Let’s face it. We are not in a booming economical cycle. Unemployment is currently in excess of 8% and has been for quite some time. With regards to housing, with a hand full of exceptions, home prices continue to decline. With some commodities like food, and energy, prices are going up. Yet interest rate on savings is at an all time low. My bank wants to pay me 1% on my savings but with true inflation in excess of 4%, I’d be going broke if I did that.
And let’s not forget what is going on in the European markets. With the euro on the verge of collapse, and with many US Banks invested in the European Banks, is it any wonder banks are unwilling to lend.
Plus, Israel and the US continue to threaten to bomb Iran because of Iran’s possible nuclear capability and that will certainly affect gas prices at the pump and transportation cost to get the goods delivered. Then there is the election coming up in November With all these uncertainties, businesses are not going to hire or expand. You might ask, “What does all this have to do with an auction? Plenty. Let me explain.
We recently sold a home via auction that brought less than the seller expected. Was the seller disappointed? Yes, but not devastated, as it was the seller’s decision to sell at the last high bid price. While the seller was disappointed, I felt we had done a good job educating the seller with regards to her expectations.
You see, she had the home appraised and was given a dollar valued that was stuck in her mind. When I saw the appraisal, I told her that the appraisal was just an “opinion of value” which it really was, and that I didn’t think she would get close to that value with an auction or even with a traditional listing. The appraiser had to go pretty far out to get comps, of which none of them were recent, as this property was in a rural area.
You see, prior to the auction contract being signed, we sat down with the seller to explore her expectations, to see if they were realistic. She had bought the home during the last real estate boom, viz., she over paid in comparison to today’s market price. We explained to her unless we had a cash buyer, it would be more difficult to get a buyer qualified for a loan in today’s market because the lending requirements had changed in the last year or so. In addition, the home needed some cosmetic repair that a traditional lender would have required the seller to fix.
We even explained to her how all the other things mentioned above (world events) would affect price. While not getting the price she wanted, her disappointment was lessened because of being informed of what to really expect. I would rather turn a client down than let them down. As auctioneers or real estate agents, we must inform and educate our clients with regards to their expectations.
What are your expectations? Are they real or just a wish, want or desire?
For more information on our auction and real estate services, call us at 252-257-4822.