Ron Taylor and Sons Real Estate and Auctioneers

Why Are Lenders Making It Hard To Stimulate The Economy?

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Sat, 24 Oct 2009 12:45:41 -0500

I don't know about you, but as a real estate broker and professional auctioneer, I have to wear many hats. One of the hats we have to wear is that of working short sales for a client that is upside down financially, viz., owing more on their home than what it is worth in today's market.

I don't recall the exact source, I want to say it was NAR, [National Association of Realtors] but back in May-June etc., almost 30% of the homes sold were purchased by investor's via short sales or REO. The investor bought the property with the idea of re-selling it for a profit. Now that is stimulating the economy by way of moving money around, providing liquidity, etc.

However, have you tried to work a short sale lately? Many lenders want the current owner of the property to have been on title for 30 to 90 days before they will approve a loan by a new buyer. It is called seasoning. Most investors hold property for a short period of time. They may make improvements on the property, if needed, or may sell it in an "as is" condition.

This whole process of seasoning has slowed down investor's purchasing and stimulating the economy because they want to keep turning their money over. Having to hold onto a property for 30 to 90 days adds additional cost and cuts into the investor's profit.

The negotiating process normally takes three to six months to go full cycle. And now the investor is told he or she must hold the property for an additional 30 to 90 days after purchase. I think you are beginning to see the picture. Less homes being purchased means more "toxic assets," less money if available to the banks to lend out.

In looking at our records, here are some of the related industries who make money off of a successful short sale:

Foreclosing Lender (they make far more in a short sale then when they foreclose)
Listing Agents and Buying Agents
Attorneys and Title Companies
Mortgage Broker/Direct Lender
Fannie Mae, Freddie Mac, FHA or whomever buys this loan in the secondary market
The Appraiser
The Home Inspector
Plumbers
Contractors
Electricians
Cities and Towns
Insurance Company
The IRS
Accountants
Marketing Companies (Direct Mail and Signs)
Printing Shops

What's the best way to stimulate the economy? The lender's can start by making the short sale process a lot easier.

For more information on how we work with homeowners and realtors with short sales and pre-foreclosures, go to our website at http://www.cansellnow.com .

Get the Feds Out of the Real Estate Business!

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Mon, 20 Jul 2009 18:59:19 -0500

Is more government the solution or the problem? I would submit to you that government is and always has been the problem. We can all remember when the Clinton administration under Barney Frank wanted home ownership available to all Americans, even to those that could not afford one and was not credit worthy.

How was this accomplished? By pressuring the lenders to make 100% financing available and even in some cases 110%, where the homeowner walked away from the closing table with several thousand dollars in their pockets and never put one penny down in the deal. The first time I saw this, I said to myself, "How is this possible?" Oh, how I learned how it was possible.

When I was a little boy and did wrong, my grandmother would always shake her long index finger in my face and say, "You will reap what you sow". Now the mortgage industry and the real estate industry are reaping what has been sown over the last few years.

The Obama administration tries it best to put a positive spin on the current state of our economy. I remember watching a charismatic preacher on television one time quoting verses from the Bible out of context about physical healing. He had a terrible cold and looked awfully miserable.

He said that just prior to the program being televised, he prayed to Jesus to heal him of his flu and Jesus did heal him, even though he sounded like he was still sick and his nose was still red and running.

That is a picture of our government today. It is sick (bankrupt) but refuses to believe it. All you have to do is look at our deficit and the amount of spending going on. Just today I got an e-mail from the National Association of Realtors [NAR] giving tacit endorsement to more spending proposed by a group called the Center for American Progress. Isn't that a nice, patriotic, sounding organization?

The fact is CAP is liberal think tank organization headed up by John Podesta, former chief of staff to President Clinton. And to think we pay our dues to NAR to support such lunacy? We don't need more government spending. When has any nation ever spent itself into prosperity? Not in my life time and probably never yours.

Is Obama Hurting or Helping the Real Estate Industry?

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Tue, 16 Jun 2009 16:59:38 -0500

Like many of you, I get e-mails and magazines from the National Association of Realtors and from my state association wanting me to write my representatives and endorse many things the Obama administration are proposing to "stimulate" the real estate industry.

Now the Obama administration has proposed to pay each lender $1,000 for each successful short sale. In addition, they want to pay the homeowner $1,500 as "moving" money. They will pay the first lender $1 for every $2 the second lender is allowed to receive.

While this may loosen up the lenders a little to accept more short sale, now the lenders want to put a stipulation in the closing instructions that a home cannot be resold for 90 days after their closing. How is this going to stimulate the economy?

I recently read that 40% of home sold were bought by investors. These investors bought the homes with the idea of reselling for a profit. By adding this stipulation to any closing instructions will only hurt the sale of these homes. I am thankful that many title companies have said they will not issue title insurance with that stipulation. They can't monitor what happens to a home after closing. Secondly, I even wonder if it is legal.

