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Builders Using Real Estate Auctions to Stimulate Business

Written by Peter L. Mosca on Tuesday, 20 January 2009 6:00 pm
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In an effort to stimulate business in what are for most the worst economic conditions in their lifetimes, builders are turning to real estate auctions to liquidate new home inventories. While there are several variations on the basic auction form, including time limits, minimum or maximum limits on bid prices, and special rules for determining the winning bidder(s) and sale price(s), many builders are reporting varying successes. Charlotte-based builder, Southampton Homes has recently engaged Tranzon/Metrolina to auction six custom homes to bidders searching for good values.

"The slow housing market in the Charlotte area is forcing owners to try new avenues to sell their homes," says Don Eldred of Tranzon/Metrolina. "Builders are embracing auctions to gain the benefit of competitive bidding for their properties and to liquidate homes quicker than with traditional sales means."

Traditional real estate listings typically take several months or more to move a property. The auction process, also referred to by auctioneers as the accelerated marketing method of real estate, entails an intense five to six week marketing period that exposes properties to local and national markets. An auction will generate more activity and interest than conventional methods. The process culminates in a cash sale, closing within a 30-45 day window.

Out West, online real estate auction marketing firm, LFC Group of Companies, recently launched a new auction campaign of brand new homes in Denver, Colorado. The auction, a builder closeout of high-end properties in the master-planned community of Stapleton and the charming town of Golden, features four boutique townhomes and four large estate homes. They are the last remaining inventory of a well-respected local developer, and is further evidence that online auctions are becoming popular again as an alternative for healthy builders and developers eager to accelerate sales.

The homes offered by this builder are diverse, yet they are all impeccably designed and very upscale," described Kelly Lovegrove, Director of Operations for LFC Group of Companies. "We are seeing more and more developers like this who see auctions as a smart way of doing business. Rather than lowering prices until buyers bite, sellers are letting the buyers decide what they want to pay--a powerful tool in times like these."

The LFC Group of Companies also launched another new auction for Brava, 16 luxury condominiums located in the heart of Palm Desert, California, where Patrick Veiling, president and founder of Brea-based Real Data Strategies Inc., said, "2009 will be the absolute best purchase opportunity in the desert that we have seen for a long time."

"Brava's developer has the foresight to act confidently, staying ahead of the game with a keen insight into keeping buyers happy and moving development forward in any kind of market conditions," says William W. Lange, LFC Group of Companies' CEO. "They see that the accelerated marketing our online auctions offer can speed up the process of clearing inventory, allowing them to focus on newer projects."

In light of these and other successes, at the very least builders should consider the auction process to help move inventory and generate the cash flow necessary to keep afloat and take advantage of the up cycle many expect in 2010.

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