Buyers competed for condos in website auction

Believed to be a first for area Addressed high demand for lofts

Apr. 22, 2006. 01:00 AM

DEBORAH BACH

SPECIAL TO THE STAR

SEATTLE?Recent buyers of new condominiums in Seattle are likely familiar with what can be a stressful, cutthroat process. It typically goes like this: The buyer registers at the development's website and is invited to an information meeting at a sales centre with other potential buyers. Next is a scheduled appointment at which the buyer must decide whether to commit, or risk losing the opportunity.

Sharon Parmenter, a real estate agent at Windermere Real Estate Wall Street in Seattle's Belltown neighbourhood, recalls a client who tried to buy in the Cosmopolitan, a 34-floor condo tower at Ninth Ave. and Virginia St. The man could only get an appointment late on the day of the sale and by that time, all the units were gone.

"He's still furious," Parmenter said.

Wanting to spare buyers from that pressure cooker and find a simpler way to address high demand, the builder of a 20-unit loft development in the Madison Valley neighbourhood held what is believed to be the area's first Internet condo auction. Mike McClure, a partner in Kirkland-based MJR Development, had the idea while thinking about the new home-valuation website, Zillow.com, and wondering how to best handle the 700-plus inquiries that came in about Madison Lofts.

"I kept thinking, there's got to be a way to make this process better," McClure said. "We started to see stories about people irritated with the old process. You've been on a list for six months, and you did everything right, and you show up to your appointment and you have no chance."  To avoid that scenario, the company held an auction from 8 a.m. March 29 to 5 p.m. April 2. Potential buyers registered on the development's website, http://www.madison-lofts.com, and then attended information meetings, which began March 22, at which they viewed building renderings and received a CD with an electronic "fly-through" tour of the development, slated for completion around the end of the year.

Buyers then went to a secured website to bid on the units they wanted. Bids could be raised or lowered at any time before the deadline, and buyers could see how much others were willing to pay. The highest bidder got the unit at the second-highest bidder's price plus $1,000 (all figures U.S.). The lofts, located on Madison Ave. just southwest of Lake Washington Blvd. overlooking the Arboretum, sit above ground-floor retail space and range from about 900 to 1,800 square feet. Minimum prices range from about $400,000 to $800,000, and the most expensive units have private rooftop decks, some larger than 1,000 square feet.

McClure attributes the high level of interest to the strong market and the relative scarcity of condos in the area. The auction didn't replace the traditional process and he said that the company encouraged agents representing buyers to attend the informational meeting and be present when purchase agreements were signed. But there can be potential drawbacks for buyers who find themselves in an online bidding frenzy. Corey Patt, an agent at Coldwell Banker Bain, said purchasers could end up paying more than a unit's worth. Not listing the units on conventional real estate sites or through the Northwest Multiple Listing Service also eliminated buyers from out of town, or Seattleites who didn't know about the development.

On the other hand, Patt said, it would have been helpful to buyers to know what competing buyers were willing to pay, since sellers sometimes accept a higher offer without giving lower bidders a chance to counteroffer. Jim Reppond, an associate broker at Coldwell Banker Bain, said potential buyers involved in an online auction need to ensure with their lenders that a sale was subject to an appraisal. "What if you ended up paying $700,000 on a unit that everybody thought was going to go for $400,000 and it doesn't appraise for $400,000, or you have a 90 per cent loan?''

Matthew Gardner, a consultant on the project, said the approach makes sense as the condo industry moves from developments being built one after another to projects selling at the same time, competing for the same pool of buyers. "Every developer and every marketing group who represents these developers are going to have to look at different avenues ? what's going to set apart their product from everything else?"

Seattle Post-Intelligencer

 

Home seizures' ripple effect
More inventory could stress housing market

By Aldo Svaldi Denver Post Staff Writer

Thousands of homes in foreclosure could put Colorado's housing market under severe stress this summer, according to real-estate experts. Colorado reported 5,392 foreclosures in March, making for the highest rate per household of any state, according to RealtyTrac, a provider of foreclosure listings. Of the Colorado foreclosures: Thirty-one percent, or 1,648, were in the preforeclosure or notification stage, where delinquent borrowers have the best chance to keep their property. Fifty-four percent, or 2,894, were headed to auction, where outside investors can claim the property by paying off the mortgage. Sixteen percent, or 850 homes, were in the hands of lenders, who are often forced to sell the properties for whatever they can get. Should a larger share of homes in the auction phase end up with banks and mortgage companies, that would indicate a troubling weakness in Colorado's home market. Such a surge could put additional pressure on markets where the number of unsold homes has swollen. "If that number starts to spike, that is a red flag," said Rick Sharga, a vice president with Realty- Trac, a California company that tracks foreclosures through public records. Most of the homes that are in the auction process don't end up with lenders, because either homeowners find a buyer or investors step in and pay off the mortgage, Sharga said. One of every 339 homes in Colorado is in foreclosure, but the percentage of homes owned by lenders is below the national average of 19.6 percent, Sharga said. In the past 12 months, the inventory of unsold homes in the seven-county metro area has gone from about 23,000 to more than 27,300, said Mike Rinner, a senior real-estate analyst with the Genesis Group in Englewood. Should buyers not step up in sufficient

 

World's Largest Online Real Estate Auction Nets Community $60 Million

OVERLAND PARK, Kan.--(BUSINESS WIRE)--March 9, 2006--An auction believed to be the largest online sale of real estate in the world recently earned more than $60 million for a Florida community that earlier considered taking a private treaty sale offer of just $12 million for the properties. The sale shows the success of the auction method and the new trend of online real estate auctions, observers said.

Two years ago, 1,900 lots of tax delinquent land were available from the city of North Port, Florida, for $1,000 a piece. During a recent online real estate auction, the lots sold for an average of $32,000 each with the most expensive lot being sold for just under $80,000. In the recent past these lots may have been sold only by traditional real estate listings or by traditional auction alone, but North Port-area officials chose to sell by using an auction company that sold the lots on the Internet, gaining a wider audience with strong marketing. The firm selected by the city and county to sell the lots that came into public ownership after owners failed to pay property taxes.

More than 200 additional lots will be available during a final online auction running Thursday, March 23, through Tuesday, March 28. While a final live auction of remaining properties was scheduled, officials now believe the last auction will be unnecessary.

"The way things are going, all of the lots may sell out completely, said County Manager of Policies and Projects Terry Gilbert in an interview with the Sun and Weekly Herald.

According to County Commissioner Joe Thaxton, the lots were put on the tax delinquent rolls between 1999 and 2004. At one point, developers offered Sarasota county $12 million for the lots. The county was heavily criticized by residents, government officials and local media for not taking the offer at the time. Rather than selling the entirety to a single developer, the county commissioners decided to give community members and regular citizens the opportunity to purchase a lot during the online auction.

While the net proceeds of the online auction will be split between Sarasota County (45%) and the city of North Port (55%), the lots are also expected to generate an additional yearly property tax revenue of approximately $235,000 for the county, $281,000 for North Port and $452,000 for the school district. Fifty of the original lots were set aside from the auction for future use by the school district.

With more than 6,000 members from throughout the world, the National Auctioneers Association is the largest organization of its kind dedicated to promoting the auction method of marketing and enhancing the professionalism of its members. Member benefits range from federal legislative representation to comprehensive continuing education programs, including coursework to earn the following professional auctioneer designations: Certified Auctioneers Institute (CAI), Accredited Auctioneer, Real Estate (AARE), Graduate, Personal Property Appraiser (GPPA) and Certified Estate Specialist (CES). The organization was founded in 1949 and is headquartered in Overland Park, Kan. For more information on the NAA and its programs, log on to www.auctioneers.org.

 

Tuesday, March 7, 2006

Cooling? Housing prices here still on rise
Following U.S. trend, sales dip -- but area's market called strong

By DEBORAH BACH
P-I REPORTER

A cooling trend in the national real estate market seems to be having little effect on King County, despite a dip in pending home sales here. Pending sales of single-family homes and condos in King County dropped 6.2 percent in February over the same month a year ago, but prices continued to rise. In King County, the median price for single-family homes rose 14.7 percent to $392,950. Condo prices rose 11 percent to $228,950.

Real estate agents are reporting a strong rebound from a holiday slowdown in 2005 that was more pronounced than the previous couple of years. Dick Fulton, a managing broker at Coldwell Banker Bain, said last month's drop in pending sales -- reflecting offers made and accepted, but not yet closed -- isn't cause for concern.

"This year we had to build the momentum, whereas last year we didn't because the momentum was already there," he said. "I'd have to say the market is pretty strong. We're getting multiple offers on the properties that are priced properly."

