In the current national housing slowdown, real estate auctions have gained popularity as a way to speed sales in a sluggish or paralyzed market. Now, the trend has made its way to the Flathead Valley where next month 14 Whitefish condominiums will go to the highest bidder.
Real estate auctions are no longer limited to banks looking to unload foreclosures or traditional auction houses. Much of the current business is conducted by real estate auctioneers hired by developers – especially builders of residential and office condominiums – who are reducing inventory or individuals who can’t afford to weather the real estate slump. And many of the auctions are now online.
Located at the former site of the town’s Par 3 on 93 golf course just south of town, Deer Creek at Whitefish is a condo development featuring multilevel attached homes with floor plans ranging from 1,805 to 2,016 square feet. The development also includes a community clubhouse with fitness center, spas, fireplace, wet bar and pool table.
Originally called The Views at Whitefish, the development was proposed in 2005 by Brett Shaves and Zac Wheat of Pacific Coast Development LLC and called for 168 units, according to city planning office documents. The first phase of that project, which includes 29 units, is all that’s been constructed so far. Fourteen of those 29 are currently unoccupied.
In an effort to speed up sales, the developers have hired the LFC Group of Companies, a Newport Beach, Calif.-based real estate auctioneer, to sell the condos through its online division Freedom Realty Exchange.
“These are the last units and, rather than hang on to them in this market where who knows how long it will take to move them, the developers have decided they’d really like to see a complete community,” Kelly Lovegrove, the company’s director of operations and marketing, said. “Things were easier a few years ago when homes were flying like hot cakes, but there’s more uncertainty now.”
Beginning in mid-August, the two- and three-bedroom Whitefish condos went up for auction online. Previously priced around $320,000, minimum bids for many of the units are now about $150,000. Bidding for one furnished unit starts at $99,000. The Whitefish auction ends Oct. 23.
Interested buyers register online, Lovegrove said, where they can see pictures of the units, floor plans and real estate documents. They can also visit the condos in person, where FRE staffs a representative seven days a week. To enter the bidding, potential homeowners submit a deposit to an escrow company and then bidding continues much as it would at an auction house.
“For a buyer, it’s so much easier than having to spend a whole day at an off-site location holding up your paddle and making a very big financial decision in a matter of minutes,” Lovegrove said. “With an online auction they have ample time to consider bidding, and do so from the comfort and convenience of their home or office.”
Buyers can also expect to pay less for auctioned properties and have a high level of personal control over the process, she added.
Meanwhile, sellers aren’t necessarily making the profit they hoped for, or even getting what they paid for a house if they bought in an overheated market. But they’re essentially assured to move their inventory quickly, in a national housing market where homes can take months or years to sell, and get out from under rising interest or other expenses like taxes and insurance.
Online auctions also give sellers access to a global market, rather than one limited to those buyers who drive by a “for sale” sign or can travel to an on-site auction.
Revenues from auctions of residential, commercial and industrial real estate grew by about 5.2 percent in 2007, to $32.6 billion, according to the National Auctioneers Association. Total sales growth within residential real estate auctions has grown 46.6 percent between 2003 and 2007.
The trend has been slower to catch on in Montana, where the state hasn’t suffered as severely the economic and housing slowdown with which the rest of the country is grappling. It is the first time FRE has held an auction here.
But there are signs things are beginning to change. Home sales in Flathead County were down 28.4 percent in the first half of 2008 from last year at the same time. In Billings earlier this month, hundreds of people crowded into a large conference hall for a multi-property auction of homes in Billings and a handful of lots in Red Lodge.
And, as of last week, Lovegrove said there were 50 registered bidders and nearly 3,000 visits to the Web site for the Whitefish auction.
“I think probably once we’re done with this auction and people see how it works and the results, I wouldn’t be too surprised if we’re not back in Montana again soon,” she said.