Its proving that previous big gains in the real estate market by the auction industry are not going to be topped this year.  With big gains in the last 5 years, and growth in the last 6 in the real estate market crisis the National Auctioneers Association is reporting a decrease of 2.7% in real estate auctions despite growth of 2.3% in the live auction business.  As we hit what may be the worst of the housing and mortgage crisis that comes as somewhat of a surprise to some that felt the auction industry would see gains again this year.  At this point I think and agree with Tommy Williams assessment of the challenges auctioneers are now seeing.  As values have continued to fall we are at a point where sellers are just not willing to accept that their home could actually be worth what the market is bringing today.  Despite the relatively small decrease in real estate auctions this year they are still at an all time high and a very valuable option for many sellers.

While these statistics are all national industry wide stats I think it would be interesting to see a state by state breakdown which isn't possible.  If my suspicion is correct you would actually see gains in real estate auctions in some states and losses in others.  Without any hard numbers or facts to back it up the best I can say is that, at the very least the number of real estate auction in Iowa has increased this year and I've seen more and more auctioneers jumping into the real estate business.  As an auctioneer I'm also seeing more and more Realtors taking notice and partnering with auctioneers to get homes sold here in Iowa.  I guess we'll never know for sure but my suspicion is that real estate auctions are more popular than ever here in Iowa.

Below is a release from the NAA about the current state of the auction industry as reported at this years national convention. 

National Auctioneers Association Estimates Industry to Grow 2.3 Percent in 2008
Decrease of 2.7 Percent Reported in Residential Real Estate Market
 
Nashville, TN, July 9, 2008 - During the opening session of the 59th International Auctioneers Conference and Show in Nashville, Tennessee, Dr. James Leiman of Morpace, Inc. announced the results of the industry's mid-year report to the members of the National Auctioneers Association. Dr. Leiman reported that if current consumer trends continue within the live auction industry, gross sales will grow 2.3% in 2008. The 2.3% percent growth during the first half will result in estimated gross sales of goods and service sold at live auction totaling $276.8 billion. This translates to six consecutive years of growth within the industry. In 2007, the live auction industry grew 5.3% with over $270 billion in goods and services sold by auctioneers in the United States.
 
While automobile auctions continue to dominate the industry with $87.8 billion in gross sales in 2007, the fastest growing sector of the live auction industry is real estate auctions. Real estate auction sectors include: residential, commercial/industrial and land/agricultural. In 2007, the auction industry sold approximately $58.5 billion in real estate assets. Total sales growth within residential real estate auctions has grown 46.6% between 2003 and 2007. Dr. Leiman reported that the pace of real estate auctions has slowed and gross sales have decreased in the first half of 2008. Gross sales in residential real estate decreased 2.7% in residential real estate, 7.1% in commercial and industrial real estate, and 2.3% in land and agricultural real estate.
 
"While auctioneers have witnessed tremendous growth in real estate auction sales over the past five years, auctioneers are witnessing more challenges in today's housing market," said NAA president Tommy Williams, CAI. "Auctions set the market value and sellers are uneasy with the realization that their property is only worth what the consumer is willing to pay and are concerned about a loss in their properties market value. In addition to seller apprehension, today's buyers are concerned with purchasing assets in an uncertain economy and do not see eye-to-eye with sellers on the true market value of their property."  
 
Every January, the National Auctioneers Association unveils its annual end-of-the-year report to the public. This report provides and overview of the industry, as well as highlights growth within sectors of the auction industry (i.e. real estate, charity, art, antiques and collectibles, etc.). To view a copy of the past three years of reports visit www.auctioneers.org and click on Auction Industry Stats.

In today's slow moving real estate market are you having trouble getting your home noticed?

Real estate auctions can deliver the results you need.  In fact, a real estate auction can put cash on the table in 60 days from the very first day you sign the listing agreement with the auctioneer. 

The first 30 days are spent marketing the property and the sale is held near the 30th day.  Closing is set for 30 days after the sale and often occurs before that time so you can expect to have your home sold in 45-60 days. 