Prices are increasing at a quicker pace in areas outside Seattle, as high costs push buyers farther out. In Snohomish County, the median cost of a single-family home rose 22.6 percent over last February, to $324,950. (The median price is the price at which half the homes cost more and half cost less.) Skagit County saw an increase of 29.6 percent, to $253,700.

"The trend seems to be very steady and clear, that the market in Seattle, because of its appreciation last year, has slowed down and it's the outlying areas ... that are now seeing the more accelerated appreciation," said Jim Reppond, an associate broker at Coldwell Banker Bain.

"We see that over and over again. It seems to work in bands -- it starts downtown and goes to the outlying neighborhoods, and then to suburbs and then further out in the counties."

Still, prices in the region have not spiked as they have in markets such as Las Vegas and Southern California, making increases still palatable for some home buyers here. Prices rose nearly 50 percent in the Phoenix area last year, while in Manhattan, the median price for an apartment was $760,000 at the end of last year, up from $605,000 at the end of 2004.

"If you just look at the West Coast, with the median home prices in say, San Francisco or San Diego, they're over $500,000," said Jill Jacobi Wood, president of Windermere Real Estate Co. "Here, appreciation is still high. I think (prices) have been undervalued here, and I think they're starting to catch up."

The overall scenario in King County is much brighter than in other markets nationwide, where homes are sitting on the market longer and the inventory of properties for sale is creeping up. In markets along the East and West coasts, some have noted a standoff between buyers waiting for the real estate bubble to burst and sellers holding firm to their target prices.

At the same time, the available housing stock nationally has increased, with the National Association of Realtors reporting a rise of 36 percent in the number of homes for sale between January 2005 and this January. Home sales across the nation dropped 5 percent over last January.

The Commerce Department reported that January sales of new single-family homes across the United States fell 5 percent, the fourth decline in seven months, and the number of unsold new homes hit a record high.

But in King County, bound geographically by water and mountains, lack of available homes for sale continues to be a challenge. Agents put 3,471 houses and condos on the market in February, compared with 3,734 during the same month last year. Seattle had 1,033 new listings in February, down from 1,141 last February.

Reppond said a dearth of condos for sale is prompting a price spike, particularly in downtown Seattle. At the moment, he said, there are only five condos listed in the downtown area for less than $300,000.

"There is a huge demand," he said. "More and more people are looking to downtown as the best living, lifestyle alternative, as opposed to spending so much time on the freeway and so much money in their gas tanks."

 

Home buyers rejoice
Market 'normalized' but still an increasingly good one for buyers

By: Jason Probst, The Press-Tribune
Monday, February 13, 2006 10:05 AM PST

Pico Van Houtryve/THE PRESS-TRIBUNE This home, 678 Young Way in Roseville, appraised at $445,000, is currently being offered at $40,000 below that, and has been on and off the market since last fall. Inventory of home listings in Roseville in December were up 272 percent compared to December 2004.

In the Sunrise Diamond Oaks neighborhood, the effects of the paradigm shift in the real estate market are never more obvious than in the simultaneous stories of two nearby properties.

This residential area, tucked away just west of East Roseville Parkway and the Galleria, is populated by well-kept three- and four-bedroom homes that mostly price out at under $500,000 - an increasingly rare confluence in the local real estate market.

But on this Tuesday, the relationship between buyers and sellers has obviously changed compared to a few moons ago, when a white-hot market forced tough decisions to be made in excruciatingly short timeframes.

At 680 Grider Drive, Christian Mackay and Abe Nelson are having the home they recently purchased inspected. The pair spent about two months on the market playing the newfound cards in the deck available to buyers - leverage - which is an increasing factor and feeling good about the results. The four-bedroom, three-bath unit is 1,735 square feet, and their closing offer of $410,000 was $9,000 below the listed price. They'll close escrow in three weeks and their entire home-buying process lasted about two months.

"We bid on one house (before buying)," Mackay said. "It was a bidding war and we went as high as we were going to go. This one is going to be easy to resell. It's not that stressful at all. Of course, it depends on when you are doing it."

A few blocks away, at 678 Young Way, investor Kevin Woody has a three-bedroom, two-bath, 1600-square-foot home that has been on and off the market since he purchased it in September. The house two doors down is on the market as well, with no one living in it. Woody's place is clean and neat, and a year or so ago probably would've been snapped up in mere days considering its proximity to the Galleria, good schools and the neighborhood.

"I've been buying houses for 27 years. I've seen the market go up and down. This house shows very well, and a lot of people have been shocked it's even still on the market," said Woody, who owns KD Properties. He typically has about 10 houses on the market at any given time. "The market's very peculiar. I watch it constantly. Roseville was one of those markets that got smoking hot, but now there's a lot of very cautious buyers out there. They all want fantastic deals."

He bought the home - which he said was appraised at $445,000 - at an auction for $356,000. The previous owner had not been able to keep up with the payments due to a creatively comprised financing deal that ultimately proved unmanageable. Between interest-only loans and second and third mortgages, those easy-in deals are increasingly less common as lenders tighten up criterion, he said. Because of this, he was able to get a good deal on the property at auction. "It's gonna happen a lot over the next 12 months," he said of loan defaults. "The owners borrowed 100 percent against its value and in a typical scenario, they couldn't keep up with the payments."

Since buying the property, it's been on and off the market he said, putting upgrades into it, including some additional landscaping. It's now listed for $405,000.

The prevalence of increasingly selective buyers, with tightened financing restrictions, has forced Woody to only deal with pre-approved clients to get ride of tire-kicking types who aren't legit, he said.

"It gets rid of about 40 percent of them," he said.

Craig Seydel, a realtor with Re/Max Gold, feels the market has slowed down but that's a relative to how bullish it was last year. And after a motivational seminar at Arco Arena on Wednesday, he summed up his thoughts on the feasibility of a market crash. Essentially, he's not buying the hype, which he feels is mostly media-driven.

"Zig Ziglar said the media have correctly predicted 18 of the last three recessions," he said.

Sellers must create a virtual tour for online listings, a key, he said, in attracting potential buyers. Also, some bring in professional stagers to utilize furniture and flower and candle arrangements to spruce up a listing. Seydel believes the turnaround from the low point - which he believes was last June or July - is already under way.

 

Feds offer seized-property deals online

KENNETH HARNEY
Kenneth Harney is a syndicated columnist.

February 10, 2006

Whether you're a first-time home buyer, an investor, vacation property buyer, historic preservation buff - or even looking for a boat to convert into a live-aboard residence - you are not shopping the market to the max unless you check out the federal government's best real estate resources: the combined property disposition program inventories of 10 agencies, all rolled into one online access point.

Want to buy a cabin in the woods near Lake Huron? Center-city rowhouses for rehab from Baltimore to Los Angeles? Raw land in Arizona, a lighthouse in the Atlantic, a condo in Puerto Rico, a development site in the U.S. Virgin Islands?

The offerings change daily, the realty sales hype is refreshingly restrained, and the caveats plentiful when you browse through the properties available from the Internal Revenue Service, Customs Service, Department of Housing and Urban Development, Veterans Administration, Small Business Administration, U.S. Marshals Service, U.S Army Corps of Engineers and the Federal Deposit Insurance Corp. Each of these agencies ends up with unwanted real estate through its own specialized activities.

HUD, VA, SBA, along with the final two of the 10, the General Services Administration and the Agriculture Department, foreclose on some of the properties they insure or finance. Customs, the IRS, and U.S. Marshals Service seize properties for nonpayment of taxes or criminal violations and then sell them on the open market.

Now there's an easy way to check out the bulging portfolios of these agencies. Go to HUD's real estate site - www .hud.gov/homes/homesforsale .cfm - and then link into any of the government agencies' separate offerings. The links also connect you to congressionally chartered Freddie Mac and Fannie Mae's property disposition sites. HUD's own portfolio tends to be the largest of the federal government, and it represents the most productive resource for anyone shopping for moderate-cost houses to live in or renovate as an investment.

The other agencies' sites are lesser-known, less visited and contain fewer properties for sale or bid. But they offer far more diverse and intriguing possibilities.

For example, the IRS' site offers houses for sale in some delightful getaway locations. How about a quaint six-bedroom, four-unit multifamily New England frame house in scenic Brattleboro, Vt.? In a visit to the Web site in early February, the property was heading for auction March 2 with a minimum bid of $41,589.

Like all the government property disposition Web sites, there's virtually none of the typical real estate agent hype. No "fabulous view" no "huge backyards" no "once-in-a-lifetime" opportunities. Along with a photo of the Brattleboro property, the IRS modestly describes it as being "located on a nice residential street near downtown." IRS marketers did note, more enthusiastically, that Brattleboro "is one of the towns listed in Norm Crampton's 'Make Your Move to One of America's Best Small Towns.'"Wow!