The loan modification program established by the Obama administration just postpones the inevitable, viz., a foreclosure. Even with reduced payments, you still have to have a job to make the payments, plus many homeowners are finding out they don't qualify for this loan modification program.

More foreclosure homes are coming on the market affecting the value of the one next door. Unemployment at a all time high while real estate is at an all time low. Which raise an important question? Where is the money coming from to pay for all this? You got, from you and me in the form of higher taxes.

Can anybody tell me what country or individual has ever spent their way into prosperity by going deeper into debt? Why does our government think otherwise?

For information on working with realtors through short sales, go to my web-site page at http://www.cansellnow.com/shortsaleinfo.html .

Don't Runaway From Short Sales or Bankruptcies

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Sat, 28 Feb 2009 18:38:11 -0600

I recently attended a Broker-In-Charge CE Update class in my state. I was amazed at the number of brokers/agents that were walking away from possible sales because the principal was upside downside with their mortgage, viz., they owed more than what the home was worth, or they had recently filed for bankruptcy hoping to slow down a foreclosure.

It seemed that the brokers/agents would rather have a root canal done on them than try and work out another short sale offer. The complaints centered on the time it took the lender/bank to make a decision [three to six months... their buyers not willing to wait that long] and then having their commissions slashed, ignoring all the hoops the broker/agent had to go through to get an answer, which was in a lot of cases, "no deal."

It was noted in our handouts that "... a broker who considers accepting a listing in a short sale situation should first ask himself or herself whether s/he is competent to provide the necessary services and to adequately advise and negotiate on behalf of the owner." And I think "competency" is the key.

Having started in the real estate business as an investor, buying, fixing up homes and then selling them, I know of the many frustrations one can go through trying to buy property at the right price, negotiating with the seller and the lender/bank.

With this experience in hand, we are working with more and more real estate brokers in our state handling the short sale process for them and they get paid their full commission. There is no cost to the agent or the seller. It's a win-win situation for all.

For more information, go to my new web-site for agents only at www.canBuynow.com .

Who Really Benefits From The Bailout?

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Thu, 11 Dec 2008 15:33:56 -0600

Lately, I have been getting more and more e-mails from real estate associations and mortgage lenders encouraging me to contact Congress and tell them to bail out (not exactly their words) the mortgage industry. This would be good for the economy, get the banks to start lending again, realtors could sell more houses and we all could live happily ever after. So they say.

Before going any further, let me preface my statements by saying I am a commissioned auctioneer/real estate broker. My business is down just like many of yours. Now with this understanding, is this bailout a good idea?

Why would I want to burden my children's future with this national debt, a debt the government can never pay back without stealing it from you and me in the form of tax increases? Only if I am selfish and don't care. It would be like maxing out all my credit cards, pulling out all the equity in my home, leaving all this debt to my children upon my demise, just so I can have a good time in the here and now.

Our government is leading us down the primrose path of socialism, all in the name of "national interest." It was the mortgage industry, then the brokerage industry, the airline industry and now the auto industry. In fact, many cities across the country want a piece of the bailout out pie.

Where and when will it all stop? Only when you and I speak up and say enough is enough.

For more information on real estate auctions, go to my website at www.canSellnow.com or call me with your questions at 252-257-4822.

Will The Feds Make the Lenders Whole?

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Mon, 10 Nov 2008 13:12:24 -0600

Recently, I received a few calls from some real estate investor friends of mine here in North Carolina venting their frustration with working out short sales with some lenders. It seems some lenders are stalling in making any decisions as to whether they will release a mortgage for less than what is owed. If you have a buyer waiting for a decision from the lenders, believe me, they will not wait around very long.

It seems some lenders may be unwilling to short sale the property thinking that the Federal government will purchase these bad loans at par, thus no need to take a loss by short selling. What has been your experience?

In September of 2007, we made an offer on a pristine home in a golf community in Wake Forest, North Carolina. The lender sent out a local real estate agent for a BPO (Broker's Price Opinion). The BPO figure was way above the current payoff and the lender refused our offer thinking they could sell the property and not take a loss.

If I recall right, the BPO was for about $680,000 with a payoff of approximately $600,000. We offered $535,000 and I was turned down. I don't need to tell you what has happened to the price of real estate since September 2007. I drove by the home last week and guess what? The home has not sold. It has been vacant since April of 2007. I sometimes wonder if the lender wished they had accepted my offer. I am beginning to see this scenario more and more, especially in the economic environment we are in.

I don't know who coined the phrase, "Cash is King", but it is certainly true in the real estate market we are currently experiencing. I have been talking with other investors who are waiting for the market to bottom out. The problem is that no one knows when that will happened.

I told them that if they can buy today and make a reasonable profit, then by all means buy today. But the greed factor is too great for most of them. They want to wait a little longer. I would prefer inventory and keep cash at a minimum because there are so many uncertainties in our economy today that can affect the value of our dollar.

