Going Once, Twice — Sold!
With a small-town real estate market hobbled by factory and store closings, Greg A. Storey used an auction to close a sale for almost double the market price.
April 1, 2008
Location: Eads, Colo.
Square footage: 1,098 square feet
Lot size: 6,000 square feet
Year built: 1940s
Extras: Basement and carport
THE CHALLENGE: The house is located in Eads, a town with a population of about 700, and is about 90 miles from Greg A. Storey’s office in Juno, Colo. In 2005, Storey, an accredited auctioneer of real estate and owner of Heart G Auction & Realty, got the less-than-perfect listing. He says the home had asbestos siding, electric wall heat, and foundation problems. But the biggest obstacles were the sagging housing market and plant closings that plagued the area.
“Eads is a small town that’s drying up,” Storey says. “Three homes were sold during 2005 in Eads. And with 12 homes for sale when I got my listing in November 2005, I was facing a market that basically had a four-year supply of homes for sale.”
Storey held one auction preview, with one attendee, prior to Thanksgiving. Then, right after Thanksgiving, the bus plant in Lamar, Colo. (about 30 miles south of Eads), which employed about 20 percent of the town’s population, announced it was closing. The same week, a major retail store that drew people for 100 miles to its location in La Junta, Colo., reported it too would close.
“With these two announcements, the entire area was in a gloomy mood and hopes for a real estate sale were rapidly diminishing,” Storey says. “And with no buyers and a house you would be lucky to get $6,000 for, it was obvious that no broker wanted to list the property and drive 60 miles round trip just to show it.”
So how did you overcome the challenge?
STOREY: I placed ads in the newspaper and posted signs and fliers promoting an auction for the property around the town. I also held a real estate auction preview two weeks before the actual auction that lasted about 90 minutes. It was attended by two people. I called the owner’s nephew in Oregon and informed him of the economic downturn in the area, and he said he would leave it in my hands to do my best. So as my wife and I drove to Eads to conduct the auction, held at the property Dec. 3, it didn’t look good.
How were you able to get it sold through auction?
STOREY: I ended up holding two auctions and one preview two weeks before the final auction. I had three bidders sign up for the final auction. The first was a man known for buying properties and renting them out. The other two bidders were the neighbors on each side of the property. The bidding started at $500. Nine minutes later I announced the property sold to the neighbor to the north at $9,950. We closed Dec. 30.
Is this what you expected the property to sell for?
STOREY: In checking the market, I learned that the two other almost identical homes that sold that year brought $4,000 and $5,000 respectively. So we got a good price for the home.
The person who bought the house had heard about the auction from the newspaper ads, signs, and fliers I posted in mailboxes and around town. He then resold the home to a young couple for $12,000. They invested a lot of money in the home, and it is reportedly now a town showpiece.
What do you attribute to closing the deal so quickly and getting such a great price?
STOREY: The house probably wouldn’t have sold, and not as quickly, without the auction process. The system and speed of auction marketing definitely drummed up enthusiasm with buyers and closed the deal quickly.
How did you get the listing?
STOREY: In October 2005, I received a call from the owner’s nephew. He lived in Oregon and was referred to me by a broker who had recommended me for a fast sale. The nephew said his aunt had a house in Eads but had to move into a nursing home in Ordway, Colo., and would never be able to live on her own again. The nephew had power of attorney. I had an auctioneer who I work with drive by the house and tell me about it. And I met the nephew at a truck stop and talked about my marketing strategy. He asked me what we had to do to start the process. I went to my car, got my laptop and my battery-operated printer, returned to the truck stop, pulled two tables together, set up my work area, wrote up the contract, and within 20 minutes, we were done.
How much did you spend marketing the home?
STOREY: The total advertising budget for the auction, with fliers, signs, and three newspaper ads, was $262.
How many times did you show the property?
STOREY: Three times. Once during the first auction preview and twice during the second.
How did you get started in real estate?
STOREY: I worked my way through college working in the livestock auction field in the 1970s. I became a certified auctioneer and started my own auction company in 2000, got my real estate license in January 2003, and started my real estate company in June 2005.
What lessons did you learn from this transaction?
STOREY: If anything, the experience taught me to not give up. As one of only about 320 accredited auctioneers in real estate nationwide, I’m often asked to speak about how auctions work and my most successful real estate auction. Even though I have sold many six-figure properties at auction, I always find myself telling the story of the little house in Eads that bucked the economic odds and sold for almost double what everyone thought it would.
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