The first argument is likely going to be "well I won't be able to get what I want for it"  You may be absolutely right and you might be wrong.  Sometimes real estate sells at auction for more than the seller wanted to ask for it through an agent.  In some cases you'll never get what you want, have to have or need to get.  In some cases its just not possible.  I'm well aware, as are the banks that a huge portion of Americans now have negative equity in their homes today.  If you are facing foreclosure its possible your bank will work with you to "short sell" your home, in which case they allow you to sell your home for less than you owe against it in satisfaction of your debt to them.  This is not always the case but in todays market short sales are very common, and often a cheaper option for the bank than actually going through with foreclosure.   An Auctioneer can work with your bank and help sort out the details and request the short sale if you sign an authorization for them to discuss the situation with your representative.

A home is only worth what someone is willing to pay for it and those numbers fluctuate constantly.  If a buyer can buy a home that fits them just as well or better for a cheaper or comparable price it affects the value of your home in their mind.  Buyers will compare all of their options and establish a value for your home, value is what they are willing to pay.  They are willing to buy your home, at a certain price, everybody is willing to buy your home at a price that is right to them.  The driving force in today's home sales is how much a buyer will pay for the home, not what the seller wants for it.  If the seller wants to much why would the buyer not just walk across the street, down the block or across town and buy another home that is more appropriately priced?

How do you know if you are ready for an auction?

I believe a real estate auction should be your first choice each time for the sale of your real estate.  It guarantees you do not leave even one dollar on the table, it is much easier than listing your home, and it establishes the absolute highest dollar someone is willing to pay for your property.  Here are some signs that its absolutely time for an auction.

You've had your home listed with a Realtor for more than 180 days.

You've had your home listed with a Realtor for 90 days and had fewer than 3 showings.

You are tired of getting the house in order for showings to get no offer.

Feedback from lookers always revolves around price, location or condition.

You are facing foreclosure. (Call quickly)

You are being relocated, or have another reason you must sell quickly.

You are an absentee landowner and do not want to commit 6 months or more to selling property.

You are settling an estate

You have many other items to sell along with the real estate such as machinery, tools or household items.

At Smith Auction Marketing Company we work with Realtors, and while I understand they want to hang onto you as long as possible to recoup the money they have into marketing your property, they do have the option of working with an auctioneer and splitting commission no differen than they would with another real estate agent.  If you are sitting at home reading this I can only assume you are motivated to get your home sold, recommend to your agent the possibility of partnering with an auctioneer to sell your home. 

For you to be successful with an auction you have to be ready, willing and able to sell your home.  This includes a realistic view of what you will get for your home and understanding the highest bidder may be below what you want for the home.  You may get what you want and more if your home is marketed correctly, either way IT WILL get an offer on the table that you can work with.

What is the alternative?  Languishing in the MLS for another 6 months, 12 months, 18 months? They are out there, homes that have been listed for over 18 months.  There are more of them than ever now. When I first was licensed as a real estate agent I was told that I was to call all my sellers each week, and even if there was no activity on their listing I was to tell them we had a few calls on it but the callers thought the price was a little high.  This was supposed to prompt clients to reduce their price and make the listing easier to sell.  I value my integrity and have always felt honesty was a better policy, after all its my job to give good honest advice. 

Do yourself a favor and call real estate auctioneer today, get your home sold in 60 days.

Jason Smith is an Iowa Real Estate Auctioneer and member of the Iowa Auctioneers Association as well as the National Auctioneers Association.

I have many conversations with folks about the value of their property.  It might be Iowa farmland or a house, after all everything has value and as an auctioneer value is important to me.  Value is complex and more in-depth than I can cover in this short blog post, but I'll hit the high points from an auctioneers perspective. 

In nearly every conversation with a potential seller I will always hear something along these lines. "Well I bought it 10 years ago for X amount of dollars and then I did this and that and then this to it, plus I did this, this and this and I know my neighbors down the road sold for X dollars 3 years ago so mine has to be with Z dollars now."

Certainly looking at value from that perspective would seem to be a common sense approach, but it doesn't work.  If you are serious about selling real estate you've got to know, and this is the best advice I can dole out..... it just doesn't work that way.   You cannot take your purchase price, add all of the things you did to it, add interest, a real estate commission and get that dollar figure today, in most cases.  In some cases you can but home values have dropped and being realistic today is what will help you sell your real estate.