I am also hearing rumors about the possibility of a Real Estate Resolution Trust. If that happens, I hope the Feds turn to professional auctioneers to help liquidate these properties. No doubt the Feds will suffer a loss but not as much of a loss if they use bank employees or attorneys to auction these properties.

For more information about real estate auctions, go to my web-site http://www.cansellnow.com

Nationalizing Our Financial Institutions

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Tue, 23 Sep 2008 20:06:54 -0500

As I write this, I realize that much can change this week with regards to the Feds final plans and Congressional approval to rescue the banking industry. So what I am about to say is based upon what is currently being proposed. I also realize that what I am about to say will be only understood by a handful of people who understand the economics of this country. My disclaimer is that I am not an economist but someone who grew up under a constitutional form of government.

What is being proposed by the Federal government is socialism, spelled with a big S. Webster New World Dictionary defines socialism as following: 1. any of various theories or systems of the ownership and operation of the means of production and distribution by society or the community rather than by private individuals, with all members of society or the community sharing in the work and the products; 2. the stage of society, in Marxist doctrine, coming between the capitalist stage and the communist stage, in which private ownership of the means of production and distribution has been eliminated.

Our federal government is about to "nationalize" the mortgage market, the insurance, the financial institutions, and soon, the big 3 automakers, to the tune of $700 billion dollars, and as one economist said, the true cost is closer to one trillion dollars.

What does $700 billion or one trillion really look like? I was listening to Chuck Swindoll on the radio in my car this past week when he had another businessman explain to him the difference between one million dollars and one billion dollars. The businessman said if you had a single three foot stack of tightly bound one hundred dollar bills that would be what a million dollars look like.

On the other hand, a double stack of one hundred dollar bills tightly bound as tall as the Empire State Building would equal one billion. If this is true representation, we can say that $700 billion is doubled stacked one dollar bills 700 times taller than the Empire State Building.

Now where does all this money come from? It will come through increased taxes or by monetizing the economy, viz., start up the printing presses, which will produce inflation.

If the current proposal passes Congress, it creates a "Czar" position for Henry Paulson which gives him power that, according to the language in this proposal, is" non-reviewable by any court or any administrative agency." Paulson will have more power than our president that no one can challenge.

I keep asking the question but I cannot get an answer, "Where in our constitution does the government have the authority to do what is about to happen?"

There is talk about the Fed forming a Resolution Trust to liquidate all the bad loans these banks have accumulate. I suppose as a real estate auctioneer, I should be excited about this but I can't, not at the expense it will have on our country. And now, we are hearing talk about our government bailing out foreign banks as well because these banks have lent money to Americans.

When will all this insanity end? Not until you and I speak out and say enough is enough.

Should Realtors Become Auctioneers?

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Thu, 11 Sep 2008 11:53:31 -0500

I received an interesting phone call from a realtor in California. She had read some articles I had written about using an auction as a first choice method of selling a home, rather than as a last option. Her question to me was this, "Should I become an auctioneer?"

My first tacit thought was, "Go for it!" Yes, auctioning a home is a fast way to sell it, but not all homes will qualify for an auction. But before I get into answering the question, let me discuss briefly what an auctioneer does and does not do.

Some think that an auctioneer shows up on the day of the auction, starts talking fast, sells the house, and he/she is done. Actually, the activities that take place on the auction day, represents about 5% of the total auction process.

The perception of a realtor may be closer, viz., a contract is signed, a sign is posted in the yard, information is listed in the local MLS, and the listing agent hopes and prays that it gets sold. We know that is not always true but that is how the public portrays us.

Now back to the question "should realtors become auctioneers?" My answer is, "It depends." Most auctioneers are a second, third or even fourth generation of auctioneers. They are in the business become they love it and have been around it since the beginning of time. Most auctioneers are specialist in a particular area such as farm equipment, heavy duty equipment, antiques, cars and trucks, land and yes, real estate, both residential and commercial.

I don't know what the licensing laws of California are, but here in North Carolina you must go to a state approved school for pre-licensing requirements which may involve ten days to two weeks of your time, then you must past a state administered test.

There are annual renewing requirements, professional associations to join such as your state association and/or the National Association of Auctioneers [NAA] in addition to continuing education requirements [CE] each year. Add all this up plus your NAR and state dues, MLS dues and CE requirements; you can spend several thousand dollars a year on licensing and professional dues requirements.

Then you must become a marketer, that is, know how to market and get bidders to your auction. Who coordinates the marketing process? Who makes up the25 to 100 page proposal to the client? Who's responsibility is it for placing line and display ads in which newspapers? What income range are you targeting? Who makes up the flyers and ads mats? Who checks on the cost of these things? Who sets up information on dozens of web-sites? Who draws up the Property Information Package (PIP)? Who registers the bidders and records the auction? Who keeps the client informed as to what is going on? And it goes on and on.

