A study released in February found that real estate auctions in the U.S. are on the rise, which leaves some auctioneers optimistic about growth opportunities in southwest Missouri.
Indiana-based GWENT Group Inc., a management consulting company that tracks real estate auction trends, found that U.S. real estate auctions generated roughly $74.8 billion in revenues last year in its recently released 2010 Auction Market Study. That’s a 17 percent jump from the more than $62 million U.S. real estate auctions brought in during 2006, the last year for which data was available.
GWENT Group Chairman Steve Martin said his company began tracking auctions in 1985, but the study had not been done for five years due to the unexpected death of a key staff member.
Marshfield auctioneer Hoover Case of The Case Co., which provides real estate and auction services, said real estate auctions create a sense of urgency, particularly when there are multiple bidders on a single piece of property.
“The real estate auction business has always been good for us,” Case said. “We just do not take an auction unless we know we are going to sell it. I say we are 85 percent successful in our real estate auctions.”
Case declined to disclose his latest sales figures, but he said his company had $16 million in sales in 2008, and 35 percent of that business was from real estate auctions.
At least part of the GWENT study’s annual total is attributed to auction sales brought by foreclosure, particularly as financial institutions look to move nonperforming assets.
A market in which more property owners may be looking to move their properties quickly – and the exit from the market of a well-known auctioneer – have an out-of-state auction company mulling expansion into the Ozarks.
Southern Illinois-based Adam’s Auction and Real Estate Services Inc. has plans to fill the void left by the closure of Billy Long Auctions LLC, after owner Billy Long was elected to Congress. Before Long was sworn in Jan. 5, the U.S. House of Representatives’ code of official conduct mandated that he could no longer own a business.
Adam Jokisch, owner of Adam’s Auction and Real Estate, hopes to expand his company, which does about 250 auctions a year, into the Ozarks.
“Our company does a lot of the same things that Billy Long did, and we have done it for 23 years. We thought we would be a good asset to the city of Springfield,” Jokisch said.
When it comes to Springfield, it will not be the company’s first foray into the Show-Me State. Most of the company’s Missouri auctions are in St. Louis, Jokisch said, but he has done some in Ava, Branson, Cuba, Fort Leonard Wood and Humansville.
“We are seeing prices probably 10-20 percent off of what they use to sell,” Jokisch said. “A $200,000 home now sells for about $175,000 to $180,000.”
Auctions aren’t necessarily the best route for all sellers, said Larry Atterberry Jr., owner of Columbia-based Atterberry Auction & Realty Co. LLC. He estimated that of every 15 properties it considers, one may be put up for auction, and he said the company has a 97 percent sell rate for those.
While buyers can have properties inspected at their expense prior to the auction, a pre-purchase inspection isn’t required on sale day. Buyers also pay cash, usually buying the property “as is,” typically closing within 30 days.
“When buyers come to an auction, they see it as a public forum,” Atterberry said.
Case said his company allows buyers to inspect auction property before and after a sale. If the house is to be bought “as is,” he said buyers must inspect everything carefully and review all terms. For example, he said, a buyer could pay an additional 5 percent to 10 percent if terms include a buyer’s premium.
“You got to read all the terms very well and ask lots of questions to the auctioneer before the bidding starts,” he said.
A challenge, he said, lies in figuring out how much an auction home is really worth, given that there are many variables, and homes could have several thousand dollars worth of damage.
“There are enough comparative sales in the area that the properties are actually going to bring market price,” he said. “Is a $200,000 house going to bring a depressed value? Not necessarily.”[[In-content Ad]]