Value is determined through many things and in today's residential real estate market pricing is everything, I can't even begin to explain just how important pricing your home is today.  Values of nearly everything fluctuates every day.  If you look at the stock market you'll notice that values change on a daily basis, things go up and down based on a certain set of factors surrounding them.  Certainly demand has the greatest affect on value.  When demand is low and supply is high your asset drops in value.  If demand is high and supply is low you'll see the value of your asset increase.  Supply and demand can be used to summarize all of the factors affecting value. 

All other things that affect supply and demand are sub characteristics and you see many of them affecting value today.  They do not affect each area the same however.  A plus for one area, may be a minus for another area.  Take for instance gas prices.  Gas prices are affecting today's supply and demand in the housing market where I live.  Since we are on the outer fringes of the Omaha Council Bluffs metro area in western Iowa and eastern Nebraska we are starting to see folks put their homes up for sale to move closer to their employment in the city, and fewer people moving out to the country.  This creates an oversupply of homes in the area and reduced demand or a minus for our area.  Adding supply to a market that already had an oversupply with increased foreclosures in the last 12 months spells a real reduction in value. That very factor however is a plus for the cities of Omaha and Council Bluffs that are seeing more folks move in to avoid commutes and save on gas. 

Supply has been affected by speculative building, mortgage defaults, and decreased demand while demand has been affected by a poor economy, gas prices and knee jerk reactions to the credit crisis we are seeing.  It's much harder to get a mortgage today than it was 18 months ago.  All of these things affect the value of your home. 

If you look at that compared to the original statement above in the second paragraph you'll notice that sellers often do not think of supply and demand or current market conditions to determine value of their asset.  There is no magic number to calculate the value of your house today and I'm not saying that its worth less than you paid for it, but I can tell you the best, easiest and cleanest way to determine the value of your home is with a real estate auction.  Real estate auctions are the best form of appraisal you can find.  Better than even hiring an appraiser to appraise your home.  An appraisal is only one persons opinion of the value of your home.  3 appraisers would have 3 different opinions and NONE of them are offering you money.  With a real estate auction you have someone offering you REAL CASH and not an opinion.  Your auctioneer has marketed your home to every buyer interested in purchasing a home, they all came together, bid against each other and the highest bidder has just given you an appraisal for free!  The most a person is willing to pay for the property is the value of your home, not what some appraiser said.

While the residential real estate market is experiencing a buyer's market today, land sales in the Midwest are in a seller's market that continues.  A very different set of factors are playing into the land sales market and values of land continue to increase month to month.  If you thought all real estate was the same and experiencing the same downturn today I'll explain why it's not true.

Today's grain prices are up, the stock market is down and more people are investing in the safety of farmland ownership.  Farmland used to produce income is the most valuable land.  This may be row cropped land for producing corn, soybeans, wheat or many other types of land.  Land used for pasture of livestock comes in second in value while other lands used for timber production, recreation such as hunting usually falls 3rd in value.   Determining the value of the land you are interested in selling will be determined by the amount of income it can produce, or its proximity to development.  Certainly you'll see cases of land in close proximity to metro developments that will fetch a much higher price than it would if it was not in close proximity. 

A reasonably steady supply of demand has not kept pace with the demand for land.  Land auctions have been especially popular over the last 24-36 months with great attendance, many times with record prices set at each consecutive auction.  Things continue to look bright for the future of land sales and ownership and as long as income keeps pace the value will remain steady and increase. 

Could value of land fall?  As I said before values fluctuate everyday up or down and if you were subject the land market to the same things the housing market is experiencing today you would see the same affect.  While its highly unlikely its possible because value is affected by the supply and demand.

The distinct difference between homes and land is supply and demand.  Land has a higher demand than supply today while homes are in oversupply and in low demand.  In either situation an auctioneer can get you the best offer with cash on the table in 30-60 days.  The alternative is to list it and let it sit on the market for months, or even years while you continue to pay the holding costs of interest, taxes and insurance.  Add those up and see what you could save by calling an auctioneer today.

On April 18 we will be selling a nearly new home in Missouri Valley at auction.  This custom home was built in 2004.  All carpet and wood floors were recently replaced and the buyer will enjoy completly new flooring.  The home also comes with stainless steel appliances and includes 3 bedrooms, 2 bath, walk in closets, 2 car garage and a large bonus room above the garage.  You can find additional photos at at AuctionZip.com and AuctionBill.com here.

