Tranzon Auction Properties - Real Estate Auction Blog

Quarterly Newsletter - Fall 2007

The Tranzon Auction Leader is published quarterly by Tranzon LLC, national experts in accelerated marketing and auction sales. This E-newsletter focuses on trends, auction highlights, and expert analyses on how a professionally marketed auction may maximize an asset’s value. Email Mike Carey with “subscribe” in the subject line and I will add you to our mailing list.

It’s Been a Long Hot Summer

The title of our opening article in the Spring 2007 newsletter read “The Big News in the Residential Market - Lenders Tighten Their Belts”.

This past August, everyone’s belts tightened so much that the markets could not breathe. We will not repeat the widely reported seizing in the debt markets on Wall Street. We will focus on what we are seeing on Main Street.

In the Spring Newsletter we noted that if liquidity continues to retract, Real Estate problems would start surfacing in certain markets that heretofore have been pretty healthy. We have seen that play out. Residential markets that were strong throughout the adjustment up through this summer seem to have slowed measurably. The residential slowdown appears pretty widespread.

We have just started seeing a return to some semblance of normalcy in many markets. The “headline shock” of the July and August credit market problems is appearing to wear off. Buyers and sellers are slowly coming back into the market. Attendance at Tranzon residential auctions across the country has been steadily on the rise giving credence to marketing that stands out.

There seems to be ample liquidity to fund new home purchases and sound investment property. Anecdotally, we have seen the “informal” sub-prime market come to life in the past month after lying dormant for years. Entrepreneurs, who prior to recent years provided much of the capital to “less-than-prime” borrowers, are back in business. And they have money to lend.

So we are not seeing conditions commensurate with a real estate debacle. Liquidity exists. And buyers have the interest in buying property, the need to buy property, and the money with which to buy property. What they do not have is confidence, which will take awhile.

All of which makes for a challenging market for residential real estate. At the same time that we have a huge pool of property for sale, we have a diminished pool of buyers. Today’s challenge in brokerage marketing is how to make a property stand out from the sea of opportunities. Effective auction marketing has been accomplishing this by communicating a sense of urgency and opportunity to the market, much more so than at any time in recent years. Tranzon’s success rates (percentage sold to percentage deeds offered) have increased sharply over the last three months.

Another challenge is dealing with an environment of falling values. We say “values” rather than “pricing” on purpose. It appears that in most of our markets, prices are not coming down to a level to accurately reflect current “values”. One reason we believe sales have slowed so much is that sellers have not, or cannot, adjust their expectations to today’s environment. This is a market that relates well to auctions, where the auction market sets the pricing, thus the value, for the sellers to approve, or reject.