Want to buy a historic lighthouse? For that, you'll need to visit the General Service Administration's site, but bear in mind in advance that you will have to demonstrate you're part of a nonprofit group dedicated to historic preservation and have the financial wherewithal to maintain the lighthouse for the foreseeable future.

Looking for real estate opportunities in the Caribbean? How about a half-acre, $35,000 piece of land in "good" condition in St. Croix, U.S. Virgin Islands? It's for sale from the Small Business Administration, which also offers a former "restaurant/store/gas station turnaround opportunity near Fairbanks, Alaska, on two acres for $250,000." The SBA's site hypes the property not at all. In fact, it admits that it's only in "fair" condition and comes with a "contaminated tank/cleanup needed."

The U.S. Marshals Service link ties you into hundreds of asset categories - land, houses, boats, businesses and others - all "forfeited under laws enforced or administered by the U.S. Department of Justice" and its investigative agencies, including the Drug Enforcement Administration, the FBI and the INS.

Want to bid on a 36-foot boat in Texas that could be turned into a live-aboard residence? Then you need to go to the GSA's link via the hud.gov site. No minimum bid was stated as of early February, but you could buy a double-cabin "personnel boat" built in 1995.

You'll have to spend some money making it seaworthy - the GSA anti-hype promotion text revealed that repairs are required, parts are missing and "additional deficiencies are unknown." Plus, it's up on blocks, and you'll have to spend money moving it and transforming it into a live-aboard yacht.

But hey, you just might get it for a steal.

 

(I-Newswire) - (  EMAILWIRE.COM, January 28, 2006  )  Beloit, WI - A crowd of 150 filled the Beloit Auction gallery Jan. 21 for a ballroom-style Real Estate Auction that surpassed expectations.

Guests at Super Saturday II dined on a buffet catered by Beloiter Peter Gabriele of Domenico?s and La Casa Grande restaurants. Seven southern Wisconsin lending companies met with Auction Real Estate buyers. The first 100 registered bidders received Super Saturday II t-shirts.  The Auction team offered ten Rock County properties. They ranged from single family homes to investment properties and buildable land. All ten received bids, and nine sellers accepted the Offers to Purchase. One deal remains in private negotiations.  The Auctioneer, called bids for the live sale. He gave general terms and conditions for the Auction, then offered each property for sale. As each came up for bid, he showed photos of it on the large screen TV beneath the Auction block.

The registered bidders and on-lookers asked their questions, then listened intently to the Auctioneer?s chant. They signaled their bids with raised hands and . When Ranft called ?Sold? for each property, the winning bidders met with one of the associate brokers to write up their Offer. Sellers, who waited quietly in the background, then signed their acceptance.
The event marked the second time an Auction company hosted an indoor Real Estate Auction with multiple properties. ?Potential bidders got to visit the properties in person during our Preview times,? the Auctioneer said. ?Then day of Auction, we made them comfortable. It works out well for everyone.?

 

Auctions offer a third option for selling property By Leanne Goebel Four Corners Business Journal Correspondent

PAGOSA SPRINGS, Colo. -- Ask most people how many options they have for selling property and they will say two: List it with a real estate agent or try to sell it "by owner." But a third option is on the rise. The number of real estate auctions in 2005 was 15 percent higher than the number in 2004. The National Association of Realtors predicts that by 2008, one in three properties will be sold at auction. Most real estate auctions today are not foreclosure or distress situations; rather they are the result of a seller choosing a cost-effective, accelerated method to sell a property at a true market value. Auctions are win-win situations where sellers obtain immediate cash and buyers purchase properties for a price determined by open, competitive bidding. In addition to "Franchise of the Year," the company placed first and second in the "Highest Auction Price" category. They sold a property in Kailua Beach, Hawaii for $14,630,000 and the Ptarmigan Ranch in Durango for $1,078,000. The Karas' were also awarded the prize for "Most Number of Auctions." They hosted 20 auctions in 2005. Karas outlined for The Business Journal what she called "a totally streamlined way taking a property and getting it sold."PAX meets with a seller. "As long as the seller doesn't have crazy expectations, it's usually a good fit. If they say 'I have to have my property sold in two months,' or 'I just want to get rid of it,' then they are probably a good candidate." According to the National Association of Realtors, a good auction situation is one where the seller needs immediate cash, has a partnership or marriage break-up, is moving out of state, wants to liquidate an estate, is retiring, is auction minded, has a listing that is about to expire, has already purchased another house, knows the auction will bring a fair market price, has financial problems, or has high carrying costs on the property. In a real estate auction, there isn't a traditional market evaluation or appraisal. The buyer doesn't name a price and hope that someone will pay that amount. In an auction, "The auction broker gets all the buyers together and we see what the market will bear,". "Every property is unique. I don't know if the property is desirable. We don't do a 'per square foot' price analysis. It is what it is." What the auction company does is market the property to attract potential buyers. In the case of Kailua property, marketing was done via an elegant brochure and DVD, Web sites and a network of other real estate auction brokers. The Kailua property was ideal for auction because it was unique and because if its uniqueness, difficult to appraise. The builder had high carrying costs for keeping the property and wanted to create an urgency and excitement about the property similar to that surrounding a Picasso at auction. A good auction property is one that: has a lot of equity (25 percent or more), is unique and there is enough interest to encourage competition, has high carrying costs for the owner, is vacant, or is difficult to appraise.

 

Overland Park, Kansas ? The value of all good and services sold at live auctions reached $240.2 billion in 2005, a $23 billion increase over 2004 live auction gross sales of $217.2 billion, according to research done for the National Auctioneers Association.

"This strong growth of 10.6 percent in 2005 shows that the live auction method is a successful and desired method of marketing for buyers and sellers," said NAA President Dennis Kruse, CAI, "and that the auction industry continues its steady growth."

Tracking of the live auction industry's growth is being conducted by global market research firm MORPACE International on behalf of NAA. The information was released today from the NAA's national headquarters here.

Key findings of the NAA's latest MORPACE International research:

• The total value of all goods and services sold at live auctions in the United States in 2005 was a record $240.2 billion. This is broken out as gross auction sales of $225.6 billion plus professional charity auction gross sales of $14.6 billion.
• The 2005 gross sales figure of $240.2 billion represents a 10.6 percent jump over 2004 gross sales of $217.2 billion. The 2004 figures accounted for a healthy 6.8 percent jump over 2003 sales of $203.2 billion.
• Real estate was one of the most active live- auction categories in 2005. Residential real estate sales showed an increase of 8.4 percent over last year. Land and agricultural real estate grew 7 percent, and commercial real estate sales increased 4.9 percent.
• Automotive sales, the industry?s largest sector, experienced a slight increase of 2.7 percent.
• NAA-member auctioneers reported that their businesses are growing. By the end of 2005, nearly 67 percent said they had seen an increase in business over 2004. Twenty-two percent reported no change, and only 11 percent reported a decrease in sales.

A breakout of 2005 gross sales figures by major category revealed that live-auction automotive business was still king ($81.9 billion); followed by land and agricultural, commercial and industrial, and residential real estate ($51.2 billion); agricultural machinery and equipment ($18.2 billion); livestock ($17.2 billion); art, antiques and collectibles ($12.1 billion); commercial and industrial machinery and equipment ($12 billion); and personal property ($10 billion). Intellectual property and other sales accounted for the remainder of gross 2005 live auction sales.

The study is an ongoing project, funded by the National Auctioneers Foundation, that charts the growth of the live auction industry. Updates are released on a quarterly basis.

MORPACE International is a global consulting and market-research firm headquartered in suburban Detroit. The company has particular expertise in market definition and segmentation, product design and marketing, brand and image positioning, pricing and market strategies, measuring external and internal customer satisfaction, and product quality and customer relationship management.

The National Auctioneers Association, with more than 6,000 members throughout the world, is the largest organization of its kind dedicated to promoting the auction method of marketing and enhancing the professionalism of its members. Member benefits range from federal legislative representation to comprehensive continuing education programs, including coursework to earn the following professional auctioneer designations: Certified Auctioneers Institute (CAI); Accredited Auctioneer, Real Estate (AARE); Graduate, Personal Property Appraiser (GPPA); and Certified Estate Specialist (CES). The organization was founded in 1949 and is headquartered in Overland Park, Kansas.

 

Valley real estate was full of ebbs and flows in 2005

Major developers invested heavily, driving land values out of sight

BY TONY ILLIA
BUSINESS PRESS

The Las Vegas Valley's real estate market reached dizzying heights in 2005, with super-sized deals and mammoth new projects. Southern Nevada, long considered a tertiary real estate market, achieved a new level of maturity and sophistication as all eyes watched the valley's runaway growth in disbelief. REITs and out-of-state investment dollars poured in, fueling record levels of buying and selling, and driving land values sky-high.

