Sometimes selling a property in a slow real estate market means getting creative.
At least that’s Melinda Merrill’s thought at Reed Real Estate in Ennis. She’s part of two real estate auctions this month in an effort to get some of her listings sold.
“I am a firm believer at being progressive and aggressive in trying new things,” Merrill said. “The only way to figure out what works and what doesn’t in the area is to try it.”
One auction will be to sell property owned by Greg and Karen Rice near Harrison. The 16 lots are all approximately 20-acre parcels in the Norwegian Creek Estates development. Also included in this auction is a 152-acre parcel near the development.
This will be a sealed-bid, Internet auction run by Kennedy Wilson Auction Group from California.
The other auction will be for Merrill’s own home and property south of Ennis. This auction will be a live auction run by Hagedorn Auction out of Twin Bridges. However, bidders can also bid online through United Country Auctions, Merrill said.
On the Norwegian Creek Estates auction, minimum bids are established. For Merrill’s home, no minimum bids are set.
With Merrill’s home, the auction will include the property along with a variety of personal items. Interested bidders must be pre-registered to participate.
Auctions aren’t new to the real estate industry; however, they haven’t really caught on in Montana, said Steve Mandeville, a Realtor and auctioneer in Helena.
“It’s how they liquidate everything in the Midwest,” Mandeville said.
He started looking into real estate auctions when the market was booming four years ago. Then it was a logical extension of what was happening with standard real estate sales – a property would be on the market for less than a day when multiple offers would come in. To maximize the profit for his clients, Mandeville started auctioning some of his listings.
“I would set it up to receive any and all offers a week after (a property) was listed,” he said. “As a consequence I was selling property at more than (the listing price) most of the time.”
In a seller’s market, auctions can maximize the price paid for real estate, Mandeville said.
What Merrill is hoping for is that in a buyers market, an auction will get her home and the Rice’s property sold.
“It’s a progressive and aggressive idea when the traditional way didn’t work,” she said.
The real estate market in Madison County is slowly recovering after a painfully slow year in 2009.
So far this year in Madison County there have been 29 sales logged on the Multiple Listing Service, said Karen Swedman, a Realtor at Arrow Real Estate in Ennis.
Last year from the beginning of January to the middle of July only 12 properties were sold, according to the MLS. During the same time period in 2008, 52 properties were sold in the Madison Valley.
The market is picking up, but primarily people are looking for residential properties, rather than buying land, Swedman said.
“I think people would probably fix up a property rather than start from scratch,” she said.
Also, most of the buyers she’s seeing are second home buyers. However, she thinks it’s only a matter of time before the first time home buyers get back in the market.
“The prices have come down, so I would have to say that people who are first time home buyers are getting an opportunity because pricing is now coming back into realistic figures,” Swedman said.
The market is also picking up in the Ruby Valley, said Karen Talley at Clear Creek Realty in Sheridan.
However, like in the Madison Valley, most buyers are not first time buyers.
Buyers are really taking their time now, Talley said. They’re looking for just the right home or property.
“They’re certainly taking their time and looking at a lot of property and they’re not willing to settle for something that doesn’t quite match what they’re looking for,” she said.
Also, the buyers she works with are looking in at a broader region to buy in.
“Our housing market competing with the Bozeman market is tough because there’s a lot of property available in Bozeman,” she said.
And despite historically low interest rates, the economy is keeping many first time home buyers out of the market, Talley said.
“Even though prices are better they’re not willing to jump in until they have that job security,” she said.
Most real estate auctions that have failed have done so because they didn’t involve Realtors, Merrill said.
This is a crucial difference with what she is trying to do. Both auctions are offering commissions to the Realtors representing the buyers. This is an incentive that Merrill is hoping will attract local Realtors with interested clients.
“My buyers are probably with Realtors so what incentive can I give a realtor to bring somebody to an auction?” she asked. “We are actually stepping to the plate and paying more in commission than a standard conditional sale.”
For her home, Merrill is offering a 2 percent commission. For the Norwegian Creek Estates auction the buyer broker commission will be 3 percent.
Merrill has tried to eliminate as many hurdles as possible for potential buyers.
“I’ve jumped through every hoop known to man I could think of that a buyer has asked me as a Realtor,” she said.
That means she’s got a current appraisal, home inspection, small repairs, and a title commitment.
“The one thing I can’t do is help that buyer qualify for the loan,” Merrill said.
She is also offering a cash rebate incentive to encourage people to bid online prior to the live auction. This will provide a rebate to a successful bidder if they started their bidding online prior to the live auction, no matter how low that first bid was.
“As a seller what I’m trying to do is get people excited enough to put in those low beginning bids,” Merrill said.
Many of the details of the auctions are online at www.reedrealestate.com. The auction for Norwegian Creek Estates will close on Aug. 10. The live auction for Merrill’s home and property will be Aug. 14 starting at 8 a.m.