What is it worth at auction?
That question is never going to be able to be answered until the bidding stops, but we can guess.
I like to play what I call the guessing game where the market gets to tell us what they are willing to pay even before the auction. During an open house, the prospective bidders guess that final sale price of the house in exchange for a prize. The trick is to make the prize big enough to attract enough attention to the game. $50 or some cookies are just not going to get it done.
Why do auctioneers do this? Information ! I want to know what the bidders are thinking. Armed with this data, the auctioneer can set seller expectations more easily and know which bidder to spend more time working on.
If I know that a bidder thinks the property is worth $500,000 and then that guy shows up on auction day, my job is easier. Especially if the undisclosed reserve price is below his guess.
Typically we will not get all of the open house attendees to offer a guess, but we do receive enough. I've got to tell you, it is very unusual to have the bidding go outside the range of the guessers.
How often have I given away the prize? With pleasure, every time there was a correct guess.
Do you have questions about distressed assets, receivership or bankruptcy sales, auctions? Email me at rfk@gryphonusa.com and I'll try to answer it in an upcoming post.
Richard F. Kruse is the President of Columbus, Ohio based Gryphon USA, Ltd. (www.gryphonusa.com). The Gryphon Organization includes Gryphon Asset Management providing receivership and consulting services in the distressed marketplace, United Country Gryphon Realty & Auction Group (www.ucohiorealty.com & www.ucohioauctions.com) providing real estate brokerage and auction services throughout Ohio and OnlineAuctionUSA.com (www.onlineauctionusa.com) providing commercial asset liquidations from the Midwest to East Coast.
United Country Gryphon Realty & Auction Career Opportunities Available. Call 614-885-0020 x 17
