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        <title>Atlanta Real Estate Blog</title>
        <link>http://www.premieratlantarealestate.com/blog/tags/auctions/</link>
        <description>Atlanta real estate blog. Consumer focused real estate information for Atlanta and information and insight into local and national topics. Areas of interest include; Buckhead, Sandy Springs, Roswell &amp; Alpharetta. North Metro Atlanta.</description>
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            <guid>http://www.premieratlantarealestate.com/blog/auctions-and-value-things-arent-what-they-seem.html</guid>
            <link>http://www.premieratlantarealestate.com/blog/auctions-and-value-things-arent-what-they-seem.html</link>
            <author>ryan@premieratlantarealestate.com (Ryan Ward:  CEO of Premier Atlanta Real Estate - Keller Williams)</author>
            <title>Auctions and Value - Things Aren't What They Seem</title>
            <description> <![CDATA[ 
Sold to the lady in the back for $435,000! What a deal! The screen says the previous value for this home was over $1,000,000. I've found it at last! Now I know exactly where to send every person who calls looking for that great deal. The auction!

If you're in the business and you get leads online, you definitely know the guy. Most others in the business know this guy now too. It's just a product of the current conditions. He acts like he knows more than you about real estate and before the phone call is over, he has made you feel like it's true. We get one almost daily, but the problem is, that guy doesn't have a clue about what he is talking about. If you are that guy, I suggest you re-read this paragraph.

I attended an auction this past Saturday with a friend/client as an exploratory event as a possible place to pick up homes that are in need of small repairs that can be flipped. My job is consultant here. The commission checks are small from auctions, but, it's more important to me that he buys the right houses at the right prices otherwise there is no chance to flip so it's a win/win partnership if I find the right houses. As this was a bit exploratory for both of us, I decided to pick a few houses to really watch closely at auction for a number of reasons. I wanted to know what the real &quot;previous value&quot; was, I wanted to know what they would sell for at auction and I figured the after repair value prior to getting there so I was ready to see how this unfolded.

The Auction

First, I need to say that it was quite a rush. I'd do it again. I think I will actually. The truth though, is considerably different than most people I have spoken with think it is as it relates to values and auctions. Of the homes I watched, none sold for the price I believed they needed to be purchased for anyone other than an owner occupied home. In other words, they sell for fair market value. Some for more than market value, but, that too is to be expected as the auctioneer is awesome! There are other homes - like those that might be in new construction neighborhoods that decimate value fro the entire neighborhood instantly. I watched as 6 houses were sold for between 80K - 90K where the values were in the 150's. Now, the 80K home isn't even a &quot;deal&quot;. That's what the whole neighborhood is worth! Look, if you don't know values going in and you rely on the information on the screen you are going to get burned and speaking of that information on&nbsp;the screen, it's hardly accurate. I don't know where it came from, but, most of these homes have histories that I can look up in 30 seconds to determine and let me tell you what was on screen and what the real &quot;previous values&quot; were did not match. It made these homes look to be much better deals than they really were. I saw a home that I said should sell for no more than 425K sell for 412K, but, the &quot;previous value&quot; was wrong (over 800K, it was never woth that). Later I saw something that they said was over one million dollars sell for a little over 400. It was listed in the 500's in the FMLS and didn't sell. Where is the great deal there? This is what happened over and over and at all different price points. &quot;Previous value&quot; of 115K, starting bids at 500 dollars, listed in the FMLS for $17,000 and selling for $10,000. Do you think that is a good deal? I could go on...

I watched for a few hours and was amazed at how free markets correct themselves so efficiently if allowed to do so. But, it occurred to me also that the deals really aren't that great - at least not on the whole and that makes them no different than regular listings for sale (unless you are the bank because they do liquidate properties). There are good deals and there are not so good deals. The problem with getting a good deal at an auction is as follows:

You have a room full of ready, willing and able buyers offering multiple offers on properties. None of that is what you want when you are in the market for a &quot;deal.&quot;

So, the takeaway goes something like this...most of the homes for sale at auction were already for sale. Some have histories that go back years now so we know a lot about these homes. Most of them sell for what they would sell for in a fair market sale. These are the homes that were listed too high to sell or did not have good enough marketing to illicit an offer that might have been acceptable to the bank. None of these homes made exceptional deals and most importantly....

Nobody bought a home for 40 cents on the dollar!
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            <pubDate>Mon, 26 Oct 2009 10:06:21 -0400</pubDate>
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