Rather than trying to re-invent the wheel, unless you have a real love for the auction industry, your best bet would be to partner with a local auctioneer in your area.

For more information about auctioneering, go to my website at http://www.cansellnow.com

IS THERE A REAL ESTATE TURN AROUND IN THE MAKING?

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Fri, 25 Jul 2008 09:38:29 -0500

In an effort to turn around the depressing attitude of many realtors across the country because of the market we are in, some local North Carolina real estate publications are trying to put a positive spin on the market by stating that 2009 will be good year and that preparation needs to be made now to take advantage of the 2009 "turnaround."

Yet, several of the major on-line networks reported this morning that foreclosures doubled during the first half of this year and that 2009 doesn't look any better.

As a North Carolina auctioneer, I have tried and tried to approach lenders in North Carolina to let us auction some of their REO properties. With very few exceptions, the answer has been a resounding no.

Reality has not set in with many of these lenders and banks. Surely they understand that these "non-income producing assets", as they call them, will affect their book value. If they get too many, the Feds will step in.

The BPO agent (Brokers Price Opinion) seems to hold the key to the lender's decision. In hopes of "getting a listing", what we in the auctioneering business call the "list and wait" method of selling, the BPO agent gives a range of unrealistic values to the lender/bank.

Why pull comps that are three to six months old or older, to determine a range of values, when we are in a declining market? Hello! The home sits on the market for many months, some over a year. The home deteriorates, some are broken in, not to mention the holding cost and the loss value of money while it sits.

An auction determines "market value." When you have a group of people in a room bidding on a home, when the bidding stops, market value is established, viz., what a buyer is willing to pay for the home.

"Market value" is not what sold next door three months ago or three streets over six months ago but what someone is willing to pay today.

For more information on auctions, go to my website at www.canSellnow.com.

UNDERSTANDING THE DIFFERENCE BETWEEN AN ESTATE SALE AND AN AUCTION.

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Fri, 18 Jul 2008 20:54:17 -0500

My mother recently passed away leaving property, both real and personal, to me, my two sisters and brother. My dad died a few years earlier. He was a pack rat, never willing to throw anything away. He was always buying things that he felt was a good deal, even though he didn't need them. Some items appear to have value and some we are not sure about. We received a letter from a company that claims they are "estate sale specialist." My brother says we need to talk an auctioneer. What's the difference?

An excellent question! When a family member dies and leaves real and personal property to the heirs, in most cases, the heirs have no idea how to liquidate the assets in the most cost efficient manner, assuming liquidation is the goal.

An estate sale is basically a "tag sale." It doesn't even come close to being compared to an auction. It can be very impersonal. An estate sale is more like a garage sale. A "specialist" normally conducts the estate sale and receives a percentage of the revenue generated. Estate sales can last from one to three days, normally with a price reduction on day three.

The "estate sale" industry is an unregulated industry without any professional standards or Code of Ethics. There are areas of conflict in that unsold property ,in some cases, go to the estate sales company. Their idea of marketing is to run an ad in the paper and put out a sign.

Auctioneers are specialist in marketing. Auctioneering is a profession that is regulated at both the national and state level and does have a Code of Ethics to operate by. Most are full-time professionals while some may be part-time due to seasonal work. An auction ensures a wide range of bids, letting the bidders determine "market value."

An auction creates excitement through the competitive bidding process. Compared to estate sales, auctions can bring highest possible fair market price for your property. Both real and personal property can be sold in one day, not over days. There is no haggling over price. An auction exposes your property to the largest pool of qualified buyers.

While estate sale specialist do not want owners present on the day of the sale, (I wonder why?), the auctioneer encourages the owner to be present. Before you consider an "estate sale," talk to your local auctioneer.

For more information on auctions, go to my website at www.canSellnow.com.

Who Pays the Marketing Fee for a Real Estate Auction?

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Wed, 11 Jun 2008 18:56:28 -0500

The simple answer to the question is the seller pays the marketing fee but it can be paid in various ways. In today's upside down real estate market where the seller normally needs to sell quickly, the auctioneer will find that many homeowners are unable to front the marketing fee due to their current financial situation.

The auctioneer and homeowner can decide on several options. For example, if the homeowner agrees that the auction will be "absolute", viz., sold to the highest bidder regardless of price, then our firm will front the marketing fee for the homeowner with the agreement that it will be repaid at closing.

However, if the auction is to be a "reserve" auction, meaning a minimum price level must be met before the hammer falls (property is sold), we will not front the marketing fee. Only in a few rare occasions where the reserve is very low compared to what we feel the property will sell for, we will fund the marketing fee and get repaid at closing.

The auctioneer should give the seller a proposed marketing schedule showing all the estimated expenses and get a check from the seller based upon this estimate. If the expenses are less than what was proposed, any excess expense money is returned to the seller with a statement showing where the money was spent.

The marketing fee cover such expenses as but not limited to: (1)newspaper, radio and TV ad, (2) signs, posters, photos and pennants, (3) postage and addressing (4) labor for tagging, clean up, security, etc.

