Home : Blogs : Eric Kodner CRS, ABR, e-PRO, CLHMS, Madeline Island Real Estate Wisconsin : Madeline Island Real Estate Blog

What works for sellers and what doesn't - Lessons learned from a real estate auction

On Saturday, July 19th, I attended a real estate auction on Madeline Island. To my knowledge, this was the first time a Madeline Island residential property had ever been offered at public auction.

The auction of the Campbell estate on Equaysayway Lane seemed more like a social event than a real estate liquidation. There were approximately seventy people in attendance. Most turned out to be spectators rather than participants.

From the perspective of some who attended the auction, the result of the bidding was less than spectacular. The highest bid received for the estate home portion of the property (valued for taxes at $1.2 Million) was just over $600,000. A separate interior parcel brought a high bid of $72,000.

My understanding is that the family had earlier stipulated a reserve figure which was not met during bidding and therefore the prevailing high bid was not accepted.

There was a lot of public discussion in the town of La Pointe following the auction. The whole event probably did more to stimulate local dialogue about real estate than any marketing campaign could have achieved. And there were lessons learned from the auction experience.

The availability of this property was probably not as widely publicized as a traditional listing would have been, and that certainly may have limited the seller's chances of achieving their desired price. Without a listing presence on MLS and REALTOR.com, an interested party would have had to learn about the auction by actually visiting the area and noticing one of the signs advertising the upcoming auction, or perhaps by browsing the auction house website.
There were probably only six or seven bidders present, out of the dozens of folks who attended. Had the property been given appropriate time for market exposure, it seems likely that more prospective buyers would have stepped forward to express an interest.
More exposure usually generates more prospective buyers. More prospective buyers generally results in receiving a higher offering price.

I'm sure the auction house did its best to make the auction a success. But the less than stellar result seems to have sent a message to Island property owners that a real estate auction may not be the best answer for those hoping to sell a Madeline Island property, especially a high-end estate.

Posted by Eric Kodner CRS, ABR, e-PRO, CLHMS, Madeline Island Real Estate Wisconsin on 08/08/2008 11:23 PM

Comments (12)

madeline island, town of la pointe

Originally posted at: Madeline Island Real Estate Blog: What works for sellers and what doesn't - Lessons learned from a real estate auction

This post has been included in Wisconsin Information Ashland County, WI Information La Pointe, WI Information
Post is included in group: Posts to Localism

12 Comments on What works for sellers and what doesn't - Lessons learned from a real estate auction

AUG

2008

Thanks for a very good post. I am passively watching a few auctions and they are less than spectacular.

I am not sure I understand why they run them. I am driving along the row of just built new and empty condo buildings, and i see the signs of the Auction, and hten the date is over, and the sign disappear, but the unit s are still unsold.

There is one thing to be learned.... How with out proper marketing/exposure did they get so many spectators? If they had been able to generate 70 on-lookers with just basic signs, what can we gather from their results to generate more traffic to our properties? I would love an open house to generate half as much interest!

It is important to meet the reserve bid from the sounds of it.

Thanks,

Tom Davis

World Class DE Realtor

AUG

2008

I don't see auctions working much here. People want a deal and regular exposure seems to be the best.

Jon, thank you.

I'm not slamming the concept of real estate auctions here. But I do believe some sellers are looking for a quick fix and auctions don't always accomplish what they hope to achieve.

Maureen, the auction was advertised on signs placed at street corners, both on Madeline Island and on the nearby mainland a couple of miles away, for a period of several months. Most open houses are not advertised nearly that far in advance.

Yes, there were about seventy people in attendance, but only a handful of bidders. It was a lovely weekend afternoon on Madeline Island and the even attracted quite a few curiosity seekers. Among others, I counted seven real estate licensees in attendance at the auction. And some of the family members who have an interest in the estate were present also.

Considering that an auction is a sale in which the process is accelerated (that is to say, the prospects are assembled in one place, at one time and told to bid as if the property will be sold to the prevailing bidder), that differs greatly from an open house, which is basically an invitation to browse and learn about the property.

I don't think it's possible to compare the attendance at an auction to that at an open house. And if you told your sellers that the result of an open house would be an offer at approximately fifty per cent of their tax assessed value, I doubt if those sellers would want you to even hold an open!

Tom,

Without meeting the reserve price, the high bid is usually rejected. I suppose the family could have opted to accept that bid, but it appears they were disappointed with the result.

Chuck,

I've heard that auctions sometimes work very well. I imagine they work best in the primary home market. But when it comes to marketing and selling an upper-bracket vacation home, I'm skeptical about the wisdom of selling at auction.

AUG

2008

We had a high end property go on the auction block here in Grand Rapids this spring. It was supposed to bring in $5 million. They had a low bid at about 750K. Needless to say, it didn't sell that way and is listed on our MLS now at 1.5 million. I agree with your assessment that auctions may not be the best way to sell high end properties. Advertising was not the problem here- this was a very publicized auction - the owner was in the news for months and was eventually convicted of Medicaid fraud.

SEP

2008

Bonnie -- The auction approach can really backfire in some cases. Once a property can only produce a bid that is way below the asking price at auction, that lowball price is what sticks in the public's mind. Prospective buyers can be like sharks..they smell blood in the water. They decide that the property is hugely overpriced and that opinion gets around!

I was at a conference in Dallas at a venue at the same time a real estate auction was happening.

I sat in on the auction during breaks in my conference. It was a real eye opener. The people

conducting the auction were all tuxedo clad. The plats were posted on the wall. Even in that short

time, the pitfalls I saw were glaring. They were selling landlocked pieces, etc. In the brochures they

had verbiage that I am sure that they could point to as "disclosure." Examples, "you better check

this out", "look close at this," etc. It left me with a very uneasy feeling for the people bidding.

They needed representation and due diligence.

Brenda,

The auction here resembled what you describe in some ways. The auctioneers were from Oklahoma. The presentation was a lot of folksy "y'all buy this now" stuff.

Auctions have a depressing air about them. There is the feeling that the sellers are in distress, that they were forced to resort to an auction in order to procure a quick sale. You can sense the sharks in attendance, looking for a huge bargain. They don't come to pay a market price, but rather are looking to steal something. That's just not my idea of a sensible way to sell your property.

Leave a response…

Name:

Email:
(optional)

Comment:

What does the graphic say?