25 waterfront condos are being auctioned at Harbor Pointe in Stillwaters on July 7th. Five of those will be absolute. This auction follows on the heels of one earlier this spring. Is this a sign of the times on Lake Martin? Does this signal an end to the seller’s market? Are auctions a way to get a good deal on Lake Martin property?
Like any real estate transaction, every auction is unique. The person that does the homework will either come out of it with a fair price or avoid paying too much.
What questions should buyers ask before attending an auction at Lake Martin?
1. Is this an absolute auction? Always clarify this, but usually an absolute auction means that they must sell on that day, regardless of price. Even if someone bids $1 for a Lake Martin condo, they must sell. If it is not absolute, then ask what the reserve price is. I’m sure they won’t tell you that, but no harm in asking.
2. How many / which parcels are absolute? The Harbor Pointe auction will have 5 out of 25 absolute. But, if you see an ad for a different auction that says “40 condos for sale, absolute auction” maybe only 2 will be absolute. You want to be clear as to which are absolute and you want to make sure that you’re under the tent when they’re selling the absolute ones.
3. Have these properties been for sale before?
The auction company may or may not know the answer, or they may or may not be obliged to tell you. Here’s where your research comes in the picture
. How well do you know the Lake Martin market? Or Stillwaters
? Or Harbor Pointe? If the lake properties have been for sale recently, the listing prices can give you an idea of the seller’s expectations.
4. What do you have to do to be a qualified bidder? Usually you can give them a check for like $5,000 or something or a letter from the bank, usually it is better to set this up ahead of time, the week before the auction.
5. What are the fees to the buyer? Usually the buyer pays a fee above and on top of the bid amount – this could be 5% to 10% – to cover the cost of the auction and the auctioneer fees. This is sometimes a big part of their pitch to sellers. They say, why pay realtor fees of 6% when you can make the buyer pay 10%? Sellers think they are saving money but it all comes down to what is net to them anyway, and buyers figure that in when they bid and reduce their top number by, say, 10%. Whatever.
6. Will you send me the rules of the auction ahead of time? I ask for those. I read everything. Every auction is a bit different. Maybe I will spot something that I didn’t think to ask about originally.
Sometimes I have Lake Martin buyers ask me about things like this, where I am neither the listing agent nor involved in any way. If they are interested, I can call the auction company for the buyer and register them as a potential bidder. The auction company usually pays an extremely small “referral fee” to realtors like me when they register a buyer that is a high bidder. This doesn’t cost the buyer a penny more because the buyer’s fee will be the same whether I call them or the buyer calls them directly. But if I do call, I can ask them all of the above questions and give my analysis.
In the case of the Harbor Pointe auction, I would run a buyer a report of all of the sales in Harbor Pointe in the last 2 years, and give a bidder an idea of what the exact market price should be on a condo there. This gives you a pretty precise point to bid up to without getting hurt too bad. Again, it won’t cost a dime more, and could arm you with a lot of information for the auction
. If my registered buyer is not a high bidder, they don’t owe me a penny.
I will definitely be watching the auction at Harbor Pointe to see what happens. (Thanks, Kirk, for the idea for this post!)