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EvenBob
EvenBob
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August 29th, 2010 at 9:39:02 PM permalink
I ran into an old friend who is an auctioneer the other day. He does mostly estates, farms and livestock. In the last year he's making a fortune auctioning real estate. He said the one he did on Friday was typical. A couple bought their dream home 15 years ago for 300K. It was valued in 2008 at 400K. The husband lost his high paying job last year and they put the house up for sale at 350K. Then 300, 250, 225, and no takers, no offers, not even anybody showing up for open houses. 60 days away from having it taken back by the bank, they sold it at auction for 187K. My auctioneer friend says he's already done twice as many large sales this year as he usually does in a whole year and its still August.

He banks the money but is very nervous about whats happening. The bottom has fallen out of his other auctions, nobody is buying antiques and collectibles or farm machinery, he's selling it for pennies on the dollar. An antique round oak table with massive claw feet that brought $800 in 2007 is now lucky to bring $100. He's very afraid something bad is coming but he doesn't quite know what.
"It's not enough to succeed, your friends must fail." Gore Vidal
mkl654321
mkl654321
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August 29th, 2010 at 9:44:47 PM permalink
Quote: EvenBob

I ran into an old friend who is an auctioneer the other day. He does mostly estates, farms and livestock. In the last year he's making a fortune auctioning real estate. He said the one he did on Friday was typical. A couple bought their dream home 15 years ago for 300K. It was valued in 2008 at 400K. The husband lost his high paying job last year and they put the house up for sale at 350K. Then 300, 250, 225, and no takers, no offers, not even anybody showing up for open houses. 60 days away from having it taken back by the bank, they sold it at auction for 187K. My auctioneer friend says he's already done twice as many large sales this year as he usually does in a whole year and its still August.

He banks the money but is very nervous about whats happening. The bottom has fallen out of his other auctions, nobody is buying antiques and collectibles or farm machinery, he's selling it for pennies on the dollar. An antique round oak table with massive claw feet that brought $800 in 2007 is now lucky to bring $100. He's very afraid something bad is coming but he doesn't quite know what.



Well, even the vultures starve when there aren't enough carcasses to feed on.
The fact that a believer is happier than a skeptic is no more to the point than the fact that a drunken man is happier than a sober one. The happiness of credulity is a cheap and dangerous quality.---George Bernard Shaw
EvenBob
EvenBob
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August 29th, 2010 at 10:03:18 PM permalink
Auctioneers provide a service, without them people would be getting nothing for their property except what the bank can get out of it. They aren't vultures anymore than a mortician is when somebody dies.
"It's not enough to succeed, your friends must fail." Gore Vidal
mkl654321
mkl654321
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August 29th, 2010 at 10:18:08 PM permalink
Quote: EvenBob

Auctioneers provide a service, without them people would be getting nothing for their property except what the bank can get out of it. They aren't vultures anymore than a mortician is when somebody dies.



Charging each party to the transaction (buyer AND seller) 10% is indeed vulture-like behavior. It is absolutely not true that "without them, people would be getting nothing". They would get whatever they could get on the open market. Banks pressure homeowners in default to sell their property at auction, because the longer a bad loan sits on the books, the worse it is for the bank. Their motive is to sell and recover SOME money, so that they can write off the loss. They are more interested in a quick sale than getting fair value for the homeowner. The bank's interests and the defaulted homeowner's interests are diametrically opposed.

The only benefit the auctioneer offers is that of quick liquidation. This is MUCH more in the interest of the bank than the property owner; in fact, a quickie sale hurts the homeowner's interests badly. If the recourse to a quickie auction wasn't available, the bank would be forced to sell the foreclosed property at fair market value, which would also benefit the homeowner as more of his debt would be paid off. But this wouldn't exactly be the only time when the interests of the big company overrode the interests of the little guy. Auctioneers facilitate this, selling people's possessions for tiny fractions of what they are worth. The auctioneer makes beaucoup bucks for doing practically nothing; the banks get theirs; the little guy gets ass-fucked. 'Twas ever thus.
The fact that a believer is happier than a skeptic is no more to the point than the fact that a drunken man is happier than a sober one. The happiness of credulity is a cheap and dangerous quality.---George Bernard Shaw
EvenBob
EvenBob
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August 29th, 2010 at 10:27:45 PM permalink
I've been going to auctions for 35 years and sometimes items do go for bargain prices, but often as not they go for far more than they're worth. How much an item is worth is determined at the sale, you never know what will happen. I have filled my van and have gone home with nothing. I've been to auctions where new high prices were set for collections. I've seen a $2000 item go for $200 and a $100 item go for $1000. In 1997 I went to the public auction in Shipshewana IN as a seller for 22 weeks in a row and I made a profit every week, sometimes I tripled my money. You can't make a blanket statement about auctions, it all depends on whats for sale and who's there to buy it.
"It's not enough to succeed, your friends must fail." Gore Vidal
FleaStiff
FleaStiff
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August 30th, 2010 at 3:17:13 PM permalink
In some states, such as Arizona, strict compliance with the laws regarding notice of the auction is required and is deemed an irrebutable presumption that a sufficient body of potential buyers was present. In some states, failure to adhere strictly to the notice requirements may be forgiven. The problem arises when despite sufficient notice only vultures attend because the market has dried up in the flagging economy. Here, the owner of the asset is deemed to have had a fair auction but the prices are not fair because only vultures are doing any buying.
Some auctioneers have followers who attend, but do no competitive bidding. Its more a club of friendly bidders. Many "estate sales" and the like are absurdly ill-attended now and items go for a song.