For more information on real estate auctions, visit my website at www.canSellnow.com.

Passive Seller vs. Motivated Seller

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Tue, 03 Jun 2008 19:51:37 -0500

We receive calls from homeowners who are considering an auction as a method of selling their home. These potential auction sellers will basically fall into two categories: a passive seller or a motivated seller.

The passive seller has a predetermined dollar figure in mind they want from the sale of their home. In a lot of cases, it is very unrealistic. They are very demanding of the auctioneer. They do not want to spend a lot of money in marketing the property for an auction, but they want a lot of people to show up at the auction. They have been told by friends, neighbors, or realtors, not to take less than such and such for the home. This kind of seller does not fit the auction criteria.

The motivated is very realistic and understands the current market. While not wanting to give away their home at auction, they understand the market value is determined by a group of potential buyers and the hidden costs of holding onto the property for an extended period of time. These hidden costs include the time value of money, additional mortgage payments if they were to use the list and sell method, additional pro-rata property taxes, continued maintenance expense on the home such as utilities and lawn, etc.

The motivated seller is an excellent candidate for an absolute auction, that is, the highest bidder will buy the home regardless of price. The absolute auction creates more excitement and draws larger crowds.

If you have questions about auctioneering, visit my website at www.canSellnow.com.

What is a Ringmen?

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Thu, 29 May 2008 13:32:42 -0500

I recently went to a large auction out of curiosity. I didn't bid but just watched. I saw men and women jumping around, moving among the crowd, yelling, "Yes" or "Yep" or something to that affect, flinging their hands up in the air. I asked someone what they were doing and I was told they were Ringmen? What is a Ringmen?

Ringmen are the men or women who stand in the crowd and relay the bids to the auctioneer. Other terms such as bid spotter, bid assistant or ring person, do the same thing. All refer to the person taking bids during the auction for the Auctioneer.

Especially with large crowds, the duty of the Ringmen is to watch his/her section of the crowd that has been assigned to the Ringmen. The duty of the Auctioneer is to watch the Ringmen rather than the crowd. With large crowds, the Auctioneer could miss some bids if he tried to spot the bidders himself.

The Ringmen should try and establish a relationship with the bidders before the auction seeking to get as much information about the items the bidders are interested in, answer any questions and let them know when those items are up for bid.

The Ringmen is a very important asset to the Auctioneer. There is even a school to teach you to become a professional Ringmen.

What If My House Doesn't Sell at Auction?

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Thu, 22 May 2008 20:56:31 -0500

There are basically two type of real estate auction. An "absolute" auction is where the property is sold to the highest qualified bidder with no limiting conditions or amount. The seller may not bid personally or through an agent. Also known as an auction without reserve, this type of auction means the property will be sold to the highest bidder regardless of price.

A "reserve" auction is when the seller or his agent reserves the right to accept or decline any and all bids. A minimum acceptable price may or may not be disclosed and the seller reserves the right to accept or decline any bid within a specified time.

Ron Taylor and Sons Auctioneers discourages sales with a high reserve price and asks sellers to disclose any minimum or reserve price prior to a sale. In the case of bankruptcy and certain court ordered auctions, many properties are sold subject to a reserve price or final ratification by the Court before the sale can be completed.

If the auctioneer does a good job with marketing, the home will sell at auction. The problem comes in when the expectations of the seller is not fully explored by the auctioneer prior to the auction. Many sellers do not understand that if you have 25 or 30 potential buyers bidding on their property, market value is reached when the bidders stop bidding.

If the seller at a reserve auction rejects the high bid, there may be a "no sale fee" the seller will have to pay to the auctioneer. The auctioneer should have a good feel as to what the home will bring. If the reserve is higher than this figure, the auctioneer should take a bye on the property.

For more information on real estate auctions, go to www.canSellnow.com.

A Real Estate Auction Should Not Be A Last Resort Method

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Fri, 16 May 2008 17:03:13 -0500

Someone recently asked me if an auction should be the last resort to sell their home. She and her husband lived in a nice neighborhood where the homes and yards were kept in pristine condition. They thought their home would sell pretty fast.

They had listed their home with a realtor with a six month listing agreement. Since then, they have had very few showings. The agreement expires at the end of the month and they are not sure what to do.

It was her understanding that selling a home by auction was only for distressed properties, like foreclosures, or government seized property. I tried to explain to her that things are different today, that more and more homeowners are using the auction method.

The National Association of Realtors (NAR) verified this several months ago by stating that in a very few years, 25% or more homes will be sold through auctions. In February 2003, The Wall Street Journal ran a story with the heading, "Auctions Are No Longer Only for the Desperate." The National Association of Auctioneers (NAA) reports that the sale of residential properties by auction continues to be on the increase.

A seller does not need to be desperate to be motivated. Many sellers have reasonable price expectations and prefer the speed and excitement of the auction process.

