Novel Auction Could Sell House for Hundreds of Dollars
Tuesday, January 20, 2009
Owners make money when would-be buyers pay for a seat at the auction
Lest you think that the the current real estate crisis (home ownership, specifically) is just a U.S. thing, feast your eyes and ARMs on this piece from New Zealand's Stuff.co.nz:
It is a modern brick house with three living rooms and four bedrooms in a pleasant Christchurch suburb and it is probably the cheapest house in New Zealand. The Redwood home could be yours for a little more than $100, despite its rating value of $594,000. (ATR readers: The current exchange rate is 1 NZD = .533 USD. So the home price in question is about $316,780 USD.)
The most the lucky buyer will pay is $1100.
Real estate agent Brad Maxwell and wife Janice own the Redwood property through a family trust and are selling it through a new sales method they hope will catch on.
Would-be buyers will book a seat at an internet auction for $100 each, with the lowest unique bid between 1c and $1000 getting the house.
The Maxwells have ensured they will not lose out on the deal. They have calculated that selling between 5000 and 6000 seats will bring in what they want for their home, and only then will the online auction run.
If they sell too few seats, they will cancel the auction and refund everyone's money.
Brad Maxwell believes the auction would fill up in 30 days, with the first seats already sold.
People could buy more seats to boost their chances, he said.
"This is a genuine auction. We are not here to rip anybody off. The intention of this exercise is to sell the property at market value," he said.
While the scheme sounds like a lottery or a raffle, Maxwell insists it is not. He has not appointed an independent overseer, but has checked the legality of the scheme and will make the auction records available for audit.
No-one connected to his family or business, low-fees agency Premier Realty, would be allowed to bid.
"There won't be any phantom bids or dodgy bids or vendor bids. We want everything to be transparent and above board. I'm happy to be questioned by anyone," he said.
Maxwell has spent several months and tens of thousands of dollars developing the scheme and a website. He said he had seen other types of low-bid auctions in other countries, but believed he was breaking new ground.
He hoped the idea would catch on and change the way real estate was marketed in New Zealand.
House-hunters on the Trade Me website, where the auction is advertised, posted mixed feelings on the scheme.
One described the scheme as smart, some found it confusing, another called it "just a coin toss".
Some were already plotting their bids, with one estimating the winning bid would be under $26 and another estimating it as less than $15.
Property author and commentator Kieran Trass said he loved the idea.
"With the property market in the state that it currently is, what can you do to sell a property?" he said.
"This is really innovative. It's a different way of doing things in a different market. He might create a new method of selling."
Trass said he was considering buying into the auction.
He believed Maxwell could struggle to get enough bidders to make the scheme work, "but I could be wrong".
"Compare it with Lotto and the odds look great," he said.
Real Estate Institute president Mike Elford had not heard of the scheme before being contacted by The Press, but said that as Maxwell was selling his own house, "I guess he can do what he wants".
"The only thing the Real Estate Institute would be concerned about, if it becomes widespread, was that the public wasn't disadvantaged," he said.
Lest you think that the the current real estate crisis (home ownership, specifically) is just a U.S. thing, feast your eyes and ARMs on this piece from New Zealand's Stuff.co.nz:It is a modern brick house with three living rooms and four bedrooms in a pleasant Christchurch suburb and it is probably the cheapest house in New Zealand. The Redwood home could be yours for a little more than $100, despite its rating value of $594,000. (ATR readers: The current exchange rate is 1 NZD = .533 USD. So the home price in question is about $316,780 USD.)
The most the lucky buyer will pay is $1100.
Real estate agent Brad Maxwell and wife Janice own the Redwood property through a family trust and are selling it through a new sales method they hope will catch on.
Would-be buyers will book a seat at an internet auction for $100 each, with the lowest unique bid between 1c and $1000 getting the house.
The Maxwells have ensured they will not lose out on the deal. They have calculated that selling between 5000 and 6000 seats will bring in what they want for their home, and only then will the online auction run.
If they sell too few seats, they will cancel the auction and refund everyone's money.
Brad Maxwell believes the auction would fill up in 30 days, with the first seats already sold.
People could buy more seats to boost their chances, he said.
"This is a genuine auction. We are not here to rip anybody off. The intention of this exercise is to sell the property at market value," he said.
While the scheme sounds like a lottery or a raffle, Maxwell insists it is not. He has not appointed an independent overseer, but has checked the legality of the scheme and will make the auction records available for audit.
No-one connected to his family or business, low-fees agency Premier Realty, would be allowed to bid.
"There won't be any phantom bids or dodgy bids or vendor bids. We want everything to be transparent and above board. I'm happy to be questioned by anyone," he said.
Maxwell has spent several months and tens of thousands of dollars developing the scheme and a website. He said he had seen other types of low-bid auctions in other countries, but believed he was breaking new ground.
He hoped the idea would catch on and change the way real estate was marketed in New Zealand.
House-hunters on the Trade Me website, where the auction is advertised, posted mixed feelings on the scheme.
One described the scheme as smart, some found it confusing, another called it "just a coin toss".
Some were already plotting their bids, with one estimating the winning bid would be under $26 and another estimating it as less than $15.
Property author and commentator Kieran Trass said he loved the idea.
"With the property market in the state that it currently is, what can you do to sell a property?" he said.
"This is really innovative. It's a different way of doing things in a different market. He might create a new method of selling."
Trass said he was considering buying into the auction.
He believed Maxwell could struggle to get enough bidders to make the scheme work, "but I could be wrong".
"Compare it with Lotto and the odds look great," he said.
Real Estate Institute president Mike Elford had not heard of the scheme before being contacted by The Press, but said that as Maxwell was selling his own house, "I guess he can do what he wants".
"The only thing the Real Estate Institute would be concerned about, if it becomes widespread, was that the public wasn't disadvantaged," he said.
posted by Chris and Frank at 12:00 AM
1 Comments:
I'm going to say that I think this kind of scheme is illegal. I don't know New Zealand law, but this seems more like gambling than an auction. It certainly would't fly here in the States.
Nick, Studio City, CA
Post a Comment