There were some unlikely successes and surprising flops, but it all made for an exciting year. Here are just a few of the highlights:

VACANT LAND PRICES SET RECORD

Median valley vacant land prices topped $708,000 per acre in the third quarter, a whopping 99 percent increase over 2004, marking an all-time record for Southern Nevada property values. The average selling price of $16.25 per square foot in the third quarter was 76 percent higher than second-quarter prices.

Major third-quarter transactions included Centex Homes' purchase of the 15.2-acre former Westward Ho hotel-casino at 2900 Las Vegas Blvd. S. for $145.5 million, or $9.6 million per acre; Gameday LLC's purchase of 85.8 acres in the southwest valley for $48.7 million, or $568,000 per acre; and the purchase of 6.7 acres on Las Vegas Boulevard near Circus Circus for $40 million, or $6 million per acre. Although a healthy economy, speculation activity and a diminishing land inventory have fueled high land prices, values are expected to soften in upcoming quarters because of rising construction costs and flat commercial rents.

OLYMPIA GROUP A BIG WINNER

Garry Goett's Olympia Group won the BLM's Nov. 16 land auction for a 2,675-acre parcel in North Las Vegas. The developer bid $639 million, or $238,878 per acre, to win the tract. The final sale price was 18.25 percent higher than the BLM's minimum bid.

The land was removed from last year's BLM auction after environmentalists found rare plant species of Las Vegas bear poppy and buckwheat. A 300-acre conservation area has since been set aside for the plants to appease environmental concerns. Olympia, meanwhile, bought 4,358 acres in Lincoln County during a Feb. 9 federal land auction. It paid $14.5 million for the tract, or $3,327 per acre.

Olympia Group is also planning a $750 million, 610-room hotel-casino at Las Vegas Boulevard South and St. Rose Parkway in Southwest Las Vegas, situated within its 2,700-acre Southern Highlands community.

DOWNTOWN FACES CHALLENGES

The city of Las Vegas and The Related Cos. dissolved talks Oct. 6 on the development of downtown's 61-acre Union Park. The former railroad site, bound by Grand Central Parkway, Bonneville Avenue and the Union Pacific railroad tracks, was acquired by the city through a 2000 land swap with Lehman Brothers of New York.

Related and the city entered into an exclusive negotiating agreement in January, which included a $500,000 good-faith deposit. But the two parties called it off 10 months later, citing "skyrocketing construction costs, high land sale prices and more competition throughout the valley."

The city has since named Dan Van Epp, former president of the Howard Hughes Corp., as its master-plan development consultant. Van Epp currently serves as Mountain Region president of Newland Communities, a San Diego-based master-plan developer. The city has approved $40 million in infrastructure upgrades to the Union Park parcel, which currently consists of the World Market Center. There are also plans for a Frank Gehry-designed Alzheimer's center at the site.

IVANPAH AIRPORT SPELLS RELIEF

A new Ivanpah airport takes shape as the county hires Vanasse Hangen Brustlin of Watertown, Mass., to perform a final impact statement. The proposed $4 billion facility will be located on a 6,000-acre dry lakebed in the Ivanpah Valley, east of Interstate-15 between Jean and the California border.

Initial plans call for a 14-gate terminal with two parallel runways for concurrent takeoffs and landings. The airport will initially service 6 million passengers annually when it opens in 2017, reaching 35 million passengers upon build-out.

It will help alleviate congestion at McCarran International Airport, which is rapidly nearing its 53 million annual passenger capacity. Once the new facility comes on-line, McCarran Airport will shift its focus toward short-distance flights while Ivanpah will service long-haul and international passengers. New airport construction will be financed from federal grants and revenue bonds, with debt being retired from passenger fees, concessions and airport revenue.

STANDARD PACIFIC HOMES ARRIVES

Standard Pacific Homes, one of the nation's largest builders, entered the Las Vegas residential market in 2005. The publicly traded firm hired Gary Cavender, former CEO of Signature Homes, to head up its local office. The Irvine, Calif.-based Standard Pacific already has 390 residential lots in its inventory.

It is building a 110-home community in Henderson and three projects totaling 280 homes in North Las Vegas. Its first single-family detached homes, ranging from 2,660 square feet to 3,400 square feet, are expected to come on-line February, 2006. Standard Pacific will be targeting entry-level to semi-custom track homebuyers, with prices rangng from $275,000 to $750,000.

CARINA SELLS TO LENNAR

Carina Corp., a privately owned Las Vegas home builder, agreed to sell most of its assets to Miami-based Lennar Corp., a publicly traded production builder, this summer for an undisclosed sum. Lennar acquired about 187 acres of land around the valley, including The Village of Centennial Springs, a $100 million, 41-acre mixed-use urban village that broke ground earlier this year at Farm and Tule Springs roads in Northwest Las Vegas.

The transaction doesn't, however, include the project's 17 acres' worth of commercial developments, consisting of 56,000 square feet of office space and 50,000 square feet of retail shops. The sale additionally includes Carina's 35-acre community at Jones Boulevard and Warm Springs Road as well as its six Lamplight Communities.

Carina built roughly 1,800 homes in the Las Vegas Valley during the past nine years. Lennar, by comparison, had 1,219 new home closings locally in 2004 under its U.S. Homes and Greystone brands.

DEVELOPER EYES GILCREASE ORCHARD

Royal Construction Co. unveiled plans to build a residential subdivision at the site of the Gilcrease Orchard, an agricultural landmark in the northwest valley, where for decades locals have gone to pick their own fruits and vegetables.

Plans for the 40-acre orchard site, located at Grand Teton Drive and Tenaya Way, consist of 120 single-family detached homes with 11.5 acres of open space. The project, "Spinnaker Homes at The Orchards," will have 3,000- to 6,000-square-foot homes with a density of three units per acre.

Despite strong local opposition, the project has moved forward. Ted Gilcrease, whose family began farming the land more than 80 years ago, managed the orchard until his death in 2003. His brother, Bill Gilcrease, founded a wildlife sanctuary adjacent to the orchard where more than 1,800 rescued birds and animals reside. A foundation was formed to preserve the orchard after Ted's death, but foundation operators sold the land to help preserve 57 acres directly east of the orchard, turning the Gilcrease home on Elkhorn Road into a public history museum.

FOCUS PROPERTY GROUP WINS AUCTION

Focus Property Group won the BLM's Feb. 2 land auction, paying $510 million, or $298,245 an acre, for 1,712 acres of land in the northwest valley near the Kyle Canyon gateway. The property had an appraised value of $323 million. Focus joined forces with a consortium of homebuilders to make its winning bid, including KB Home, Kimball Hill Homes, Lennar/US Home, Meritage Homes, Pulte Homes/Del Webb, Toll Brothers Homes, Woodside Homes and Ryland Homes -- to make its winning bid.

The property will be developed into a master-planned mixed-use residential community, adjacent to its Providence community now under development at I-215 and Hualapai Way.

COMMERCIAL RENTS FLAT, FOR NOW

Despite robust valley-wide demand for commercial retail, office and industrial space, rental rates, when adjusted for inflation, have remained relatively flat since 2001, reported Colliers International/Restrepo Consulting Group. The rapid inventory growth of commercial space has prevented rental rates from rising. Rental rates, as a result, are expected to see double-digit increases during the next several quarters as leases begin to expire and developers attempt to catch up with inflation, rising land prices, and higher construction costs.

DOWNTOWN HENDERSON BEGINS RENEWAL

Downtown Henderson is undergoing an urban renaissance with four new projects backed by low-interest, five-year loans from the city's redevelopment agency. For example, Water Street South, a two-story, 30,500-square-foot office-retail building at the southeast corner of Water Street and Basic Road, opened in November.

RLK Investments, meanwhile, broke ground on the three-story, 21,000-square-foot Meridian at 155 Water St. in December. The $5.2 million development consists of 7,000 square feet of dual-use office-retail space, with seven 1,000-square-foot apartments. VLP Investments' $3 million, 12,000-square-foot Pinnacle office/retail building at 203 South Water St. opens in January.

And developer Sam Cherry recently received a 4.5-acre, city-owned parcel at Water Street and Victory Road. Although still in the early stages, Cherry's $180 million project may consist of condos, apartments, and retail space. The combined undertakings mark the first significant private construction in downtown Henderson in nearly 30 years.

SUMMERLIN SKIRTS NEW COURSE CONSTRUCTION

New county ordinances introduced this year halted any future golf course construction for three years or until valley drought conditions cease. However, the ban doesn't apply to Summerlin because of a pre-existing agreement with developer Howard Hughes Corp. that dates back to September 1996.

The 22,500-acre master-planned community is permitted to build one additional course. Homebuyers pay premiums of $100,000 up to $3 million for residences adjacent to a golf course. The ordnance, some fear, will deter bidding activity during future BLM land auctions.

