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 Because there is an unpublished “reserve.”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
Broker FranklyRealty.com
Owner FranklyMLS.com

This is the Results Show for the Parkside of Alexandria Auction yesterday (Sun. Oct 28) at Hilton in Alexandria. As background make sure you read: Parkside Alexandria 47% Off Auction

About 300 people showed up. Of which, over 100 were registered buyers with an auction number. About 50% of those had attended an auction practice the night before. Also about 75% of the 100 were 1st-timers at an auction.

To the right is the price sheet and my notes with what went for what.

Below is a Youtube of an Auction for a 2br 2 level townhouse. Minimum bid is $225k

The event was publicized as a “one-in-a-lifetime opportunity”, as if units MIGHT go for $225,000 for a 2 level 2 bedroom 1.5 bath townhouse. Well that didn’t happen. For the units starting at $225,000, they were immediately bid up to $275,000 and the range ended at $287,000, most sold at $300,000, and the highest close was $306,000. Keep in mind that some units are MUCH closer to 395 and some came already upgraded with Hardwoods and Granite.

The developer even added Hardwood floors midstream as a “free upgrade” for SOME units that currently have carpet.

The 3 bedroom units had a minimum price of $275,000 with a “Last Asking” price of $390,000. These units sold for a low of $351,000 and a high of $362,000.

Below is a video of the 3 bdr with a minimum starting bid of $275k

Now did these people get a great “deal.” Maybe. I’m not sure. What I can tell you is it wasn’t at a “no-brainer” price that investors could buy it and easily flip it the next week for a $40,000 profit (don’t think the thought didn’t cross my mind), but if a buyer was looking to live in it, and was considering the units at $340,000 list, sure, they got 10-15% off.

If you are still interested in a unit, let me know. Sometimes they have units that come up if one of the buyers backs out. Megan, an agent with FranklyRealty.com used to live at Parkside and recently sold a unit there for $330,000. She knows the pros and cons for each unit. I believe the developer is now cooperating with Realtors (they were giving 66% less for Realtors during the Auction vs during regular sales), so it shouldn’t cost you anything to have representation.

- Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4OO6 Please report all typos, I don’t like looking stupid. If you like this post, sign up for new blogs daily, use the form on the right of the page.

Videos at YouTube.FranklyRealty.com

Update 2-21-08: Eos 21 Just announced an Auction. More soon.

Just on the heels of my article New Construction Bargains: Risks or Rewards? on whether the “deals” at new condo constructions like Phoenix Condos in Arlington, were good ones, I get an email about Parkside Alexandria having an Auction on Oct 28th 2007.

Their advertisement is based on a “Minimum Selling Price”* of $225,000. These units went for as high as $425,000 in the heyday!

If they sell for that price, that is about 47% off! So NOW is it a good deal?

Again, I’m not saying to avoid new constructions since they might offer a deep discount versus a similar resale unit, but you have to look at their inventory levels and the risks of them unloading units like the condo townhouses of Parkside Alexandria.

Remember, it can ALWAYS go lower! No matter how much of a deal you think you are getting, it can always go lower. So when do you buy? Perhaps only when you are ready for the long term hold and can ride out any waves, or like I say in my Attn. Market Timers! The EXACT Best Day to Buy!, the day that you stop caring about finding the best day to buy, and simply want to enjoy YOUR house.

So what about this 47% off sale? Is that a good deal? Is THAT the bottom? I don’t know, but, like a broken record… it can always go lower. You would think that at that level of slashing, it can’t go down any more, but you never know. Nobody would have thought that they would have pulled back from $425k to $325k. That would be unheard of! Now at $225k… ???

Mad Money’s Jim Cramer put it well… He said the single best time to buy the Nasdaq Index was when it fell from 5,000 to 4,000. But so was 3,000, and 2,000 and 1,500!

Is your risk LOWER than somebody that bought a house at $300k or $400k, sure, but there is still risk. Risk has to be evaluated and measured versus the potential reward and return. Will buyers at $225,000 make a killing? Very possibly. Is it a “no brainer” for a Virginia real estate investors to jump in? I don’t know. Not for me, but then again, I’m too conservative and conservative people miss all the great opportunities.

* Minimum Selling Price MSP is a “reserve auction.”
Sometimes reserve auctions are fake since the reserve isn’t published and is sometimes right up near list price. They can be designed to entice potentially interested buyers to bite. For example if three people put in low balls below the reserve, the homeowner will just counter like a regular contract.

At the Parkside at Alexandria the MSP is published and is significantly under list price, with the hopes of attracting enough buyers to hopefully have people bid up from $225,000 to as close as full list price as possible. But then again, they might all go at $225k (for the 2 level townhouse). I’ll try to go to this event and report on it. I bet the attendance will be pretty good. Here is more info: ParksideAlexandria.com Here is the ad

What will other builders have to do to avoid the INCREASE in buyer fears that this will create? Will they agree to put $50,000 in escrow for a year to insure that the builder won’t drop auction off the rest of the inventory? If they don’t offer some insurance, buyers might just wait and wait and wait and these auctions might become more frequent because of it.

Which project will be next??? Sign up for this blog (upper right corner of blog) for free to make sure you are kept up to date on the marketplace. or Subscribe in a reader.

Feel free to forward this email to others that might be interested.

- Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4OO6 Please report all typos, I don’t like looking stupid. If you like this post, sign up for new blogs daily, use the form on the right of the page.

Here are other new construction communities: Parkside of Alexandria, Eclipse, Parkside of Courthouse. Condominiums at Carlyle Square, Bryon, Palatine, Phoenix, Turnberry Tower, Odyssey, Hawthorn, 1800 Wilson, Westlee, Vantage Merrifield Town Center, Bromptons, Brittany, Bearings in Old Town, Renaissance 2230, Park at Courthouse, Butterfield, Mercer. Parkside Alexandria