It's not every day that a nice home in the Bay Area is auctioned off. Usually auctioned homes are the dregs of the area, those that no one wanted to buy on the regular market, a cross between a fixer and a teardown. That’s why I was pleasantly surprised to see such a 'perfect' home in Berkeley ready for auction. The owners had obviously taken care of the home, and had painstakingly addressed every detail. The roof and foundation were new. The floors were freshly sanded and finished. The bathroom had been remodeled and the large kitchen had been tastefully finished. In the well manicured backyard there was a studio trimmed with wood that was used as an office.
So why was the house being auctioned off? The owners had always paid their mortgage, their bank wasn't selling it, and the opening bid of $299,000 was a steal for the neighborhood in a traditionally strong Berkeley market. In talking with the owners, they revealed that they had tried to sell the house before but it had been 'one of many' on the market, and because of its immaculate condition, it had never been properly priced for the area. “8 agents had given 8 different prices” they said. So, by auctioning it off, they expected to have at least one of over 200 interested parties pay what the market will bear. As I was waiting for my client, at least 6 interested people drove by with their printouts, gazing at the home, maybe thinking they can steal it for $299,000.
Now, I have no doubt that they will get the $299,000 opening bid and, because it is ‘perfect’, they will probably get closer to $500,000 is my guess. (Check back to see if I was right). But is this a good strategy for selling a home? Probably not, this is definitely an exception because of the home’s pristine condition. I also suspect from the calm demeanor of the owners that they have an ace up their sleeve, a reserve price. Many auctions have a reserve, meaning that if the bidding doesn't reach an agreed upon price (say $450,000), the owners don't have to sell the home. The owners said all the attention to the house had led to quite a few offers before the auction, and they planned on following up with those people if they couldn’t auction off the house. They will sell the house, but not for $299,000. My bid of $299,250 is going to take it all!


Posted by Bruce Wagg on
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