Herman: John L. Herman Jr., Author

It's Wednesday Update Time...

Recapping for newcomers…A couple invested in a newly constructed house in Cape May New Jersey and have been caught in the free falling real estate market. My advice was to “swallow their medicine” and lower the price of the property and set an auction to see what the market feels is the correct price for this house.

Last Friday the auction company held and Open House for potential bidders who wanted to inspect the property before the scheduled auction to take place this coming Saturday, April 19th at 11:00AM. It goes without saying that unless people view the home we won’t have any bidders come auction time.

While prospective buyers didn’t rain down in great numbers, three viable bidders did show up. One owns the commercial property that borders the back lot of the house and he has suggested he would love to own this lot as well. Of course, he would like raw land but we are past that point now and he may have to pay more than just the price of a lot now that the house exists. The price will dictate his movement come auction day.

Two other “suspects” showed up and both did a walkthrough and indicated they had an interest in attending the auction as a bidder. None of the three have posted the requisite deposit to officially become bidders, but they can do that on Saturday morning. For the sellers this is an excruciating week. They don’t know if anyone will actually bid, or if more than one makes an effort and what the price might be. It is what it is. Ads were run in all of the surrouinding newspapers. Color postcards were mailed. Every Broker has been sent multiple mailings reminding them of this auction. So, whatever happens Saturday is in my belief the “Market Validated Price” which I always define as what you can get for something now provided you have completed adequate marketing.

Adequate marketing has been done. People know of the opportunity to buy the house. The professional auction company is ready. The Open House was held, and people can still view the property through the local listing agent. At the auction the Public will speak with their check book and the price will be what it is. The alternative to my clients is to simply give the property back to the bank in lieu of foreclosure.

• Posted: 16 April 2008
• Comments: 0
• Category: Business failure

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