Tranzon Auction Properties - Real Estate Auction Blog

Okay, after this I promise to find some other sources of information, but Mark over at CoStar does a great job reporting from credible sources and keeping up with trends…here is another finger on the pulse update:
The Waiting Game: Lenders, Borrowers Grapple With Uncertainty Over Property Values, Cap Rates

The Real Estate Journal published an article yesterday morning that is interesting from several perspectives. Their articles lean toward simplicity out of, what I believe is, the K.I.S.S. mentality of writing for the masses. Nevertheless, this article highlights a multitude of topics that could be expanded upon, but I’m going to hook items 1 and 2 as they relate to this blog content.

1. “You don’t know what’s worth until you sell it” - I should print this on my business cards. The power of perception is a wonderful thing - it allows us to dream and leads to research and innovation - unfortunately, if unchecked, it sometimes also leads to delusions of grandeur - when it comes to the real estate this next statement is a natural tendency - [dreaming] “leaves ample room for mental mischief. You can happily imagine that your house is a wonderfully stable investment, because — unlike your stocks — you aren’t receiving continuous price updates. You can also happily imagine that your home sports some grand valuation.”

which leads us to item 2: “The expense ratio is HUGE” - That mortgage payment and utility bill doesn’t seem as overwhelming when we are seeing the direct benefit of writing that check every month - BUT, when that house is empty and you’re still writing the check, numbers like this are significant “Each year, between maintenance costs, property taxes and homeowners insurance, you might be paying a sum equal to 3% or 3.5% of your home’s value.” To put this in concrete terms - you’re $400K house costs you between $12K and 14K a year - minimum! That doesn’t include your debt service folks.

So you ask, what’s my point? Well, first let’s start with my point isn’t that everyone should be selling at auction. There are times and places where auctions are the most effective and impactful means of resolving a real estate situation, but auction are not appropriate for all real estate transactions. My point is mostly - don’t quibble over a couple of thousand bucks here or there on the sale of your house - in the end it really won’t matter and usually your money today is worth more than your money tomorrow.

Click here for article

CoStar - New Money Pouring into Funds Targeting Distressed Deals

I never claim to be on the bleeding edge of information and news, but I was just discussing this exact situation with a client yesterday - Our opinions were very similar to ones in this article. What also rings true from this situation is that each deal/project/development must be viewed individually and will be analyzed differently by each buyer/buying entity. As an example I looked at a residential development deal last month and thought at a 40% to 50% discount it really makes sense. Come to find out the owners just received an offer that nets out at approx. 25% discount off the last asking price - now I would be hard pressed to tell you where this buyer in finding an additional 15% to 25% in this project, but hey all the best to him and congratulations to the owner/sellers - to me that’s a home run!!

CoStar - New Money Pouring into Funds Targeting Distressed Deals

Your very own blogger was quoted in the most recent CoStar Watch List

Taking Our Global Medicine

The level of thoughtfulness, intelligence and market insight of Watch List readers and the chance to receive and share that knowledge has been one of the primary motivators behind this column and for which I am entirely humbled and grateful. This past week has been a prime example of that.

The Federal Reserve Board’s actions in January lowering key interest rates 1-1/4 points over the span of two weeks prompted several e-mails. Readers are suggesting that while the Fed cuts may have buoyed short-term hopes, they won’t be enough to keep real estate markets from sinking further. The problems that need to be addressed are no longer just about money and have overflowed out of the U.S. pool and are spread out across the globe…

…What is happening in Vegas is being mirrored elsewhere in the country.

“Our phones just started ringing again with earnest. It is almost like the Northeast has come out of the deep freeze and stopped shivering enough to dial the phone,” writes Mike B. Carey, national account coordinator for Tranzon Auction Properties in the Portland, ME, office. “Buyers are once again aggressively chasing Class A and B locations. Class C and single-family residential is still struggling to attract the interest it did two years ago as the speculators have either smartened up or been wiped out (more of the latter, than the former). All in all the conversations I have been having with clients and buyers over the last two weeks indicate a bit more optimism, cautious as it may be, about the real estate market in general. That said, buyers are still very conservative and are unwilling to push the pricing envelope assuming the markets are either stagnant or still receding.”

It’s the caveats that Kingham, Law and Carey hint at that other readers addressed head on. The optimists are assuming that there is a spread in risk, which there is not, writes Dr. John Doede, a doctor of chemistry and physics and a “semi-retired private investor” in Phoenix, AZ,… Click Here for Full Article

I’ll make the prediction now: Countrywide won’t survive 2008 without either a major foreign cash infusion or bankruptcy protection. Want to buy a huge chunk of the U.S’s largest lender at a cut-rate price?
Reuter’s Article

I tend to write more on real estate and finance and less on Auctions, so here’s a bit of fun auction news! Denise is in my CAI Class and along with being a fantastic auctioneer is very thoughtful and entrepreneurial person.

Auctioneer Gives Crash Course on Fast-Talking Style

Tell Me More, January 3, 2008 · It’s the familiar, but sometimes unintelligible voice standing out among all the rest: that fast-talking, number-crunching auctioneer. Denise Shearin shares tips and divulges insider info on the world of auction blocks. Shearin was recently named the International Auction Champion.

I think we’re going to see more of this in ‘08!

WSJ.com - Luminent Mortgage.

This type of thing is indicative of a variety of issues surrounding real estate right now. What it will eventually come down to is when, where and who is going to eat the actual loss in value of real estate collateral associated with the plethora of financial instruments securing them. As a long time asset manager said to me that other day when discussing a variety of troubled real estate projects around the country…”you can’t fudge with the value of real estate like you can with other assets. At some point someone is going to have to own up to the loss.” So for the next several months to years I think we’re going to see attorneys racking up some significant billable hours in sorting through who owns what.

Happy New Year. Be safe!