Auctions & Bankruptcy & Bring All Offers in Great Falls Virginia

I went to an Open House today for a $3Million+ “Auction” in Great Falls Virginia today. What a spectacle.

Funny how buyers think they are the only ones buying. As I pulled up, I was rerouted to the next street down to take the “shuttle!” About 20 Mercedes Benz, Lexus, and BMWs lining the road.

At the right price there are always buyers looking for “bargains.” In this post I want to unravel the new techniques in trying to move (sell) mansions and estates in Great Falls Virginia. It also relates to other areas as well.

System #1: Auction
Auctions are sexy. Make sure to get a bunch of people in a room and get each other excited. Even the Open House was only 1 hour, so it looks 4x more packed then a normal 4 hour Open House. But it was packed and my buyers were amazed.

This auction was requiring bidders to bring a $150,000 cashier’s check before you could bid. The “starting bid” was $1.5M. But that means nothing. That is 100% marketing. Why? Because there is an unpublished “reserve.” So even if only 1 person bids at $1.5M, they still won’t sell it to you (most likely). So why not start at $178.72? Because $1.5M lets you think for a second that you might get it for that! And they use you to bid up the next guy.

And on TOP of that… this auction has a “10% Buyer’s Premium.” Oh and did I mention is it also a Short Sale to boot? Bid up all you want, the bank will likely still make a counter.

I have to give it to this Auction company though. They WERE able to sell one home this way. And that says a lot. If this company had never sold one, I would likely 100% write it off. For the one that DID sell, it sold for $500k under tax assessment. It probably also started at $1.5M, but sold for $2.5M. No 1/2 price firesale here.

System #2: BANKRUPTCY.
The seller is in “bankruptcy” so all offers are encouraged (see below). It is not clear to me who actually is selling the property. Does the builder have the right to agree to a price, or does the bank have a say? Does the bank have the only say? Or is it a court?

People ask me “what will it sell for?” Heck I have no idea. This is all unchartered waters. All I can do is look up past data to see if I can predict the future. So I did a Realtor MLS historic search for 10 years for the word “Bankruptcy” from $1m to $4m.

Only 1 had sold in Northern Virginia.
Listed for $1.05m, sold for 1.1m (over list)

And two others “withdrew.”
One of those was listed at $1M and came back onto the MLS a year later as a bank owned and sold for $750,000.

System #3: Bank REO
These are regular bank owned properties for sale. They have already undergone the other tricks and marketing techniques and they are serious about selling. Since 2007, in all of Fairfax I found 13 over $1m . Link to Fairfax Bank Owned and Sold via the MLS
Most of them sold AT list and a few within 10%. How can that be? Well if they are priced right, below “market,” they will sell fast.

These are the best options. I recommend signing up for email alerts via FranklyMLS for the phrase: Cityname Bank like this: Great Falls Bank (note that this site searches the remarks, so if it says “near Suntrust Bank” it will come up in the results).

System #4: “Bring All Offers
What does that really mean? Does that mean a $4M place will take a $1M offer? Not likely. Or at least I wouldn’t tell you about it, since I’d call my mafia friends and find a way to buy it myself (joke). So again, I look at data. What homes that have used the phrase “Bring All Offers” have sold in Great Falls or Fairfax over $1 million in the last few years…? In all of Fairfax since 2007, only 8 have sold.

Lowest List Closed Price
$1,080,000 $1,058,000
$1,098,000 $1,000,000
$1,149,000 $1,120,000
$1,201,500 $1,185,000
$1,209,900 $1,000,000
$1,299,998 $1,175,000
$1,395,000 $1,230,000
$1,890,000 $1,750,000

I don’t see any huge firesales. I do see two that were 20% off though. So you know an offer 20% below shouldn’t be laughed at. See all 8 “Bring All Offers” Homes Sold

More interesting facts:
How many homes have sold in Fairfax since 2008+ for over $2M? 109 homes sold.
Only 24 were in Great Falls, most were in McLean.

Only 7 have sold in all of Fairfax (including Great Falls and McLean) from Jan 1 2009 to March 1st 2009. Oh yeah one said “Motivated seller” in all caps. Listed at $2.2M sold for $1.9M.

If you are looking in this price range let me know, I can pull some more specific data for you. Whatever you do, don’t just call the listing agent. Having a buyer agent can help you save a ton in the end, if they are good with data analysis.

Soon I want to blog next about creative financing for these higher price estates. Why? Who wants to sell off their stock at a 50% loss to buy a home for a “deal?” (see Luxury Homes blog post) Including full seller financing, or a mix of a bank loan and partial seller financing, also called Seller held trust (either with interest or a balloon payment in 5 years).