It may still be true that foreclosed properties are still big business and carry the "last resort" image but don't view all real estate as a last resort. I told her a live auction should had been her first consideration. I encouraged her to attend an auction or two to get a feel how they are conducted and the prices that homes are being sold for.

And I also told her to visit my website at www.canSellnow.com to learn more about auctions.

Consignment Auctions

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Wed, 14 May 2008 20:00:09 -0500

My mother recently passed away and left her home and furnishings to me. My husband and I want to move into the home but we do not need all the furnishings. I don't want to do a "yard sale" as I feel some of her things are of value and may not get a good price. A neighbor told me to find someone who would sell them for me on consignment. Would an auctioneer be interested in something like this?

There are many auctioneers that have galleries that conduct consignment auctions. There is a caveat though. Most auctioneers do not like consignments with a reserve, meaning the seller has a minimum dollar figure the seller is willing to accept.

Ironically, some sellers want more money than what a group of buyers are will to pay because the sellers are not familiar with the market or the item to be auctioned. That is why the auctioneer likes the absolute auction, meaning the highest bid wins regardless of the price. If the auctioneer has done a good job in marketing the auction, you should get a good price for your items.

Many auctioneers will buy pieces or the total furnishings from an estate. The auctioneer needs to make a profit when he sells, so you need to take that into consideration. For information on North Carolina auctions, go to my website at www.canSellnow.com.

Do I need an Auctioneer?

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Mon, 12 May 2008 16:56:55 -0500

I own my home and have been thinking about selling it and moving to another state. I have talked with several realtors and just can't get excited about listing my home with them, especially in today's real estate market. I need to sell quickly.

I have been doing some reading about auctions. It seems home auctions are becoming more popular as a way to sell homes fairly quickly. My question to you Ron, is, why can't I just auction the home myself?

As owner of your own home, you could but do you really want to? You could operate on yourself but I wouldn't suggest it. Most states require a license if you don't own the property that is being auctioned.

Before becoming an auctioneer, as a real estate broker, some home owner's would tell me they could sell their home and save on the commissions. Some did but most didn't because they didn't understanding marketing.

Their idea of marketing was to run a FSBO (For Sale By Owner) ad in the local newspaper on the weekend, and to put a sign out front of the home.

Auctioneers are specialists in marketing. Auctioneers are not really auctioneers but marketers. They know how to expose your home to the greatest number of people in a cost effective way. Most FSBO sellers are targeting the local market only while auctioneers are national and in some cases , international, in their marketing efforts.

A professional auctioneer knows how to get people to the auction, how to create excitement and get the best price for your home. In addition, there is the paper work you will need to understand, viz., contracts and disclosures, handling escrow money, getting pre-approved, qualified buyers to the auction, and the follow up after the auction that leads to a quick and smooth closing.

My suggestion is to use a professional auctioneer. For more information on auctions, go to my website at www.canSellnow.com.

Using Credit Cards at an Auction

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Sat, 10 May 2008 07:59:07 -0500

Ron, I recently attended an auction in another state while on vacation. There were some nice pieces of furniture that were being auctioned. The auctioneer stated before the auction that they would accept credit cards for payment but they would charge a 3% processing fee along with the buyer's premium.

The buyer's premium was 10%. When you add the credit card fee of 3% plus state sales tax of 7%, it doesn't seems to be that great of a deal.

There's not a whole lot you can do about the sales tax but pay it, whether at an auction or at the local grocery store. At an auction, the best way to pay is cash, but I realized that is not always an option for everyone.

The credit card company charges the auctioneer or any merchant, a processing fee. This varies from vendor to vendor. If there was a 10% buyer's premium, and if someone used a credit card with a 3% processing fee charge to the vendor, the gross to the auctioneer is 7% and then his expenses (labor, utilities, liability insurance, facility charge if he is renting, etc., has to come out of the 7%, thus reducing his margin of profit.

My suggestion is that if you are going to use a credit card at an auction for your purchase, bid accordingly, viz., does the price I pay for the merchandize, plus the processing fee, make me feel I made a good decision with regards to price versus value?

Keep, in mind, if you don't pay that card off within the next billing cycle, you paid more for that item than what you bid, particularly if you have one of those 18 to 24% credit cards.

For more information on auctions, go to my website at www.canSellnow.com.

AUCTION VALUE vs. MARKET VALUE

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Wed, 07 May 2008 20:01:09 -0500

How does auction value differ from market value?

The differences between auction value and market value stems from the auction process itself. By this, I refer to several characteristics which are more dominant in the auction process than in the "list and sale" technique. They are:

•1. The necessity to make a decision as to buy or sell at that moment. There is not time in which to deliberate and think about it. There is a sense of urgency.

•2. The auction process creates an atmosphere of competition among the bidders which could result in at least one or more bidders to offer more for the property than they would have under different circumstances.

