No Feeding Frenzy: AUCTION: MORGAN COUNTY APRIL 5, 2008

According to McGinnis Auction and Appraisal Service, an absolute auction is "an auction where the property is sold to the highest qualified bidder with no limiting conditions or amount. The seller may not bid personally or through an agent. Also known as an auction without reserve."

The “absolute sale” in Morgan County on April 5 was indicative of current market conditions and illustrates who the buyers are today. The sale took place in the Morgan County Civic Center on a rainy Saturday morning that brought out everybody in the land business in the area and several from out of the area, approximately 120 people in all.

The auctioneer explained the terms of the sale with some new and confusing rules to snatch money from the bidders in combining tracts.

The parcels ranged in sizes of 32 acres to 179 acres in size:

• 6 of the smaller tracts were 32 to 69 acres consuming most of the road frontage
• 4 tracts were 130 acres to 179 acres being accessed by private drives with cross-over easements

The highest bidder could choose which and how many tracts to purchase.

3 bidders started the bidding at $2000 per acre, not a good sign, since this tract would have sold for between $5500 and $6000 per acre two years ago. A $4050 per acre bid prevailed and the high bidder took the entire 923 acres. All that anticipation and excitement about the “absolute auction” and it only lasted 3 minutes!

After the buyer’s premium, the high bidder ended up at $4455 per acre. The gentleman who purchased the property bought a tract from us just a few months ago at a fair price. There are a few buyers who want to warehouse money with a reasonable appreciation in land, but the auction bidder pool, at this time, is predominantly bottom feeders.

So where is the competition when the rest of the market believes that we haven’t seen the bottom? Waiting anxiously on the sidelines until they see evidence of consumer confidence rising and that is the time to call your auctioneer for an “absolute sale,” no reservations, no restrictions. When optimism is on the rise and the people are excited about the immediate future is when you sell recreational land by auction, that’s when you create a feeding frenzy of bidding fast, bidding last, and selling to the greater fool.

When would I do this? The spring of 2009 is the best I could say today.

Image from John Dixon and Associates