach the topic.
What the wanna-be/newbie failed to recognize is auction strategies rarely work, at least if the goal of the seller is to receive close to what they perceive as full value. Buyers see the list price of $199,000 and that’s their new baseline. On this house, two full days of open houses and advertising the bogus price resulted in a bid $75,000 below the last legitimate list price - that’s nearly 20% low.
Great strategy, my friends.
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[…] I really have to thank Jonathan Dalton for doing a bit of my homework about the house in Gilbert for $199,000. This was on my buyer’s list to explore, so getting the scoop from him was a real time […]
Auctions worked several years ago. This is a tough market. I’m hearing 10 months average on market. I’ve heard of falling prices ETC. I think things are going to get worse before they get better.