ARROYO OPENS

EJM Development Co.'s 450-acre mixed-use business park -- The Arroyo -- opened this summer. The firm has a 50-year ground lease with the Clark County Department of Aviation to develop the site along I-215 between Rainbow Boulevard and Buffalo Drive, splitting the proceeds with the public agency.

The project's $11 million initial phase consisted of three concrete tilt-wall industrial/warehouse buildings, totaling 310,556 square feet, on 26 acres between Buffalo Road and Tenaya Way on the northside of I-215. The first phase was about 90 percent pre-leased with tenants such as MICE North America, Red Bull and Interior Specialists Inc. The Arroyo eventually calls for 5 million square feet of commercial space, including industrial, retail and office products, with some speculative and custom buildings as well as stand-alone pads. The master-planned project is expected to reach build-out by 2014.

 

5 negotiation tactics for real estate deals

What home buyers, sellers and realty agents are likely to encounter

Monday, December 26, 2005

According to recent information from the National Association of Realtors, the National Association of Home Builders, and other reliable sources, the volume of home sales has declined slightly in the last few months compared to a year ago. But home sales prices in most communities have held steady. As the home sales market adjusts to slightly higher mortgage interest rates, if you are a home buyer, seller, or real estate agent, your negotiation skills will become more important than during the recent "bull market" for home sales. As a long-time student of negotiation tactics, I've learned it pays to periodically review the key negotiation strategies most frequently encountered in home sales. 1.) WATCH OUT FOR THE "HIGHER AUTHORITY NEGOTIATOR." Experienced real estate agents can spot this negotiation tactic, which is used by new and repeat home buyers. I first encountered it about 25 years ago from a young couple who were my tenants. They wanted to buy the house I was renting to them. The husband was a lawyer. That should have been my first warning. After I agreed to sell the house to them, and we agreed upon and wrote up the sales details in a standard contract, the wife said, "This looks good to us. But we'll have to check with my father who is giving us the down payment." Oops! I had just become a victim of the "higher authority negotiator" tactic. That means the sales contract you think you have negotiated is subject to approval by a previously undisclosed higher authority. When her father visited the house (I'm sure he had been there several times before), he found alleged defects such as the floor plan, which he didn't like. He also pointed out the heavy street traffic. The result was my buyers asked for a price reduction from the sales price and terms we had already agreed upon. Realizing I was being whipsawed by this "higher authority" negotiation tactic, also known as "two bites from the apple," I stood firm on the agreed price and terms. Unknown to the father, I was not a motivated seller. After all, my tenants came to me asking to buy the house they were renting. I politely explained we reached an agreement on favorable terms to both buyers and seller, the buyers had rented the house so they knew its pros and cons, and if my tenants didn't want to buy the house on the agreed terms that was fine with me. Those buyers still purchased that house on the original agreed terms and the wife's father put up their $50,000 down payment. Looking back, if I had known there was to be a "higher authority" involved in the negotiation, I would have suggested we all meet together with the "higher authority" to work out the home sales details at the same time. 2.) BEWARE OF NON-STOP NEGOTIATORS WHO NEVER QUIT "NIBBLING." These are the toughest buyers. Virtually every long-time realty sales agent has encountered them. They are the home buyers who reach a home purchase agreement relatively easily without much back-and-forth negotiation. The sales contract is signed. But then the "nibbling" negotiations begin. A very smart "nibbling" negotiation tactic for home buyers is to include their approval of a professional home inspection report contingency in the sales contract. Today, most realty agents stronglyencourage buyers to make their purchases contingent on approval of a professional home inspection paid for by the buyer. However, if that report reveals significant home defects that the seller "forgot" to disclose to the buyer, the buyer can then use that report to (a) renegotiate the sales price, (b) obtain a repair credit, or (c) cancel the sale. To counteract this tactic, home sellers and their listing agents should set a quick deadline for the professional inspection report, such as 5 to 10 days, so the home won't be held off the market very long. If the home passes the professional home inspection test, watch out for other tactics of non-stop negotiators. One of their favorite methods is to repeatedly come back to the home, even after the sales contract is signed by all parties. They use excuses such as, "We need to measure for our furniture." But their true purpose for another visit at the house is to look for defects to lower the sales price or even cancel the sale if the buyer has a serious case of "buyer's remorse." The harsh preventative to non-stop negotiators is to refuse them access, except for the customary reinspection on the day before the closing of the home sale. 3.) LOOK OUT FOR THE FAMOUS "BAD GUY-GOOD GUY" NEGOTIATION TRICK. Everybody has seen this "bad cop-good cop" negotiation trick on television shows. Typically, the tough cop will ruthlessly question the suspect, stopping just short of violence to gain a confession. Then the "bad" cop is called away for some reason and the "good" cop takes over to sweet-talk the suspect into a confession or a plea bargain. The same negotiation tactic works in real estate negotiations. Often the husband is the "bad cop," who is tough and not willing to compromise. But the "good cop" is the wife, who is more reasonable. However, don't be fooled. I've told the story before but it's worth repeating how this tactic was used on me. I was interested in buying a "for sale by owner" house from Carl and Elsie. Surprisingly, tough Elsie was the "bad cop" demanding full price and all cash. But Carl was the "good cop" who realized the vacant house was less than perfect. After a few weeks of informal Sunday afternoon open house negotiations, "bad cop" Elsie finally gave in and agreed to my 10 percent down payment with a 90 percent seller carryback mortgage which provided comfortable retirement income for the sellers for many years. "Good cop" Carl was only too happy to get rid of that house. Elsie and Carl later became good friends and we completed several mutually profitable transactions together. 4.) THE UNEXPECTED AUCTION TRICK. We are all familiar with advertised auctions, such as for artwork, antiques, and foreclosed real estate. But few home buyers anticipate the "unexpected auction." This negotiation trick can arise in several ways. One method is where the seller's listing price for a house or condo is set artificially low below the true market value. The intent of the listing agent and the seller is to create a "buyer frenzy" of competitive buyers out-bidding each other far above the initial asking price. Personally, I've seen this negotiation tactic used by home sellers who purchased many years ago for a price far below today's market value. They are thrilled with whatever profit they receive. Another way this negotiation tactic can arise is when more than one buyer becomes intensely interested in buying a house or condo. They are told by the realty agent, "Another buyer is seriously interested in purchasing this home." When the seller rejects the initial purchase offer, it creates a competition between two or more buyers. My best advice, if you discover you are in an unexpected auction, is to drop out of the bidding. If you really want to purchase the home, submit a written "backup offer" with a substantial deposit check to show your sincere purchase interest. You might be surprised when the first buyer who won the "auction" backs out and you wind up owning the home. 5.) THE "WOULDJATAKE" NEGOTIATION METHOD. When it is possible for the home buyer and seller to meet, such as during the inspection, as an aggressive buyer I never hesitate to engage in friendly conversation with the seller about the home. After asking a few questions of the seller, I turn the discussion to the asking price. My favorite question is "Wouldjatake $___ for your home?" Sometimes, the seller is shocked. Other times the seller says, "maybe." Better yet, several times I've asked, to the shock of the nearby hovering real estate agent, "What is the lowest price you could take for this home?" When that price isn't acceptable, I then resort to the "wouldjatake offer" which often produces better results. If you are the home seller and you encounter a disgusting buyer like me, your correct answer should be, "Well, why don't you put that offer in writing so I can seriously consider it." Then the seller can either accept it, or make a counteroffer. CONCLUSION: Home sales prices in a competitive market are determined by careful negotiation between seller and buyer. Both parties should be aware of the most frequently used negotiation strategies.

 

Arizona Property Values Soar.
Foreclosures are DOWN!

Tim Rocho, owner of the Arizona foreclosure data provider Real Estate Fortune, says recent data indicate significant trends are developing for 2006 as Arizona residential property value appreciation tops in the Nation and Maricopa County foreclosures and mortgage delinquencies continuing to attain historic lows.

Scottsdale Arizona (PRWEB) December 22, 2005 -- According to the OFHEO, Arizona topped the State by State property appreciation list by a ?wide margin? with 30% annualized appreciation through the third quarter of 2005. The four quarter appreciation ending September 2005 for the Phoenix-Mesa-Scottsdale also topped the MSA list with 34.4%. While property values soared, a flood of excited investors poured money into the Valley of the Sun snapping up property inventory at a record pace. This aggressive buying reduced Maricopa County foreclosure inventory from over 9000 properties in the first part of 2002 to about 2500 this month.

Just two years ago in December 2003, 1501 properties in Maricopa County had a Notice of Trust Sale filing. Last month there were only 700 NOTS, accounting for a 50+% reduction in one year. Even more significant is the amount of properties that actually sold at auction. Two years ago in December 2003, investors had 446 auction (foreclosed) properties to choose from. That number was reduced to a paltry 51 in November, almost a 90% reduction in two years!

