Friday, February 22, 2008
Homeowners turn to the auction block for a sale
I'm located in St. Louis and very interested to see how this auction on Saturday turns out. Auctions are still new in many areas, St. Louis included.
By Riddhi Trivedi-St. Clair
ST. LOUIS POST-DISPATCH
Friday, Feb. 22 2008
Like so many others trying to sell their house, Ann Auer, is finding this a frustrating time. Her four-bedroom, two-car garage house in south St. Louis has been listed for $189,000 since July with no takers. She and her husband have already moved and are maintaining two houses. That makes them "motivated sellers," Auer said.
Now Auer is trying something unconventional to get her house sold: a real estate auction."The market is so stagnant. I thought this (an auction) was an unusual marketing tactic and worth giving a shot," Auer said.
Auer is one of almost 50 sellers hoping that an auction will help get their house sold, or at least generate some interest from potential buyers who otherwise seem to be sitting on the sidelines.
Phil Hunt and Sonny Brockman, agents with Prudential Advantage Realtors in Webster Groves and co-owners of St. Louis Auction, are organizing the auction to be held Saturday morning.
Whether it's a sign of desperation or inspiration remains to be seen. Auctions are a creative alternative in a slow market, Hunt said." We are not getting enough showings and contracts. We need to do something different to encourage buyers to buy and sellers to negotiate," Hunt said.
"Auctions are one of the oldest and most proven methods (to sell something)."Auctions — for everything from livestock to art — are not a new phenomenon. And they were fairly common for houses a few years ago in hot markets like Florida and California. They are generally used to create competition among buyers and obtain a better price for the seller.
But house auctions are unusual in the St. Louis area except for foreclosed properties. Some local real estate professionals are skeptical that auctions will work, especially in a slow market. "There is just so much property out there right now. I think you would have a much better chance if you get your house in the best condition inside and out and price it competitively, maybe even a little under everyone in the neighborhood," said Jane Nuckolls, an agent with the St. Louis office of Coldwell Banker Gundaker.
John Williams, owner of Missouri Online Real Estate based in Chesterfield, has a different perspective. The purpose of an auction, he said, is to create a "buying mind-set and environment."Truth is, there are properties sitting around that should sell but people are waiting for them to get cheaper," Williams said. "If someone is interested in a property and is faced with possibly losing that property to another buyer in an auction, it might encourage them to buy."
About 35 buyers have pre-registered for the auction and, Hunt said, he has received another 100 or so phone calls. All the registered buyers must be pre-approved by a lender, he said, and there will be a lender on site for last-minute registrants.
The auction houses range from $40,000 to $1.2 million and none is involved in a foreclosure, Hunt said. All the properties are listed in the Realtors' regional house listing service, giving buyers the chance to look at them prior to the auction.
Sellers pay a $100 fee to include their house in the auction and another $400 if the house sells, Brockman said. There is no fee for buyers. There is no minimum bid, but if the highest bid is unacceptable, the seller has the right to refuse a deal, Hunt said.
Tim Meyer, manager of the St. Louis office of Coldwell Banker Gundaker, sees that as a potential pitfall."Buyers come to an auction expecting a deal," Meyer said. "I went to an auction recently that had about 25 attendees and the auctioneer was still unable to obtain a minimum price bid."
Putting a house on auction may convey desperation to the buyers, Nuckolls said, making them much more likely to bid low. "And if they don't get what they see as a good deal, they will walk," Nuckolls said. "I would never put one of my sellers' properties on auction."
Brockman and Hunt aren't setting their sights too high. Before organizing the auction, they spoke with other companies around the country that have conducted the auctions. She will consider the auction successful if 20 percent of the properties are sold, Brockman said.
As for Auer, she considers the $100 an investment and the auction as another shot at attracting buyers. The auction sign in her front yard attracted six people to view the property at an open house, Auer said. "I hadn't had that many showings at an open house in months," she said.
"I don't know if the house will sell because this is a new tactic here in St. Louis. But to me it is another marketing tool."