I wrote about an unsuccessful real estate auction in the Redland a few weeks back. I commented about the fact that it was not an absolute auction being the primary reason for it’s turning out to be a flop.
Then I had the opportunity to attend another auction in the Redland. This one was different in that it was an absolute auction. When the public thinks ‘auction’ they think whatever’s being sold will be sold to the highest bidder. I, personally, think it’s a gimmick to give them anything but. But that is just my opinion. When an auction is not absolute, I think it’s just a ploy to spark more interest in the property and hopefully get it sold. There’s nothing wrong with the marketing premise, in itself. I still have issues with calling it an auction. Maybe we just need to educate the public that an auction isn’t always what they think it is.
I attended the absolute auction hoping to see some action and see a property get sold to the highest bidder. The property is a larger-than-most, but older and well-kept home in the Redland area. It’s right smack in the middle of the Redland and sits on 2.5 acres of tropical paradise, well manicured yet plenty of flora. Adjacent to the property is a natural hammocks, designated as such. Beneficial to the property is that most of it has a property tax benefit because of the hammocks and the property pays about a third of what a similar property without the tax benefit would pay. With the issue of property taxes being so high in Florida, this by itself is a huge benefit to the property.
On top of the tax benefits, an acre of land in the Redland sells for about $180,000, although many would like to have you thinking it’s a lot more than that. Right now, that’s about the going price (albeit not the asking price). And even though on a single property lot an additional acre isn’t technically worth the same as the 1st acre (simply because you can only build one home on it, whether it’s one acre or five) let’s give it the benefit of the doubt and do what the county property appraiser does and calculate each square foot as being worth the same. That means the land on this parcel is worth $450,000 by my calculations.
The auction was to open at $489,000. And it was going to sell to the highest bidder. Period. Seeing how the land alone was worth just $39,000 less I figured it would be like getting the structure almost free if you could buy it at the opening bid. By the way, the county property appraiser has the structure valued at $213,000, so it’s not as if there wasn’t a lot of wiggle room there.
The winning bidder would be responsible for a 10% buyer’s premium so if he won the bid at $500,000, he’d have to pay $550,000. No matter, this home was priced right, so a good deal could still be had.
Upon arriving at the property I recognized a couple from the last auction. I guess I wasn’t the only curious one. I struck up a conversation with them as we waited for the proceedings to begin. Twenty minutes after the bidding was supposed to begin we realized they weren’t going to have an auction. Of the several parties that were there (perhaps 4) none of us were registered to bid. I was dumbstruck by this fact.
Here was a prime property in the Redland available for sale at way less than market price and no one was bidding.
Is the market in South Florida that bad? Or had the auction not been advertised fully? My opinion tells me it’s the former. I had personally found the auction online but because I specifically looked for auctions. I wasn’t searching as a home buyer. The couple I met said they had seen it advertised in the local papers. So it had been advertised. Exactly how much, I wasn’t sure.
That day I went home shaking my head and thinking that the local real estate market may be in for a really looooooong adjustment. Hmmmmmm………
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