An auction is a great way to sell a home. It is fast, efficient and final. The results are normally known from the beginning to the end, within 30 days or so. The type of auction I am talking about is an absolute auction. In this type of auction, the final price offered is the price the seller gets. Normally, an auction sale closes within 30 days. It is a cash offer, "as-is" sale. Besides selling the home fast, the auction sale will reset the value of homes within the subdivision where the auction is conducted.

A common reason for sellers to take the auction route is to have their home sold no matter what, by providing maximum marketing exposure to their home within a given period of time. If the home is sold much below the market price in the subdivision, this will basically reset all home prices within a subdivision and surrounding area and beyond. Auctions in today's marketplace serve a great need to get homes sold. Therefore, I have developed a working relationship with DeCaro Auctions www.decaroauctions.com . They primarily deal with absolute auctions on luxury real estate over the $3m price range and DeCaro South sells luxury homes below the $3m price range. We consider Decaro Auctions our in-house auction house.

Here is an explanation of various auctions for your comparison.

In an absolute auction, the property is advertised as selling to the highest bidder. The word "absolute" generates much greater interest among potential buyers, resulting in greater attendance at the auction. As well, the property will realize its greatest potential. Fear of loss is a great motivator. If a buyer has an interest in the property, they will not miss this type of opportunity for any reason. Many sophisticated buyers will only do their due diligence if they are certain the property will be sold.

In a reserve auction, the seller establishes a confidential reserve price and has the right to accept or decline the highest bid if it falls below the established reserve. If the reserve method is chosen, it is imperative that the reserve be realistic. This allows the bidding to start at a price that will capture the interest of all potential buyers and will create excitement and momentum in the bidding, but perhaps not as strong as absolute.

The suggested opening bid auction is a variation of a reserve auction. The suggested opening bid that is advertised must be a number that grabs a potential buyer's attention. Typically, this number should be well below the market value or last exposed price. The suggested opening bid auction affords the seller the right to accept or decline the highest bid if the highest bid is below the established reserve.

Let me show you some of the properties being auctioned off with suggested opening bid auctions, with a reserve attached.

In Kissimmee, the property at 3150 APPALOOSA COURT is currently listed at $699,000, with an opening bid of $275,000. This is located in the Pleasant Hill Trails subdivision. Let's assume the home sells for $350,000 ($92.20 / sq. ft.). This would set a new benchmark for the whole subdivision. This is the problem, and I am sure the home prices in Pleasant Hill Trails will take a southward turn after this sells. In case the home does not sell, by publicizing a low price minimum bid price as what is being suggested as a market price from now on, the low price will stick in people's minds.

Here is another example at 32548 HAWKS LAKE LANE in Sorrento, Florida. It is currently listed for $1,295,000 by Heathrow Country Estates Realty, with an opening bid price of $675,000. Assuming this sells at $850,000, what will happen to all the other homes listed at much higher prices? Where will the home prices go in this prestigious subdivision of Heathrow Country Estates? Another is 327544 HAWKS LAKE. Also in Sorrento and also in Heathrow Country Estates, this is currently listed for $1,350,000, by Heathrow Country Estates Realty, and being auctioned off at a suggested resale price of $675,000. Both of these sales could depress the prices in Heathrow Country Estates for a long time, or, at the very least, will give any appraiser the fits trying to get a value for a home in this development. I believe advertising a suggested auction price is going to negatively affect home prices in a subdivision even if the home does not sell, because it will have a stigma attached to it.

The next example is 260 EAGLE ESTATES DRIVE in Debary, Florida. Located in the Debary Plantation subdivision, it is currently listed for $1,395,000 and has a suggested bid price of $750,000. The other home is 1800 LAKE EMMA ROAD in Longwood, Florida. Opening bid for this is set at $995,000, with a list price of $3,468,000. This is a huge difference and will certainly bring a lot of bargain hunters but not many serious bidders.

We prefer absolute auctions, as they bring market price down to what a buyer is willing to pay. It does not set an artificially low price for a home which we may later have to defend and it also brings serious buyers. For example, our absolute auction last week at 5567 WHISPERING WOODS POINT in Sanford, Florida sold with 10 bidders registered. The property will close on October 19^th.

While auctions can set some home prices lower, so will foreclosed homes, according to the recent Orlando Sentinel article: Foreclosed Homes A New Blight. The home seller who wants to survive this must sell their home prior to an auction. They should prepare for a foreclosure sale taking place by setting their home price 10 to 15% below the competition so their home sells before prices are being reduced by an auction or a foreclosure.

Here are the updated September statistics. Whichever way you look at them, they do not look good. In fact, they look frightening!

General Market Indicators

While many in the press insist that the Orlando real estate market in an envious position compared to many other areas of Florida or the country, the facts indicate that we are suffering. In fact, the market conditions are just outright terrible!

While the inventory of unsold homes has only marginally increased over the prior week, and pending sales have increased only by a pittance, the sold homes compared to last year has dropped from 50% lower to 53% lower sales. If you are comparing this to the good times of 2005, we are 66% lower. Any way you slice it, the market looks terrible and outright scary. Not many industries can survive in such a business climate. We are seeing many lenders being on the ropes. If Country Wide, the #1 lender is going to make it, it will take a miracle. Why? Because they are getting kicked from all different sides and their stock value has dropped to almost a penny stock value. Over the last seven weeks, our Orlando home sales have dropped every week compared to that of last year. Seven weeks ago, they may have been just 40% behind pace. Now they are 53% behind last year and we are not seeing any change in course on the horizon.

The overall active resale inventory in the 4-county area (Orange, Seminole, Volusia, and Lake Counties) stands at 31,315 which is very high. In fact, this has increased slightly. Hopefully, we will get another Fed rate cut which would help at least sentimentally and get some buyers off the fence. Buyers are "on strike" right now, at least that's what I read in a recent edition of the Orlando Sentinel. A rate cut would at least be one of the incentives which could get some buyers moving into buying.

The number of sold homes, compared to last year for the same 30-day period, has decreased 53%, and that is not good in anyone's book. In comparison to the same period in 2005, sales are 66% behind the fast moving 2005 pace. Storm clouds are continuing to form over the real estate horizon and they seem to be stationary for some time to come. Since the beginning of the year, sales declined compared to last year, by 37%.

Our market is currently a 100% buyer market

• Sales Demand Activities –moving to slower
• Sales last year (September) to this year (September) - 53% lower
• Resale Inventory – decreased by 250 homes
• Trend Indicator – downwards
• Cumulative Market Time – Volusia County (125 days), Seminole County (114 days), Lake County (143 days)
• Unsold Inventory Supply - Orange County (21.4 months), Seminole County (14.0 months), Lake County (26.0 months), Volusia County (20.1 months), Osceola County (38 months)
• Areas that face the biggest challenge to sell homes are: Lake, Volusia & Osceola Counties.

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The area marked in red shows inventory availability of over 12 months.

The area marked in red shows inventory availability of over 12 months.

The area marked in red shows inventory availability of over 12 months.