Dennis Norman
I think of myself as a pretty clever and creative guy. Having been a real estate investor since 1979 I have had to deal with tough market conditions on several occasions…including 18% mortgage rates back in 1981.
During those periods of tough market conditions I worked to come up with some clever ways to market my homes or to find niches that enabled me to continue to sell homes in spite of the current market conditions.
Well, I’ve been trumped! Last week I received a press release about Agoraseto, LLC; Investors in Boston that are offering homes they own for sale at auction. OK, nothing that creative about an auction however this company is selling their homes at ABSOLUTE auction without a minimum or reserve price. This means the high bidder, no matter how low his or her price is relative to the value of the house, will buy the house.
Hmm…at this point I’m starting to be a little suspicious how legitimate this offer is or what kind of junk are they selling that they can gamble by accepting whatever price happens to be bid? I then read more of the press release only to find the deal gets more unbelievable…I now notice the company, Agoraseto LLC, is offering 100% financing at market rate to the successful bidder, regardless of income or credit history.
Give me a break, no way I’m thinking. I have now invested 10 minutes or so into this release so I might as well go ahead and dig in deeper to find out what is going on. Finally I get to the part that makes all of this make sense…I see the statement “a predetermined number of offers must be received by a specified date in order for the sale to proceed”. I then read on and find that “in order to participate a $1,000.00 deposit is required…if the sale occurs, all deposits are kept.”
AHA, now it makes sense! This was sounding a little too good to be true from the buyers perspective but now I see that this investor has come up with something I think is extremely clever and may offer a great opportunity to people to own a home. Better yet, due to the very original way of structuring the auction, I can see where it works for the seller as well.
In fact the last paragraph of the release pretty much sums it up; “It’s a winning proposition for both parties. Agoraseto pays off their mortgage from the deposits received. This allows Agoraseto to accept any price for the property and to provide 100% financing to the buyer.”
I went to the AgoraSeto.Com website and checked out the one property they are currently offering for sale in this manner. Here’s a quick recap of the deal:
- The house is in Dennis, Massachusetts (sounds like a great town, love the name!)
- According to the site the 2009 assessment on the property is $283,400.
- There are 210 participants required for the sale to take place
- The auction is done by sealed bid
In my opinion (and guess) the seller will probably realize more (taking the deposits into consideration of course) from selling the home in this manner than they would selling in the traditional manner. But at the same time it’s also my opinion (and guess) that the buyer will buy the house below market value and will get themselves a no-money down home loan to boot!
It does appear to be win-win….well, except for the 209 people that spent $1,000 and were not the successful bidder, however that’s the price they “pay to play”, so to speak.
I’m curious how this concept is working out so I’m planning to do an E-View TM with someone from Agoraseto LLC so watch for it in the next few days.
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