AUCTIONS IN ACTION

In today’s highly competitive ‘down market’, we are seeing more and more ads for auctions, as would be expected. I would suspect that we will most probably see it for the next couple of years. In the greater Naples, Florida area, as well as many other areas of the country, we need to shed ourselves of a lot of excess inventory and an auction can be a good way to do it.

About six months ago, there was a highly publicized auction here in Naples taking place at the Naples Beach and Golf Hotel on the Gulf of Mexico. The auction was being run by J.J. Manning Auctioneers, who claims over 30 Billion Dollars in sales over their 30 year history. Paul Drake, a local real estate agent, teamed with them to act as ‘front man’, (he has since joined forces with Manning and they have formed Manning/Drake Auctions in Florida.) The auctioneer was J.J. Manning.

The parcels to be auctioned included some 34 properties belonging to one local real estate investor who had a history of doing quite well in earlier years, but got squarely caught in the current downturn and now was facing fore-closure on all 34 properties, unless disposed of. Her properties represented a majority of the parcels in the auction.

I, like many other interested parties who attended, were realtors, as well as investors. My motivation was strictly to get a further indication of where the market really was. I knew that there would be bottom feeders attending, just like in any other market, but felt that it wouldn’t really matter.

What did matter though was that little, if anything, actually sold. (It was extremely hard to verify statistics in the weeks following, although Drake said that they would be forthcoming, which never really happened.) The bids were drastically, and I mean drastically, under the reserve price. Yes that’s right, the whole auction was actually a reserve auction, which wasn’t specified, so there wasn’t a chance of any bidding wars going on. It ended up quite mundane and very boring!

What I have always believed is that an auction really isn’t a true auction unless it is an Absolute Auction. I think that you can get a better feel of where the true market is in a no-reserve (absolute) auction. I have seen where, at absolute auction, where two or more parties feeling that they just have to have the property that they are bidding on and someone actually ends up paying more than what would normally be considered true market. Be that as it may, the bottom line is that I will only attend absolute auctions, because for me, the others are a complete waste of time!