Basalt brokers try auction to jump-start sales in tough times
October 26, 2009
BASALT – Two Basalt real estate agents hope that an auction will result in a favorable sale of a client’s house in Elk Run later this month, and create a new tool to sell property in a stagnant market.
Matt and Terry Harrington of Chaffin Light Real Estate proposed the auction to clients after their house at 804 Kestrel Court in Basalt sat on the market for months without attracting much interest. Matt said he had no showings for 40 days even after the price of the four-bedroom, three-bathroom house was reduced to $998,000. The Harringtons introduced the homeowners to an acquaintance of theirs in the auction business, and a deal was struck last month to offer the house at auction.
The same clients will sell a vacant lot in Basalt also via auction. Both auctions will be handled by A.J. Karas Auctioneers of Denver.
The maneuver has already generated interest in the residence. Terry estimated they have had 25 showings since the house was listed for auction.
Many buyers in today’s market, particularly in the $500,000 to $1 million range, have been wary of making offers because they want to make sure prices have bottomed out, Terry said. There is no minimum bid requirement on the house in Elk Run, so prospective buyers can offer what they think it’s worth rather than meet what may be inflated expectations of a seller. The minimum bid for the vacant lot is $250,000, the Harringtons said.
There is always the risk, of course, that buyers won’t materialize and that some lucky bidder will walk away with a steal for the house. But Matt expressed confidence that enough interest will be generated to drive bids up to the market value of the house.
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“There’s a sense of urgency created,” Matt said.
Auctions aren’t unheard of in the Roaring Fork Valley, but they are rare, according to real estate pros and observers. They have been used occasionally to sell special estates, and a development firm used an auction earlier this year to sell some of the lots in a new rural subdivision in Missouri Heights. In other parts of the country, auctions have the dubious distinction as the tool for creditors to unload foreclosed-upon homes. They are also used to sell so-called distressed properties.
The Harringtons see an auction as a legitimate tool to sell some properties. Matt said auctions are particularly effective when the seller has equity and motivation to make a sale rather than just test the water. The advantage for sellers is they have a date certain of when their property will sell. The advantage for buyers is they know they are competing fairly on the same terms as other buyers. They determine the purchase price.
“I think you’re going to see more of them,” Terry said. “I’d like to think we’re in the forefront of this.”
Mark Overstreet, managing partner of Chaffin Light Real Estate, said he is curious about the auction and will review the results of this sale to determine what role they can play for the company.
Meanwhile, the Harringtons have engaged in what they call “guerilla marketing” to get the word out about the auctions. They said they have probably run more advertisements in the last month than many agents do in one year on a house. They are also holding special preview showings.
The auction for the house is at 11:07 a.m. Friday, Oct. 30, at the residence on Kestrel Court. The auction for the same sellers’ vacant lot will be held at an hour later, also at the Kestrel Court residence. The auction firm sets the unusual start times at 11:07 a.m. and 12:07 p.m. so people remember them, according to Terry.
More information about the auction, the properties, and terms and conditions of the sales can be found at the auction firm’s website at http://www.ajkaras.com/br11.