One Douglas County homeowner is taking a new approach to selling his home in today's volatile real estate market, at auction under the auspices of the Boren Group, a local realty firm.
"This is another tool in the sales process and the implication is, buyers will get the home at a lower price," said Mike Leonard, Realtor with the Boren Group. "That's generally true, but last fall Sierra Shores at Lake Tahoe auctioned their timeshares and got more. That's always a possibility too."
The initial bid price is usually set well under market and the bidders decide when to stop. In this case, the owner approved the bid package and will set the minimum bid on the day of the auction, on Saturday. The property was open for preview for three consecutive Saturdays.
The conditions of the sale, from the payment of taxes to title insurance and Realtor fees, are all stipulated in the terms of the auction.
The process has been used extensively in Florida, where sellers pick up fees and pay for an extended home warranty, Leonard said.
"It doesn't matter if the market is soft or hard. Auctions can be a credible tool," he said. "It's more about speed."
Auctions work very well for properties not easily valued, much like today's markets. They create a deadline for selling real estate not available with the traditional approach and the seller can schedule the auction to respond to his/her own timing needs. The seller's income tax goals can be better met when the seller determines the date of sale, according to an article in the Real Property, Probate and Trust Journal.
"The shortened period for an auction program can save a seller three to six months' additional costs of taxes, insurance, security, and repairs," the article said. "In a soft market, selling the real estate even at a lower-than-hoped-for price may be preferable to waiting for market conditions to improve sufficiently to produce a buyer using conventional sales programs."
Nationally, there were 179,599 foreclosure filings reported nationally during July, up from 92,845 during the same period a year ago, Irvine-based RealtTrac Inc. said recently.
Nevada posted one of the highest foreclosure rates, one filing for every 199 households, or more than three times the national average, most of those in Clark County.
The national foreclosure rate in July was one filing for every 693 households, Realty Trac said.
Last friday, 801 homes, everything from condos, modulars to stick-built homes were for sale in Douglas County. Add to that the 325 parcels of land for sale and there is at least 18 months worth of inventory on the market, according to Jim Madsen, a local planning commissioner and realtor for Coldwell Banker.
Yesterday, the Case-Shiller national home price fell down 3.2 percent from the second quarter of last year, its lowest level since it began in 1987, according to an article in Forbes magazine.
The Case-Shiller index studies indexes at repeat sales or refinancings on the same homes, so they don't indicate a shift in the composition of sales, but despite those deficiencies, economists say all home price reports are describing the same picture, one that puts off potential buyers.
"People don't want to borrow money to finance what could be a depreciating asset," the article said.
Leonard said real estate prices haven't been impacted as much in Douglas County as in neighboring Carson City and Reno. There is a pent-up demand at this point, as people wait to see what the real estate market will do.
"We have 180 years of (collective) experience in this office," he said. "We understand the markets and we've been through other cycles. We're not concerned, because we know the market will come back."
Historically, September and October have been good months for the Lake Tahoe real estate market and the group is opening its new office at 276 Kingsbury Grade to coincide with that trend, Leondard said.
"We're opening our new office in one week - suite 107," he said.
The auction will be held Saturday from 1-3 p.m. and the property is located at 1674 Minden Village loop. For more information, call (800) 587-1110.
Associated Press reporter Alex Viega contributed to this story.
Susie Vasquez can be reached at svasquez@recordcourier.com or 782-5121, ext. 211.