•3. Buyers are not competing against sellers, but instead are competing against other buyers. Therefore, the activities are not those of negotiation between a high and low price but instead it is a contest of how high one bidder is willing to go above another.

Logically, it would appear that if all of the bidders present at an auction were all well informed as to the market price of a property, then the market price would tend to represent the ceiling of the selling price.

However, an auction many times acts on the emotional side of a buyer's personality. And when a person starts to add emotion into value judgments, then those judgments may lose some objectivity and, in the buyer's eyes, more value may be given to the property than is shown by market comparisons.

On the other hand, there is a possibility that the auction price may fall short of the market value. For example, the time allotted to expose the property to the public may be in reality not long enough to attract that buyer who is willing to pay the highest price for the property. Then, the seller who is emotionally prepared to sell the property may accept a lower price rather than wait any longer. Also, if all of the buyers are able to remain objective and the auctioneer has failed to inject emotionalism into the bidding process, then the auction price may also fall short of the market value.

For more information about real estate auctions, visit my website at http://www.cansellnow.com/.

What is an "owner confirmation" auction?

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Tue, 06 May 2008 09:22:33 -0500

I recently attended a real estate auction whereas the auctioneer stated that the winning bid would be "subject to the owner's confirmation." Was this really a "reserve" auction?

There is really no difference between selling real estate at an auction with a reserve or selling real estate at an auction "subject to owner's confirmation." In essence, both of these auctions are "reserve auctions." Unless a property is advertised as an "absolute", meaning the property is sold to the highest bidder with no limiting conditions or amount, it is a reserve auction.

In the reserve or subject to owner confirmation auction, the seller may not personally or use an agent to bid for him or her.

For more information on real estate auctions, go to my website at http://www.cansellnow.com/.

What is a Buyer's Premium?

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Sun, 04 May 2008 16:11:26 -0500

The use of a buyer's premium is a way of paying the Auctioneer for his or her services. The buyer's premium shifts the payment of the Auctioneer's commission from the seller to the buyer at auction.

The buyer's premium is a fixed percentage of the sales price that is collected from a successful bidder in addition to the amount of the successful bid. For example, if the highest bid at a real estate auction is $200,000, and the buyer's premium is 10%, the sales contract will be written up for $220,000.

Auctioneers traditionally have been compensated through the payment of a commission paid by the seller, which is normally based on the total auction proceeds. An estate auction that includes both real and personal property is a good example.

As an alternative to this commission based fee structure, the Auctioneer and the seller will often agree to reduce or eliminate the commission paid by the seller and instead agree that the Auctioneer will be either partially or fully compensated through the retention of a fee levied against the successful buyer at auction by way of a "buyer's premium.

The buyer's premium is a matter of choice. The buyer's premium is used only when the Auctioneer and seller agree to it in their contract. Auctioneers and sellers have to decide when to use it. The "buyer's premium" disclosure is announced in the advertisement under "terms and conditions of the sale" in addition to the announcement at auction. Most auctioneers have potential buyers /bidders sign a statement before bidding that they understand that a buyer's premium will be added to the final and highest bid.

For more information on real estate auctions, visit my website at http://www.cansellnow.com/.

When is an Auction not an Auction?

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Sat, 03 May 2008 09:03:10 -0500

Over the past six months or so, I have noticed an increase in the ads in the paper about auctioning homes. Here in the state of North Carolina, you must list your auctioneer license number in the advertisements and the property owner along with the terms of the sale. When I don't see this in the ad, I get suspicious.

Upon further investigation of these ads, I have found two things happening. First of all, there is an investor or group of investors that claim they own the home by way of a deed BUT they do not own the debt (the mortgage), that is, they took over the property "subject to" the existing mortgage.

In most cases these are homes they are about to be foreclosed. The homeowner has throw up his or her hands and have basically given up trying to stay in the home. They deeded the property over to the investor(s) with the understanding that the investor will stop the foreclosure, buy their home or get the property sold and save their credit.

In the meantime, the investor(s) work out a "short sale" with the lender. The investor(s) then try and find an end buyer to sell the home to, at a higher price than the "short sale" offer. Part of the marketing plan is to "auction" the home to the highest bidder by way of what I call a Dutch action or round robin bidding process.

Potential buyers come and look at the home and write an offer down on a list provided by the investor(s) along with their phone number. The bidding process stays open for several hours then closes. The investor(s) call everyone on the list after the bidding process closes and tells them what the highest bid was and wants to know if they want to increase their bid. A few will, most don't.

If the highest bid does not meet what the investor(s) need or want out of the house, there is no sale, and it basically goes back to the bank through a foreclosure. The homeowner's credit is ruined.

The second thing I see happening is that realtors are advertising a property as an auction using a form of the silent auction method. A potential buyer makes an offer through a sealed bid. The bid process may stay open for several days. Again, as in the investor group above, if the bid does not meet expectation, there is no sale.