Nearly new home!  Residential real estate to be sold at public auction in Missouri Valley Iowa. 

Seller: Garrett and Melissa Klutts 

Address: 1103 W. Michigan Street Missouri Valley, Iowa 51555

Sale Location: 1103 W. Michigan Street Missouri Valley, Iowa 51555

Sale Date: April 18, 2008 at 2:00pm

Lot Size: 70 X 100 feet

Square Footage:  Main floor 1457, bonus room 928

Terms and Conditions

Down Payment: 10% down payment due the day of sale.  Your bidding is not contingent upon financing, financing must be arranged prior to sale.  All bidders to provide approval letter or proof of funds.

Taxes: Gross Taxes: 2599.14; Net Taxes: 2450.00; Tax Year: 2006

Closing: Closing May 19, 2008

Flood Plain: Property is located in a flood plain.

Buyers Premium: 10% buyers premium

Public Inspection Times:  March 28, 2008 at 5pm and April 11, 2008 at 5:00pm

Cooperating Brokers:  Cooperating brokers paid 2.5%.  Register your buyer by contacting Jason Smith 402-250-1006

Sellers Agent:  Jason Smith is the sellers agent only and a licensed real estate agent in the State of Iowa.

Auctioneer:  Jason Smith 402-250-1006

Open Houses:  The home will be open for public inspection on the following dates and times.  March 28, 2008 at 5:00pm-6:00pm and April 11 at 5:00pm-6:00pm

Directions: Home is located near the swimming pool. From the swimming pool in Missouri Valley go west on Huron to Shawmutt Street, north on Shawmutt to Michigan, Michigan west to 1103 W. Michigan.

Auctioneers Notes:  This home is a newer custom home built in 2004.  The home has 3 bedrooms and 1.75 bathrooms.  2 car garage with large bonus room above the garage.  All stainless steel appliances in the home are included in the sale.  All new carpeting and wood flooring was just installed and will be brand new for you.  Heating and cooling system is a heat pump.  Home is sold "as is where is" with no contingencies.  This home is ready to move in and live in immediately. 

Visit our Iowa Auctioneering site for more information.

Contact information Jason Smith 402-250-1006 or 712-646-2061

In todays gloom and doom real estate market I've got some great news you can take back to your clients to give them some hope.  Real Estate Auctions are helping separate more and more people from their listing when they thought there was no hope. 

Real Estate auctions bring excitement and attention to your listings and partnering with an auctioneer makes sense.  If you have clients that really want to sell that home you'll be their hero for finding a solution to their trouble and you'll still get paid and they still get market value.  As a Realtor you have many tools, many relationships with key people to assist your clients but do you have an auctioneer? 

If you don't have an auctioneer in your brokerage does that mean you can not use or offer auction services?  Absolutely not, you still have the option of using an auctioneer.  If you can't find one call me, I travel!

Why partner with an Auctioneer?

Each home has a market value and using the auction method of marketing is the best way to determine the market value and the best way to GET market value.  When all the marketing has been done properly you will attract all buyers that are interested in the property and they will compete against each other to buy the property.  The final price will be the market value, the amount of money someone was willing to pay for it.  Now as a Realtor you'll have a ready made list of people that want to buy homes!  You'll get the registered bidder list when the auction is through!  Thats the easiest prospecting you'll ever do.  You'll also still get paid your commission on the sale and you'll be the hero of the clients that hired you in the first place.

Do auctions really make sense?

You know that at any given time there are a certain number of people interested in purchasing a home.  You also understand there is a market value for each home.  Why not put that home in front of all of them and offer it, let them bid their highest bid and see who comes out the winner?  You will offer a greater predictability for your clients.  Your selling clients will be able to choose the amount of the earnest deposit (usually 10%), they will be able to set the sale date, they will be able to set the closing date and all other terms.  The best thing about an auction for a seller is that they get to set the terms and the buyer must abide by them.  Here is one of the things I love about auctions NO CONTINGENCIES.  Would your life be easier if you did not have to worry about getting that cracked shingle fixed, or the carpet replaced.  Would you sellers life be easier if they did not have to wait 30 days to see if the buyers financing was going to go through?