But are the dynamics of the market changing again? I believe so. Two years ago MLS inventory was over 26,000 properties. It dipped below 7000 in March of this year, and has been moving up steadily to past levels with more than 24,000 on MLS now. Average days on market has also increased and monthly sales have moved from a high of 18,000 sales in June to a little over 12,500 in November. The increase in inventory is concurrent with a slowdown in residential resale prices. The median price of a residential resale home in Maricopa County has risen from $182,000 to $259,900 over the past year, but appreciation has slowed dramatically the past three months, even having a slight step backward in October.

Along with that, it looks as though mortgage delinquencies have hit a natural low, and are about to start trending up again. FHA, VA and Sub-Prime late payments look to be creeping up, and conventional loan delinquencies have flattened out. Did the ?Bubble Burst?? I don?t believe there ever was a Bubble (see my article ?Bubble Schmubble!?), but there are more sellers than buyers at the current price level.

In fact, out of state buyers have already decreased their buying activity from a peak of more than 25% of all sales (more than 4000 properties per month the second quarter of this year), to about 19.4% (2444) in November. Investor activity however (measured by the rental election on the Affidavit of Value), has remained strong at about 16% of all purchases.

Here?s what I believe the numbers are telling us about foreclosures: Adjustable rate mortgages, which are about 29% of all loans, will start showing up for adjustments in 2007, and homeowners might not have the ability to pay extra. This will increase delinquencies and foreclosure activity.  A key statistic is that most loans default in the third to the fifth year. Today, about 80% of all mortgages are three years old or less, so 2006 to 2008 will (statistically) see more default activity. Professional investors with the knowledge, skill and contacts with lenders and banks will prosper.

You?ll also have an opportunity to buy part or all of other investor?s portfolios. Prices have risen so high so fast that it?s been tough to find positive cash flow rentals. Folks usually only want to be in the ?red? so long, and some just won?t want to be landlords long term.  What?s hot right now? Condo?s and value priced inventory. Since the sub $175,000 market has been taken away, people are buying condo?s because that?s what they can afford.

Finally, as a real estate professional or investor, you know that money can be made in any market: flat, rising or falling. We can make money, but identifying and riding a trend creates wealth. The last four years saw record appreciation. People became multi-millionaires buying property in the right areas from 2001 to 2005.

Will appreciation continue? I think so, but not across the board at the pace we have seen. There are bargains everyday, and savvy investors will continue to do very well into 2006.  One thing?s for certain, people will continue to move to Arizona in record numbers for the weather, lifestyle and economy. This will keep the Arizona real estate industry healthy for the foreseeable future, presenting opportunities for investors that position themselves wisely.

About Real Estate Fortune, llc. Real Estate Fortune, founded by Tim Rocho, is an Arizona based resource and training company for real estate investors. REF offers a daily foreclosure email service at Maricopa County data is compiled by Tom Ruff at the Information Market.

 

Aggressive builder buying into LV real estate market

By Jennifer Shubinksi / Staff Writer

Standard Pacific Corp. has quietly been amassing land throughout the Las Vegas Valley since May. The Irvine, Calif.-based company has been on a buying binge throughout the valley and the country, expanding its reach to eight states and 31 markets nationwide.

In September it entered the San Antonio market through the acquisition of a homebuilding company; earlier this year Standard Pacific bought two homebuilding companies in California. In November, Standard Pacific entered a joint venture with an Illinois-based homebuilding company. In Las Vegas, instead of buying companies, Standard Pacific has been buying land.

The 180 acres it has been able to buy, or almost 1,000 home lots in Henderson and North Las Vegas, marks the beginning of an aggressive move in this market. In November the company started garnering some local attention when it was among the successful bidders -- along with the Olympia Group, developer of Southern Highlands, American West, and D.R. Horton -- at the Bureau of Land Management auction for 2,073 and 601 acres in North Las Vegas. The parcels, auctioned off together, sold for $639 million.

Standard Pacific hopes to control up to 300 acres of that land. "We're in a good land position going forward," said Gary Cavender, president of Standard Pacific's Las Vegas division. Standard Pacific hasn't ruled out buying a local homebuilding company -- the way many public builders have entered the Las Vegas market. The question is who would they buy, Cavender said. "There's really only a few left," Cavender said. "Smaller builders don't have enough (land) inventory."

It's easy to see why Fortune Magazine in September named Standard Pacific Homes one of the 100 fastest-growing companies in the nation. The ranking is based on its three-year annual growth rates in earnings-per-share, revenue and total return. For the three-year period ended March 31, Standard Pacific's earnings per share and revenue grew by annual rates of 45 percent and 35 percent, respectively. The company also had a total revenue growth of 37 percent for the three-year period ended June 30.

Earlier this year, Forbes Magazine named Standard Pacific Homes to its Forbes Platinum 400 list of Best Big Companies in America for the fifth year in a row. But that aggressive growth, especially at a time when it appears the national housing market is cooling, concerns some analysts. "While this management team has historically been among the most conservative in the industry with an impeccable track record, we are somewhat concerned that the company may be embarking on an ambitious expansion at a point in time when it appears the housing market may be transitioning to a slower period," according to a recent Raymond James research report.

In the same breath though, the analysts said the management team is so strong it's hard to bet against them. Since Cavender left Signature Homes (a private, locally owned company where he was chief operating officer) last spring, he has been buying land -- and hasn't stopped. "That's what I've been doing for six months," he said. It has been a challenge to find and purchase land in such a tight and expensive market, Cavender said.

Cavender wouldn't say how much the company has spent on buying up land in Southern Nevada. Land in Las Vegas is not cheap -- industry experts have said residential land is pushing $800,000 an acre, or more. The chunk of land Standard Pacific helped buy at the BLM auction, by comparison, was a deal at $238,868 an acre. When Standard Pacific announced in May that it was setting up shop in Las Vegas, other homebuilders, particularly public homebuilders, weren't thrilled, said Dennis Smith, president of Home Builders Research Inc.

"They are big enough to make some waves," Smith said. Smith said the entrance of another homebuilder actually doesn't help keep prices down, despite the increase in competition. It also makes the competition for land stiffer. Cavender said the goal at Standard Pacific is to become one of the top 10 homebuilders in the Las Vegas Valley. That would put the homebuilder in the company of KB Home, Pulte Homes, Del Webb, D.R. Horton, Richmond American Homes and other large public builders.

KB Home -- the No. 1 homebuilder by sales volume in the Las Vegas Valley -- sold 3,759 houses in 2004, Home Builders Research. Cavender said he doesn't kid himself into thinking the company will build that many houses, or even 1,000 houses -- almost a prerequisite to crack the top 10 -- in the first year or two. "That's a five-year window to try and get there," he said. Smith said getting into the top 10 may not happen unless Standard Pacific buys another homebuilder's land holdings.

First Standard Pacific has to build up its local staff. Cavender expects his staff to be up to 25 people by next summer. Standard Pacific builds entry-level to move-up homes that most likely will start at $350,000 in the Las Vegas market, Cavender said. Home sites in Henderson will most likely start at $500,000, he said. He expects to start selling houses in January or February. But did Standard Pacific miss the golden age of Las Vegas real estate? Cavender doesn't think so.

"They've been watching the market for years and waiting for the right opportunity," he said. "And it's getting the right local talent to lead a division." John Restrepo, principal of Las Vegas-based Restrepo Consulting Group, thinks Standard Pacific may have entered the market behind the times. "It's a little too little too late," he said. "They've waited until Las Vegas is an absolute proven commodity." But Smith believes there is still money to be made in the Las Vegas housing market.  

November 23, 2005 04:25 PM US Eastern Timezone

Residential Auctions Back in Fashion; Condominiums in downtown Grayslake, 30 home sites and 5 homes in Yorkville, set for December auction

OAK BROOK, Ill.--(BUSINESS WIRE)--Nov. 23, 2005--Auction Company's have been retained to sell over 40 residential properties throughout Chicagoland, including an auction of 10 condominiums in downtown Grayslake. Many will be sold absolute regardless of price. With prices for these homes originally ranging up to $250,000 on the conventional market, the auctions provide an unusual opportunity for private buyers and investors to find a real value.

Built just last year, the condos at 10 Lake Center Place in Grayslake include one and two bedroom plans, over 20,000 square feet of first floor retail space, and many fine amenities such as custom appliances, spacious private balconies and underground heated parking. "10 Lake Center Place is minutes from the train station, beach and lake," said Dale Bottom. "The location adds value to the already-impressive amenities." The final open house occurs Sunday, Nov. 27 from 1 to 4 p.m. Lake Center Place is located at 10 N. Lake Street, Grayslake, Ill.