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Thanks for reading! Make sure you add your comments and questions. Nobody likes a dead blog.

Written by Frank Borges LL0SA

  • 1
  • March
  • 2009

8 Responses to “Auctions & Bankruptcy & Bring All Offers in Great Falls Virginia”

  1. tchaka owen says:

    I gotta give this company a thumbs up for auctioning a short-sale because like you pointed out, the bank could say “no way” and all that was for nothing. Did they make it clear to bidders that it was subject to third party approval?

    Good article Frank! Thanks for sharing the auction experience.

  2. Kevin Connelly says:

    Seller held financing, is gaining popularity especially in the higher price ranges, and if the buyer makes their payments, these second trusts can provide a superior yield on a sellers money. the lender wants to see at least ten percent down from the buyer before they will allow the seller held second. And as mentioned in the blog, make sure the terms of the second are acceptable to the first trust lender.

  3. NovaHomeGuy says:

    Good example as these housing types are the biggest “up in the air” prices right now.

    I can confirm these auctioning/marketing techniques are used on regular mass REO auctions.

    Its amazing how hard it is for an investor to hold down their paddle when the price soars above their target price!

    “Just one more time…”

  4. Dave B says:

    Just noticed you have a link on the FX listings with tax and owner info. Many thanks, that is very useful (I used to keep that page open in a separate tab; now you’ve saved me the trouble of typing in the address).

  5. Lee Baybrook says:

    It has long been known that the real estate “auction” is just another marketing gimmick. You start to wonder if consumers have some innate desire to be hustled. In a similar light, you could consider the extremely under-priced REOs “silent auctions” as they tend to spark competition and rapidly generate multiple offers.

  6. FRANK LL0SA Va Broker- says:

    Hey Lee,
    True about the REOs getting bid up and are kinda like silent auctions. But I still find that even AFTER the bid up, the final price is still far short of resale comps. So the bidding up is not hitting the market value, and also not going over market value.

    I think they would do better if they just priced 5% below market instead of 10% below and getting it bid up 2%.


  7. Lee Baybrook says:

    Hi Frank,
    Yes–agreed. I would say the bank’s price is a little too low if they receive 5-10 offers in the first week. But it seems to be a listing strategy that is working for them, even if it breaks the hearts of most of the interested buyers. =)

  8. Steve says:

    Very interesting article and good comments. FRANKLY, this is the best blog I have ever seen – Good on you! I have been selling houses since I was 19 (now 42- bugger!). I am an honest person and don’t tell lies, trust me I’m an estate agent! I focus on listing properties. I track every sale in my area and know exactly what similar houses sold for, but my skill is not predicting what a house is going to sell for before it is sold.I view this as dangerous as if you are not spot on and how can you be? You have either priced the property too high or too low – neither of which serve the seller or the buyer. In this information age, it is really only marketing and negotiating skills that I can offer my clients. It is best to leave the pricing to the buyers – at the end of the day, they are more “price” savvy than most sellers and in some cases, even the salesperson! Anyway that is not my point so best I get to it.I don’t support misleading advertising or sleazy practices. What I notice with your sales data is 2 things, firstly none of the sales achieved more than the ask price(that would be unusual even almost impossible) and secondly the sellers were prepared to accept in most cases a fair bit less than their ask price. I auction all my properties, there are no “seller bids” or “phantom bids” and bidding starts at wherever the first buyer decides. Normally uncomfortably low and the price is set when the buyers stop bidding. The free market dictates the price, the seller witnesses this unraveling in front of their eyes.In some cases they are thrilled and achieve $160 000 (Kiwi) more than we all thought “their house was worth”. In others they see for themselves that the market wont meet their aspirations and they either need to adjust their thinking or switch to plan B and keep their home. Simple … as long as the agent delivers remarkable service, creates a world class marketing campaign and makes it real easy for the buyer to buy by providing information. I see some other stuff is going on in your cases but I say long live the free market and I believe that an honest auction reflects the free market in its purest form. I don’t ever discuss the price with the Seller or the Buyers (It is such fun -try it).The only reference I would make about price during the campaign to both seller and buyers is providing them with every sale in the suburb and leave the interpretation to them. In exchange for my world famous pricing reports I do ask every buyer where they see the property selling and pass that info on to the seller – it is important information. I feel like I am a guest writer and not just making a short comment, so thanks again Frank and do you have any time to help me set up my blog?I reckon you are wasted in real estate? Kidding mate.

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