Can somebody steal the property?

Absolutely not and this is the biggest misconception about auctions, but also lends to their popularity.  Sellers worry that someone could just come buy the home for a few thousand dollars and buyers think they may be able to get a good deal.  It might make sense this way.  I am both an agent and an auctioneer so I sell homes both ways.  As an agent we are usually starting above market value and moving down.  As an auctioneer we are starting low and moving up.  Which price is going to be more attractive to the buyer?  Most likely the lower price.  When a buyer sees a home with an opening bid of $90,000 but feels the home is worth $150,000 they are going to be attracted.  If a buyer sees a home priced at $170,000 and they feel its worth $150,000 they may never give it a second look.  Now that $90,000 will move up and when the bidding ends will be around $150,000 or over.  If the auctioneer has done his/her job marketing the property and brought the right buyers and the home is worth $150,000 thats the area it will sell.  You do want to bring attention to your listings am I correct?

There are two types of auctions.  Reserved auctions where the seller sets a price the bidding must get to before they will sell and Absolute where the seller agrees they will sell to the highest bidder regardless.  Back to my original question whether the home can be stole at auction... no.  People are going to protect their investment with a reserve.  Reserves will protect the sellers interest but DOES NOT put a cap on the price. 

Take a look back at the example I gave earlier of the $150,000 home.  If originally you thought this home was worth $150,000 but your seller priced it at $160,000 then you have essentially put a cap on it.  You are not likely to get more than $160,000 on the home.  With an auction there is no cap.  What if someone was willing to pay $180,000 for the home?  With an auction you are going to take advantage of this benefit and not leave money on the table, you are going to feel certain in the end that you have gotten what the home was worth. 

What kind of homes are sold at auction?

Every type of home can be sold at auction.  An auction has nothing to do with the type of home.  Distressed homes, executive homes, new construction homes, builder held homes, incomplete construction, model homes, mobile homes, vacation homes are all candidates for auction.  An auction is about marketing, its not about the type of property.  An auction brings attention and interest to a property.  You and I both know how hard it can be to get attention to our listings right?  An auction makes your listing the "Rock Star" of the all the homes available.   

I've said in the past that not all homes are candidates for auctions when I should have said "Not all sellers are candidates for auction"  Any home is a candidate for auction and again, it will sell for market value.  Sellers however might have circumstances where the home can not be sold for todays market value.  If their mortgage is larger than the market value. 

So does this mean auctions only work in a buyers market?

Oh absolutely not, you can sell real estate at auction in any market condition but I think you as a Realtor are more likely to be searching for options in todays buyers market but lets talk about it as if it were the other way around right now.  If we were in a sellers market right now and we had more buyers than sellers you'd expect to see multiple offers right?  Thats what an auction is, a multiple offer situation.  The difference between the two is that at an auction everybody can see everybody's bids.  Its open and transparent.  Now I bet you have been there and tried to explain to a client that the home they offered on has two other offers and they give you that look of "ya right" or they ask "how much did the other people offer" and you can't answer them.  You have to tell them to give their highest and best offer right?  Well if you were hold an auction at the property there is no question who is bidding what, there is no worry that the other offers are "made up to get more"  Its happening right now, right here, right in front of our eyes, its real and if you don't bid now one more time those other people are going to get it so think quick and get that card in the air. 

What is an auction?

When someone says auction you are thinking of the auctioneer with the microphone in his hand chanting. An auction is so much more than that.  An auction is about MARKETING.  You've heard me say "the auction method of marketing" or "auction marketing"  The auctioneer chanting the bids is an important part of the auction.  A good auctioneer is a good bid getter and its more difficult than it looks but the real meat lies in the marketing ahead of the auction.  Without marketing you can not even get the buyers to the auction to bid.  Auction marketing is intense, its accelerated, its condensed into a short time period.  Its the only way to assure you got every dollar the home was worth and not a penny less.  The marketing does many of the same things you would do to market a private treaty sale, but it also does much more.  Auction marketing brings interest and excitement to a single property and spotlights it for all to see. 

Interested in the auction method?  Our Iowa Auctioneering service may be able to help you sell your real estate at auction.  Want to know how you can partner with an auctioneer and do the very best for your clients?