In an indication of the increasing use of the auction to sell new homes, 30 lots and five new model homes will be sold in Yorkville's Briarwood community. The homes offer ranch and two story floor plans, up to about 2,800 square feet, with master suites, dens, dining rooms, nine-foot ceilings and completed landscaping. Two homes and eight lots will be sold absolute regardless of price. The final open houses will occur Sunday, Nov. 27 and Saturday, Dec. 3, from 1 to 4 p.m. Bidders will include private owners seeking to build a home or buy a model home, and developers bidding on a multiple number of lots. Additional discounts are offered to buyers of multiple lots.

Bidders are required to attend an inspection and acquire the bidders' information package, prior to attending the auction. "Auctions are gaining in popularity for new residential properties, as builders are seeking creative marketing alternatives to focus interest on their properties and away from competitive developments."Builders are willing to offer a discount in exchange for many sales made during a two hour auction. It's really a win for the buyer and for builder."

 

REAL ESTATE AUCTIONS ARE RED HOT EVERY FRIDAY!

10:57 PM PST on Monday, November 14, 2005

By ALLEN SCHAUFFLER / KING 5 News

When banks and other lenders have to take properties back from borrowers in trouble, they want to turn around and get their money out of those properties as quickly as possible. So foreclosure auctions take place every Friday morning in every county in the state. It?s a small, but bubbling sector of the red hot real estate market.

It sounds like something that would happen in a courtroom or the back room of a bank, but by state law, these auctions can be held outside any public building. In downtown Seattle on morning recently, the bidding opened at $178,500 for one property and quickly edged up into the 180s.

But if you want to play with this crowd, you had better bring your nerve, your poker face and your money. It's a sidewalk property auction featuring trustee sales of foreclosed real estate and it happens every Friday morning. And at the end of the day, the highest bidder owns the home ... as is.

The crowd at the auction is a mix of real estate regulars, like Dean Street, and newcomers, like Carl Thompson and Dante Hill, drawn by a hot market and the possibility of sweet deals.

"This is the American dream, to come down here and strike it rich,? said Thompson. "It's the stock market,? he said, ?just like the 90's, everybody wants in. Property is the new Yahoo stock.? Street, in the meantime, has worked these auctions for decades. On the morning we caught him there, his $230,000 -- paid on the spot ? bought a home in Renton. It needs work, but he sees it as a good rental property.

At a weekly strategy session, Street, advises other investors on the complex business of buying real estate that's under pressure. ?What we're looking for is a property that's distressed, whether we buy it from the owner prior to losing it or buy it at auction or whether we buy it from the institution that has foreclosed, we're just simply looking for a deal,? he says.

But, Street warns, ?foreclosure is not synonymous with 'great deal.' There's a lot of bad deals being in foreclosure.? Agent Nick Upshaw cautions that it's not easy, and points to a huge lake view home bought back at auction by the original investors. It?s a property tangled in debt with major construction costs ahead. These are things a buyer might not know and that don?t have to be disclosed at the time of sale.

"You are buying it completely "as is, where is" whatever that may mean,? he says. ?So if you blow it by buying a pig in a poke or the title's obscured ? there?s no recourse to anyone.? Upshaw warns that a foreclosed property might have title issues. There could be IRS liens on the home or other creditors waiting for payment

In many cases, there's no chance for an inspection. Glen Gegen, another longtime buyer, has simple advice for newcomers: "Beware, beware," he says. First timers Thompson and Hill came up empty at this auction. They say they understand the risks. They like the opportunities and they'll be back. "The big guys like to intimidate us smaller guys into scaring us out, but I don?t scare that easy," said Thompson.

The old pros and the first timers agree. The key to this kind of real estate investing is research, learning as much as possible about any property that's available.

And you'll find plenty of companies that, for various kinds of fees, will help you with that research and with the auction process as a whole. 

 

 East Oakland Naval Base Gets $100M in Hot Auction!

Nearly 10 years after it closed down, an anonymous investor is willing to cough up more than $100 million for a 167-acre former U.S. Navy hospital in the hills above East Oakland. The bidding between 15 developers in an electronic auction, which started Aug. 22 at $12 million and ended Friday at 3 p.m., is just another sign of how wild the Bay Area real estate market has become.

The auction for the Oak Knoll Naval Hospital complex, which stretches along Interstate 580 just south of Keller Road and north of the Oakland Zoo, was expected to go as high as $50 million or $60 million. The final bid of $100.5 million stunned federal and local real estate officials. "We are pleasantly surprised -- this was more fun than eBay," said David Haase, a realty officer with the federal General Services Administration, which oversaw the auction. "We knew the market had increased, but this has certainly exceeded our expectations."

Although anyone could monitor online bidding, the actual names of the bidders remained anonymous. The name of the winning bidder will not become public until the bid is formally accepted, possibly as soon as next week, Haase said. The City of Oakland offered $2 million for the site eight years ago, and by 2002 it upped its offer to $11 million. The federal government rejected the city, which had planned to turn the site over to a developer to build about 575 homes, saying that Oakland's development plan did not qualify as a public use and therefore the property could not be sold at the below market rate. Seven acres were sold to an old Navy credit union and the Seneca treatment center. The rest was put up for auction.

Three years ago, the site was auctioned for $22 million, but the winner, a church that hoped to develop the property, didn't have enough money to close the deal. The second-place bidder was the Seneca group, which offered $19 million but declined to buy it for $22 million. The delays in auctioning the site again proved fortuitous for taxpayers, Haase said, because the market had increased so much in between. The proceeds of the sale go into a fund to clean up toxics at other closed military sites.

One month after the auction started, GSA issued the call for final bids and initiated the process of soft close, meaning that the auction continues for one more business day if a bid is received. The price quickly shot up to $42 million. The price then increased by about $1 million each business day after that. When the price topped $70 million last month, there were only three bidders. "When it went above $75 million, I just kind of threw my hands in the air," said Frank Fanelli, manager of real estate for the City of Oakland. "When the city tried to do this, $11 million seemed like a huge number. I am just as surprised as a lot of other people are."

The Oak Knoll deal becomes the third-highest price fetched in the auction of a former military base in California. Both other sales were in Orange County. In July, the 3,700-acre El Toro Marine Corps Air Station in Irvine sold for $649 million. In 2002, a 235-acre piece of land in Tustin, also formerly used by the Marines, sold for $208 million. The high price of the Oakland property has left some wondering how the developer will recoup the $100 million investment and whether Oakland officials will approve whatever plan is presented.

"Everyone is curious to see how this will work out," said Oakland developer Phil Tagami, who was not involved in the bidding this time. Tagami, who owns California Commercial Investments, was part of group that unsuccessfully bid on the site in 2002. He said if the developer built 575 homes there, each house would have to sell for "well over" $1 million to make a profit.

Much of the site is in a small valley so many homes would not have sweeping bay views. Tagami said there had been a lot of new development in the nearby hills since the hospital closed in 1997, including the old Leona Quarry, where 404 condominiums and 19 homes are under construction. That project was delayed for nearly 10 years by resistance, including lawsuits, from nearby residents. Any project at the old hospital could face similar fights.

"If you use the Leona Quarry as an example, you are looking at a pretty long process," Tagami said. If the developer tries to build more than 575 homes, it could spark serious resistance. "It's zoned residential, and it's surrounded by residential," Fanelli said. "It seems kind of far fetched that something much larger than (575 units) would be approved."

Unlike many other closed military bases in Northern California, Oak Knoll has relatively minor toxic cleanup issues because its only use was as a hospital. But the developer would face some unique challenges on the site, which includes thick woods and a colony of deer. Environmentalists have shown in interest in preserving Rifle Range Creek, one of the few open creeks in the Oakland hills, which runs through much of the property.

Architectural preservationists want to preserve the former officers' club, known as Club Knoll. This Navy hospital began in 1942 as a temporary hospital to handle battle casualties returning from the Pacific on the site of the Oak Knoll Golf Course. It gradually expanded during and after the war. At its peak, it was treating 8,000 sailors and Marines -- the largest naval medical center on the West Coast.

"This is a really fascinating deal," Tagami said. "It's a challenge. I certainly wish them luck."

 

Are you are real estate 'flipper' or a 'keeper'?

Every property is a "flipper" or a "keeper." If you are not familiar with those real estate terms, a "flipper" is a property that is bought for a quick resale profit, usually in less than six months. But a "keeper" is a property held for at least a year, often for many years. Most houses and condos are keepers. Their owners plan to own them for many years.

But some properties are ideal for fast resale profits. For example, if you buy a foreclosure property at a bargain price, it can often be "flipped" (meaning sold) to another buyer for a handsome profit within a few days or weeks. Flippers are especially attractive to beginner real estate investors who want to quickly build up their "cash stash" from profits of buying low and reselling higher. There's nothing wrong, illegal or unethical by earning fast resale profits. However, sometimes a property that looks like a quick easy resale at a large profit turns out otherwise.