Vulture funds for a while were the only ones buying condos in Miami. Even in Las Vegas, Condo Flipping is now the province of Vulture Funds that buy a condo at noon and sell it at a higher price at 3:00pm. Owners and developers often prefer to deal with vultures but its hard to obtain a fair price under those market conditions.
mkl654321
mkl654321
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August 30th, 2010 at 3:22:51 PM permalink
Quote: FleaStiff

In some states, such as Arizona, strict compliance with the laws regarding notice of the auction is required and is deemed an irrebutable presumption that a sufficient body of potential buyers was present. In some states, failure to adhere strictly to the notice requirements may be forgiven. The problem arises when despite sufficient notice only vultures attend because the market has dried up in the flagging economy. Here, the owner of the asset is deemed to have had a fair auction but the prices are not fair because only vultures are doing any buying.
Some auctioneers have followers who attend, but do no competitive bidding. Its more a club of friendly bidders. Many "estate sales" and the like are absurdly ill-attended now and items go for a song.

Vulture funds for a while were the only ones buying condos in Miami. Even in Las Vegas, Condo Flipping is now the province of Vulture Funds that buy a condo at noon and sell it at a higher price at 3:00pm. Owners and developers often prefer to deal with vultures but its hard to obtain a fair price under those market conditions.



The very nature of the auctions: poorly advertised, restricted to buyers who can put up a large cash deposit, or sometimes not even open to the public, pretty much guarantees that the prices the auctioned properties will go for will be extremely lowball. In the case of professional/freelance vultures, they often agree among themselves not to bid on the properties another is most interested in: there is honor among thieves.
The fact that a believer is happier than a skeptic is no more to the point than the fact that a drunken man is happier than a sober one. The happiness of credulity is a cheap and dangerous quality.---George Bernard Shaw
AZDuffman
AZDuffman 
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August 30th, 2010 at 4:56:37 PM permalink
Quote: EvenBob


He banks the money but is very nervous about whats happening. The bottom has fallen out of his other auctions, nobody is buying antiques and collectibles or farm machinery, he's selling it for pennies on the dollar. An antique round oak table with massive claw feet that brought $800 in 2007 is now lucky to bring $100. He's very afraid something bad is coming but he doesn't quite know what.



Things ebb and flow. Part of it is good news--if you want that antuque table now is the time to buy. Prices can't keep climbing forever. Look at real estate--as late as 2006 in Phoenix (and Vegas) went to $300K+. Problem was the wage base did not follow. Same for cars. I remember walking a lot with my brother, a Ford lot, loaded with Expeditions all >$40K. Who was buying all of this stuff?

Eventually the credit bubble burst and we are paying for it now. The danger will be if government tries to prop up prices. It is far better if a person loses $200K on a house but a person who can afford $100K buys it than to keep propping up the guy who can't afford the $300K mortgage.
All animals are equal, but some are more equal than others
EvenBob
EvenBob
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August 30th, 2010 at 9:14:09 PM permalink
I'm not sure why people who buy at distressed sales are 'vultures'. For whatever reason, the seller is selling, how is that the buyers fault? If the seller doesn't know he might take a bath, how is that the buyers fault? 99% of the time the buyer knows exactly whats going on and has no choice but to go through with it. How come nobody ever cries for the buyer when he pay 3 times what something is worth? When that happens its HIS fault for not educating himself, but when a seller gets hosed, its ALWAYS the buyers fault for 'taking advantage' of him. Get real, people are responsible for their actions, and that means buyers and sellers. We're dealing with adults here, not 2nd graders.
"It's not enough to succeed, your friends must fail." Gore Vidal
mkl654321
mkl654321
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August 31st, 2010 at 12:19:45 AM permalink
Quote: EvenBob

I'm not sure why people who buy at distressed sales are 'vultures'. For whatever reason, the seller is selling, how is that the buyers fault? If the seller doesn't know he might take a bath, how is that the buyers fault? 99% of the time the buyer knows exactly whats going on and has no choice but to go through with it. How come nobody ever cries for the buyer when he pay 3 times what something is worth? When that happens its HIS fault for not educating himself, but when a seller gets hosed, its ALWAYS the buyers fault for 'taking advantage' of him. Get real, people are responsible for their actions, and that means buyers and sellers. We're dealing with adults here, not 2nd graders.



Very simple. The seller at the kinds of auctions we were talking about (foreclosure quickie sales, seized property liquidations) is NOT in the process voluntarily. In fact, he's not actually even the seller--he's the former owner. Banks want to liquidate the property as quickly as possible, even if it means selling the property it seized for a tiny fraction of its value. The former owner gets fucked over because the proceeds don't even come close to paying off his debt, especially not with the fines and fees and surcharges and interest charges.

The presence of the vultures facilitates all this. If there weren't these greedy people hovering nearby, ready to take advantage of people's misfortunes, then the banks would be forced to sell the properties for something approximating market value. But fortunately for the banks, there are always the carrion-eaters nearby, ready to feast on someone else's misfortune.
The fact that a believer is happier than a skeptic is no more to the point than the fact that a drunken man is happier than a sober one. The happiness of credulity is a cheap and dangerous quality.---George Bernard Shaw

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