Herman School of Business
Down the Auction Path We Go...
We have only a week and a half left before the auction of our clients’ property in Cape May County, New Jersey. For the last six weeks we have been covering the case of a crashing real estate investment. The auction will be held on Saturday, April 19th at 11:00AM.
The newspapers have all been alerted, color postcards were mailed out this past week, and another letter went to every Real Estate Office in Cape May County. This portion of the program is designed to “put the horses on the track.” With an Open House for Inspection scheduled for this Friday, we will find out if more than just the curious show up for a visit. No one buys a house without first looking the place over, so by next week at this time we will have an idea of who will post up the twenty-five thousand dollar deposit which is needed to qualify them as a bidder.
At this time we have pushed for Brokers to reach into their rolodex and come up with a potential buyer by appealing to the Broker’s desire for an easy commission. Instead of dragging prospects back and forth hoping to show them something they will buy…this house screams “bargain” and the “desperate” nature of an auction might bring someone to want this, and we can only hope two people show up with a deposit.
But, what if only one bidder actually registers? Does that bidder just raise his hand onec and the auction is over? No way. The Seller is not obligated to take any deal and therefore the auctioneer may ask for a bid high enough to satisfy the Seller, and not just take what may be one bid from the only qualified bidder. And, by the way…there may be an absentee bidder who looks at the property and then doesn’t actually appear at the auction, but rather bids via the telephone. So long as that bidder has a deposit up in good standing, they are qualified to bid that way.
With a week to go I will notify the “Short Sell” department of the bank holding the mortgage that the auction is taking place, along with the marketing effort we have made to get a contract on the house. This will give them a heads up to be ready to make a decision about whether they will accept or reject the deal we bring to the table. Keep in mind that since the homeowners have had this house listed with Brokers for almost two years…with no offers…and the price has been lowered half a dozen times with stimulating a deal…and now we have mass marketed the property through this auction scenario…either they should take what we put on the table or be prepared to own this house for quite some time. It is what it is. If the bank gets the house they will incur carrying costs including insurance and taxes while they tie up their cash which could be loaned out to the next deal and make some return for the bank. If two people bid on the property and the bank turns down the deal they would be making a serious mistake, as the market will have spoken.
- Posted: 9 April 2008
- Comments: 1
- Category: Business failure
how about a photo or address for the property in case I would like to bid?Herman Says: Go to www.comly.com and look at upcoming auctions. The address is 25 Lord Lane, Swainton, New Jersey.
Written by Mark on 10 April 2008