To illustrate, I have an investor friend who bought a house from an elderly seller who wanted an easy cash sale without paying a real estate sales commission. Her asking price was about $40,000 below market value. My friend had access to cash and he closed the purchase within a few weeks. Only then did he discover the good looking house was riddled with extensive termite damage which would cost about $25,000 to repair. That house also needed a new roof. Rather than being a quick "flipper" the house turned out to be a long term "keeper" until its market value appreciated to make the resale profitable after about three years. Meanwhile, he rented the house to tenants who eventually bought it.

But my friend enjoyed several advantages of holding that house for several years: (1) instead of earning a quick $40,000 resale profit he netted well over $100,000, and (2) by holding title over 12 months his resale profit would be taxed as a long term capital gain at a 15 percent tax rate rather than as ordinary income

? The King of Flippers. In his recent book "How to Be a Quick Turn Real Estate Millionaire" Ron LeGrand explains how his student Marco Kozlowski paid $100 for an option to buy an Orlando house for $4,000,000 from a wealthy seller. The house had previously been listed for sale with a Realtor at $8.6 million, but it didn't sell. Kozlowski, a 30-year-old, new realty investor, hired a professional auction company, which, 43 days later, auctioned that house for $5.6 million cash. The result was a "flipper" gross profit of $1.6 million. LeGrand reports Kozlowski acquired 119 deeds on flipper houses in the Orlando area within his first year of investing. Today, he teaches others how to profitably flip properties.

? Secrets of profitable property flipping. Lest you think flipping properties is easy and simple, it isn't. But there are several secrets for finding these properties:

(1) Find a motivated seller who wants to sell but doesn't insist on receiving top dollar and will sell at least 25 percent below market value. Strong seller motivations include out-of-town job transfers, unemployment, divorce, financial problems, illness, death in the family, and health problems.

Longtime homeowners often have large home equities and are willing to sell below market value for a quick easy sale.

(2) Look for properties in need of inexpensive cosmetic fix-up rather than properties needing major structural repairs. "El dumpo" properties often just need fresh paint (the most profitable improvement of all), new light fixtures, cleaning and repairs, new carpets and flooring, and fresh landscaping.

Unprofitable repairs to avoid include structural changes, new roof and foundation repairs, which are very expensive but add little or no market value.

(3) Sources of "fast flip" properties include local real estate agents, newspaper classified ads, foreclosure sales, probate sales, bankruptcies, recently expired MLS (multiple listing service) listings, vacant rental houses, absentee out-of-town owner lists, and properties with unpaid property taxes.

(4) Another great way to find potential flippers is to drive around neighborhoods looking for houses that appear to be vacant, run-down, or abandoned. By jotting down the address, taking a photo to remember the house, and then checking the owner's mailing address at the tax collector's office will often uncover an owner who would be willing to sell.

Even the best neighborhoods have houses meeting these criteria. If you discover the house has been owned for many years, often with a small or no mortgage and a large equity, the seller might be extremely eager to sell at a bargain price.

? Possible disadvantages of flippers. As with any profitable enterprise, there are potential disadvantages of flipping properties:

(1) Profits from the sale of investment property held less than 12 months are taxed at ordinary income tax rates. However, if you hold title over one year, then the capital gains are currently taxed at a low 15 percent rate, plus any applicable state tax.

However, if you own and occupy the property as your principal residence for at least 24 of the 60 months before its sale, then your profit up to $250,000 (up to $500,000 for a married couple filing a joint tax return) is completely tax-free under Internal Revenue Code 121.

(2) Fix-up work is a disadvantage for some investors who don't like to upgrade properties. By hiring fix-up workers, the cosmetic improvements can usually be accomplished within 30 days to increase the property's market value. A goal of most experienced "flippers" is to add at least $2 of market value for each $1 spent on fix-up.

(3) A quick profitable resale forfeits the potential for future profits from the property's long-term appreciation in market value. With median U.S. home prices currently appreciating around 10 percent annually, many investors adopt a strategy of keeping some properties and flipping others.

 

Multiple Listing Service-style website started for real estate at Auction

Until now, there has never been a website where the public could find real estate offered at public auction. But www.NAARealEstateAuctions.com was started recently by the Natioal Auctioneers Association and can be accessed through NAA?s primary website, at www.auctioneers.org, and through www.onlyatauction.com as well.

You are invited to visit this new real estate website to easily find ones land and commercial real estate offered at auction in your area and through the United States.

Traditional MLS listings do show all auction properties to be listed on those sites because the market price at auction is not pre-determined, as in traditional listings, allowing for more upside potential. This exclusion from traditional MLS listings excluded $48 billion worth of real estate sold at auction at 2004. Thousands of buyers and sellers are finding tremendous success with real estate at auction because of its advantages over traditional listings. Some advantages include a definite date of sale, instead of letting a property linger indefinitely on the market, and a close date very soon therefore.

Attendance at real estate auctions is a an all-time high right now as the general real estate market continues to be strong. Many real estate auctions are conducted not only onsite where the hone is located, but also simultaneously on the Internet. Bidders can submit bids instantly over the Internet or by telephone, so if you cannot be at the auctiob location you can still participate as if you were right there.

Take a moment today to visit this new website. Check it out for yourself. See where the real estate auctions are in your area and visit one, and then consider conducting yournew real estate transaction by using the auction method of marketing. Real estate auctions are growing and generate excitement and results for all involved.

 

Pretty view costs pretty penny

Monday, November 7
Jenny Shand

A BEACHFRONT house at Point Lonsdale sold at auction for $2.24 million at the weekend. Real Estate owner Damian Cayzer said the price set a 12-month auction record in the coastal town and set tongues wagging at the Saturday afternoon sale.

``It's the highest price paid for a beachfront property sold by auction in Point Lonsdale in the last year,'' Mr Cayzer said yesterday. ``A property like that is pretty unique, right opposite the beach . . But it does show the market is still pretty healthy. A lot of people are trying to talk it down but it's still pretty healthy.''

A crowd of more than 150 gathered near the corner of Point Lonsdale Road and Cheshunt Street as the auction opened with a vendor's bid of $1.2 million. ``And it was pretty amazing to have four people still bidding over the $2 million mark,'' Mr Cayzer said. ``The particular two bidders did fight it out for a considerable period of time.''

Recent Real Estate Institute of Victoria figures revealed the median for Point Lonsdale house prices for 12 months to September's end was up 28.6 per cent from the same period the previous year. The institute reported the 2005 median as $585,000. I can't tell if these are auction or private sale...Perhaps they're both. Institute figures also showed house prices in Geelong had fallen 5.6 per cent over the last quarter, with the median house price dropping to $255,000.

Mr Cayzer said the Melbourne family who bought the three-bedroom home was ``over the moon''. He believed the family would use its new buy as a holiday home. The house, on a 365-square-metre block, has uninterrupted views of The Rip and a beach across the road.

``It's probably the highest price paid (for Point Lonsdale) per square metre,'' Mr Cayzer said. ``The weather was perfect. Just as we were taking the final bid the pilot boat went through and a ship went through. I couldn't have timed it more perfectly myself.''

Felix Hakins, also with Kerleys, said word of the sale spread like wildfire. ``I had a friend who was at the races at Flemington and he found out straight away. He couldn't believe it,'' Mr Hakins said. ``Everyone is still talking about it.''

Mr Hakins said the Point Lonsdale house, a deceased estate, had easy access to front and back beaches, the lighthouse and The Rip. ``And we do have Henry (the elephant seal) but I think he's overstaying his welcome at the moment,'' he said.

 

Over $13,000,000 of Prime Marco Island Properties Scheduled for Auction Block
Tuesday November 1, 7:50 am ET

MARCO ISLAND, Fla., Nov. 1 /PRNewswire/ -- The auction hammer will fall on a dozen waterfront homes, lots, and island properties on November 12th at the Marco Island Yacht Club. Bidders will be able to feast on a variety of properties ranging in value from $350,000 to $2,500,000 in the largest auction ever held on Marco Island.

 A Marco real estate broker is presenting the auction as a platform to give buyers an opportunity to name their own price on some very desirable properties. Sellers will have the opportunity to convert their real estate to quick cash without contract contingencies. The auction industry has experienced a phenomenal growth in recent years. According to a study conducted by the National Association of Auctioneers, 2005 will experience a 7% growth in auction revenues totaling over $217 billion in the United States alone, with real estate auctions being the fastest growing segment of the industry.*

In today's fast-paced society, auctions have a tremendous marketing advantage in that buyers and sellers both can feel comfortable that they are quickly exchanging assets at a fair market price derived by the competitive bidding process.

Premiere's auction division manager is excited about the upcoming event. Due to the overwhelming response from both buyers and sellers, plans are being made to conduct at least one gallery-style auction every month in the Marco area.