As a professional auctioneer, I question the legality of some of these selling methods that are being advertised as live "auctions." If you are approached about selling your home via an auction, ask that person if he or she is a licensed auctioneer,(not all states require a license) a member of the National Association of Auctioneers [NAA] and/or a member of their state auctioneer organization and about their experience in the auction business. They should also be licensed to sell real estate.

For more information on real estate auctions, go to my website at http://www.cansellnow.com/ or call me with your questions at 252-257-4822.

Selling Before the Foreclosure Auction Date

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Wed, 30 Apr 2008 15:27:48 -0500

A local realtor recently called me about a home she just visited. The bank is foreclosing on this property in about 45 days. The courthouse auction date had already been set. She wanted to know if she sold the property prior to the foreclosure date, would the bank still give her client 30 days to close the deal?

After I told her I was not giving her legal advice, the short answer was "it depends." In today's upside down real estate market, banks and lenders are doing things I thought they never would do. The first thing she needed to know was how much money the bank had in the deal, viz., attorney fees, late fees, payoff, etc.. She didn't know. And I assume she wants to get paid. :-)

With so little time to sell this property, it might qualify for a live auction, which could take place in 30 days or less. But the key would be the payoff to the bank/lender and the Loan to Value (LTV) and if the seller had funds for the marketing cost.

I didn't think there was enough time to work out a "short sale" in this situation, BUT, if she had a qualified buyer, the bank could, and I am saying could, not that they will, but they could postpone the auction at the courthouse steps but the buyer had better be pre-approved and not just pre-qualified for a loan.

That is where live auctions have an advantage because before someone can bid, they must put down a deposit and show proof of their ability to purchase the home and be able to close in 30 days or less.

The "short sales process", as most of you know, can take several months to complete and even then, the lender may not agree to your offer or commission structure. Will the buyer wait for the lenders answer? Probably not. Here in NC, you have to disclose the fact that a home is in foreclosure.

Short sales take a lot of patience as you end up talking to many people before you get to the right person. And have a radio ready or plan on doing something constructive while you are put on hold for long periods of time and then you are told to call back as "their volume of calls have increased."

For more information on real estate auctions, go to my website at http://www.cansellnow.com/ or give me a call and I'd be glad to share with you what I know about the short sale process.

I Sell Real Estate, Not Personal Property!

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Mon, 28 Apr 2008 10:06:51 -0500

Have you had one of those rare occasions that a client calls you and says something like, "Mom called a few days ago and said my Aunt Edna died last week and that my husband is the executor of the estate? My husband informs me that we need to sell the home as quickly as possible and all the personal property that includes some antique furniture and her deceased husband's fully restored 1965 Ford truck in addition to her personal car. Since you are a realtor, he wants you to get the house sold and also handle the sale of the personal property."

What are your first thoughts? You can handle listing the home but you surely don't want to get involved in selling the personal property items. After all, your expertise is real estate and not an antique or truck/car dealer.

This is a great situation to work with an auctioneer to get the home, its furnishings and all the vehicles sold on the same day through an estate auction. Through proper planning, the home and personal property can be marketed together. You will not have to move all the furniture out to a different location or put anything in storage. The executor picks the date of the sale and you moved forward from there.

What if the home and all the personal items sold in 30 to 45 days from the time you got that call. How would that make you look in the eyes of your client? Pretty fantastic I would imagine. And it can be done. Go to my website http://www.cansellnow.com/ for more information on real estate auctions.

The Mother of All Governments?

Ron Taylor (Ron Taylor and Sons Real Estate and Auctioneers) — Wed, 23 Apr 2008 09:40:35 -0500

I received an e-mail this morning from the Certified Mortgage Planning Specialist (CMPS) Institute proposing to Congress that they (Congress) bail out homeowners with negative equity by way of a loan equal to 20% of the homeowner's current value of their home.

Gibran Nicholas, Chairman of the CMPS Institute said, "Negative homeowner equity is the one root problem that Congress can help solve." He further stated, ""If homeowners have no incentive to keep up their mortgage payments, the problems in the housing markets could continue to spread and plunge our country into a deep recession," continued Nicholas.

Excuse me, but can someone give me chapter and verse in our Constitution that our government has the authority to do this?

The title of the e-mail was "What Congress can and should do to help solve the housing, mortgage and foreclosure crisis." I would submit the title should be, "What Congress cannot and should not be doing..."

We can go back in history when the Government bailed out Chrysler by way of a loan. That set a precedent. Whenever there is a national catastrophe, the media starts up with the mantra, "What is the government going to do about this?"

Now our government is in the stock brokerage business by way of Bears and Stearns. Ok, I going to say it, "Our constitutional form of government doesn't guarantee everybody free or affordable health insurance either." Whatever happened to the free enterprise system?

Do you really think the CMPS approach is going to solve the mortgage dilemma? If this passes, and I hope it doesn't, do you think it will help you sell more house? Let me know your thoughts.