FALMOUTH ENTERPRISE - Racing Beach Homeowners Sell At Auction To Move Property In Slow Market
The Falmouth Enterprise
Friday, January 30, 2009
V. 118, No. 82
By: Elise R. Hugus
It is a sign of the times.
While potential buyers wait for the market to bottom out and banks put a tight rein on credit, one homeowner opted for an alternative method of selling their property: put it up for an absolute auction and hope for the best.
After two years on the market, Charles E. and Marie L. McGowan of Katelyn Hills Drive, West Falmouth, decided to try an absolute auction with the Yarmouthport firm J.J. Manning Auctioneers.
On January 17, the McGowans' three-bedroom home on Racing Beach Avenue sold at auction for $748,000. The price, which was $223,000 less than its assessed value, underscores the reality of a difficult real estate market on Cape Cod, where credit and qualified buyers are hard to come by.
"In today's market it is a method to sell where other methods fail. The burden of owning two homes tells you that you have to make some decisions," said Mr. McGowan.
"The auction process is little known in content and message to buyers and most brokers. From a personal viewpoint, it's a point of finality and satisfaction. I think it's something anyone who wants to sell or buy a home should pay attention to."
This house, at 136 Racing Beach Ave., was sold by absolute auction
through J.J. Manning Auctioneers on January 17.
Absolute auctions, usually considered the domain of homes in foreclosure, are becoming more popular, especially in a tough economy, said auctioneer and company president Justin J. Manning.
"We've found that since eBay, the next generation has become more accustomed to auctions. It's becoming more mainstream," said Mr. Manning, whose father founded the family's auctioneering business in 1976.
An absolute auction differs from a regular auction, because there is no minimum bid, said Mr. Manning, who also said that an absolute auction usually draws three times as many participants. However, in order to bid in this auction, potential buyers had to prove financial solvency by bringing a $25,000 cashier's check with them. The auctioneers launched a $15,000 advertising campaign in local and national newspapers and online. More than 20 people arrived to the January 17 auction, and more than 3,000 people downloaded the informational packet about the property online.
Offers for the Racing Beach property started at $550,000 from bids submitted by realtors prior to the auction. In about 12 minutes of bidding, the house sold for $748,000 to a buyer from Pennsylvania, Mr. Manning said.
The town assessment lists the property, with deeded beach rights, at $971,000. It was last listed with the realty firm Kinlin Grover for $860,000.
Mr. Manning said that with the downturn in the real estate market, the house sold for about what he expected.
"That house, three years ago - could you have gotten $950 [thousand] for it? Probably, but it's not three years ago," said Mr. Manning in a telephone interview after the auction was completed.
The sale of a higher-end property by absolute auction would "rarely, if ever happen in a normal market," said Mark Gardner, a Century 21 real estate agent who placed the winning bid.
"Under the right kind of circumstances, [an auction] is an excellent way to sell property by trying to gather as many people as they can with expectations for a bargain. Most sellers are not willing to place major emphasis on closing by a certain date. The end result is that the house sold for a little less than what he would have gotten on open market and cost him more."
Jaime Regan, president of the Cape and Islands Board if Realtors, said that the recession has led to a "buyer's market" where there are more homes on the market than buyers. With prices and interest rates now at record lows, the housing market has gone from a trickle to a steady stream.
"We're in a transitional market. It's definitely been challenging," said Mr. Regan, who noted that thousands of houses are currently available on the Cape for under $300,000.
Mr. Regan said that home sales by auction account for about one percent of total home sales in the region, and he does not anticipate an increase in that number because foreclosure notices have been on the decline since last year.
According to Mr. Manning, deals close much more quickly in an absolute auction than in regular real estate sales, because the buyers have already researched the property and have proven their financial ability.