Crunching the numbers is taking longer than I imagined. I can’t be 100% sure about the final auction prices because my colleague got some information from others there and it was also said that some of these might come back on the auction block. He was told that everything sold on Saturday.
Looking over the Days On Market (DOM), I must say that I feel for the builder. He had some of these properties on the market for over 400 days and one was cancelled after 611 days. He had to come up with something to get these homes moved. Also, the “Previously Valued” price was almost always the highest listed value in the home’s history in my random selection.
Home example #1 19223 SE Barrington Ave Auction lists value at $311,950
- Listed 8/22/06 for $280,950
- $311,950 on 2/16/07
- $286,950 on 5/29/07
- $279,950 on 9/13/07
- $264,950 on 10/4/07 withdrawn on 11/14/07
I understand this home sold for $260,000 at the auction. Plus the buyer had to pay 5% which was to cover advertising making the total $273,000 which was $8,000 more than the list price. For the select amount of homes I have final prices, this was rare. But it does show an interesting price strategy the builder had. Rarely do you see people try to raise the price. You will see that more often in the following cases. 460 days on the market
Example #2 12587 Se 147th Ave Auction list value at $465,950
- Listed 6/1/06 for $439,950
- $465,950 on 9/26/06 Price increased for only one day
- $439,950 on 9/27/06
- $399,950 on 10/25/06
- $443,950 on 2/14/07
- $404,950 on 6/8/07 withdrawn on 11/14/07
Never Pending but Bumpable once for about 3 weeks in Spring ‘06. Final auction price believed to be $365,000. With the 5% added it equals $383,250. A theoretical savings of $21,700. 536 days on the market.
Example #3 14506 SE Vista Heights Auction lists valued at $477,950
- Listed 5/31/2006 for $499,950
- $479,950 on 6/22/06
- $508,950 on 9/26/06 One day price increase again
- $479,950 on 9/27/2006
- $429,950 on 10/25/06
- $477,950 on 2/14/2007 Why raise the price almost $50,00? Hoping for Spring?
- $424,950 on 6/8/07 withdrawn on 11/14/07
The final price is believed to be $379,000. A possible savings of $27000 (6%) with the 5% add on to the price. This is one of the few times that I saw where they didn’t use the highest listed price as their “Previously Valued” price. 537 days on the market.
So I don’t think anyone made a “fantastic” deal that is worthy of flipping. Look at Example #1 for evidence of that.
Things of interest I pull from this:
- The builder was very creative with his pricing strategy though it didn’t seem to work. I see price drops coincide with the holiday season and except for one day price bumps, most were in February hoping for the Spring selling season I would guess.
- The builder may be a victim of all of the other builder’s stubbornness. Most agents learn early on that builders don’t negotiate their prices. They will give incentives left and right but I have only gotten a builder to negotiate once that I can remember. Some of these final auction prices could have been negotiated but maybe no one tried.
- The average price, from the article referenced below, would have been $460,992.
I could spend another couple of hours looking these homes up but I think this is enough information for the time being.
Buena Vista had many opportunities to drop prices in early 2006 but at times actually raised them. Many agents I talk to agree that right around June 2006 the market took at hit and the seller’s market started to show it’s weakness. June or so of this year may have been the switchover to our current Buyer’s market.
Oh, and that 5% advertising fee that was added on to all sold homes? I just saw the Oregonian story from Ryan Frank, and he has done a great job. A reports that the Builder sold 141 homes for $65 million. I had just got done calculating what that 5% fee would be at the starting bide but at $65 million it is $3,250,000.
I would love to know the story behind the one day price increases of $30,000 they did a couple of times in my random search. Email me if you have questions at mikerohrig@gmail.com
One last thing. The builder says in Frank’s article that every house has a 1-year warranty. For one year after sell a new home, a builder is open to complaints to the contractors board for work that they have done. There is rarely, if ever, a true warranty through a third party. So the one year is really about their liability but builders spin that to make them look good. Most builders are good and will remind homeowners near the end of the year to report any issues with the house.
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