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 Because there is an unpublished “reserve.”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

So how will that affect the housing market for luxury homes? Don’t care? Then don’t read this.

I had a theory- albeit obvious – that those buying luxury homes over $1 Million in Arlington and the DC area would come to a halt since these buyers most likely “had” their money in stocks.

Who is going to unload their stocks down 25-45% to buy a house? With a 20-25% down payment (5%-10% down is much harder, if not impossible, now) that can make that $2 million property feel like $2.2M overnight, and without another wing on the home.

My data-pull results (not regurgitated data):
I pulled up homes in the DC area from $1 Million to $4 Million that went under contract (more reliable than solds) for a 4 day period and compared it to the one and two weeks before.

• 9/21/2008-9/24/2008 26 under contract
• 9/28/2008-10/1/2008 25 under contract
• 10/5/2008-10/8/2008 13 under contract

For homes from $800,000 to $1,000,000:

• 9/21/2008-9/24/2008 24 under contract
• 9/28/2008-10/1/2008 25 under contract
• 10/5/2008-10/8/2008 12 under contract

That doesn’t look good, to say the least.
Will this become a longer term trend in the higher end luxury market? Dunno.

What if you are high end buyer?
Know the stats, know that 50% of your competition just flew the coop. This allows you to be more aggressive. As for waiting, that is obviously your call, I don’t believe in market timing.
Heck it could get MUCH worse, or things might stabilize and the buyers might come back.

What if you are a high end seller?
Read above, but know that it isn’t your agent slacking off. Also if you do get an offer… man, you have to have some serious cohones to try and get much better. Sure next week might look better, but you really never know.

If you have any specific questions about a marketplace or price bracket, let me know and I can run some specific numbers.

If you know somebody looking at high end homes, forward them this email and make sure they subscribe to Blog.FranklyRealty.com .

-Written by Frank Borges LL0SA Broker FranklyRealty.com

Image is a photo of a $3.34 M property sold previously by FranklyRealty.com
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