26A — April 24 - May 14, 2015 — Spring Preview — M id A tlantic

Real Estate Journal

A uction

By Richard G. Warner, Warner Real Estate & Auction Company, Inc. When does an auction make sense?

ach year, auctions are used to sell billions of dollars of real es- tate . Once thought use- ful only for disposing of problem and hard-to-sell properties, auctions are gaining pop- ularity as an effective sales tool for all types of real estate. Current market activity shows that auctions are on the rise nationwide. For in- E Richard Warner

stance, the reported sales in 2014 by National Auctioneers Association members with an Accredited Auctioneer of Real Estate (AARE) designation was $1.35 Billion. Characteristically, an auc- tion helps define the mar- ket for hard-to-value, unique properties. The competitive bidding technique reaps pre- mium sales prices for such properties. In addition, if the property’s market is small, an auction can accelerate the sales process. Auctions are also advan- tageous when the property

owner wants to control the structure of the sale. In an auc- tion, the seller establishes the

of an auction is comforting, especially to owners who have experienced cancelled sales

must be disclosed. There are scheduled on-site inspection times when all interested par- ties can preview the property. The auction or bid date sets a deadline by which the buyers must act if they wish to pur- chase the property. Auctions also allow the seller to effectuate a “time certain” sale. This is a key advantage for owners who want to defer taxes by selling a property and buying a re- placement property in an IRS Code Section 1031 exchange. Additionally, owners seeking to sell properties before the end of the year to offset gains and losses find controlling the time line of the transaction extremely important. Owners of properties with negative cash flows can also benefit from a “time certain” sale, especially if they are un- able to retrieve carrying costs incurred during a protracted marketing campaign by selling at a higher price. Most auctions take place within 45-60 days, with closings ranging from 30- 45 days thereafter. The speed of these sales can translate into huge savings for the owner. For example, a property has a negative cash flow of $10,000 per month and based on the ab- sorption rate will take 12 to 18 months to sell. By utilizing an auction, the owner can afford to discount the sales price be- tween $120,000 and $180,000 and still come out ahead. An example in the current market is a condominium developer who accomplishes an entire sell-out in 75 days thereby eliminating his carrying costs and the uncertainty of future market conditions. Owners and brokers now regard auctions as a cost effec- tive tool to accelerate the sales process and control the terms of the sale. Richard Warner is the president and founder of Warner Real Estate & Auc- tion Company, Inc. and a licensed real estate broker in New Jersey and Pennsyl- vania. Warner is one of 348 in the United States and Canada who have earned the coveted designation Ac- credited Auctioneer, Real Estate. He has successfully sold real estate at auction for a variety of sellers in- cluding corporations, es- tates/trusts, government entities, financial institu- tions and private owners. n

“Auctions are also advantageous when the property owner wants to control the structure of the sale. In an auction, the seller establishes the specific terms of the sale, and the market bids based on those terms.”

specific terms of the sale, and the market bids based on those terms. The auction firm codi- fies all the financial, legal, and other materials in advance, including the contract for sale the successful bidder must sign. This important aspect

due to contingency-riddled contracts. Most auction trans- actions are made on an “as is, where is” basis and require potential buyers to complete their due diligence prior to the auction. Both the positives and the negatives of the property

719 S Broadway Pennsville, NJ 08070

927 Crt Hse So Dennis Rd, Dennis, NJ 08210

Former Michael’s Restaurant and Diner consists of one and partial two-story restaurant building situated on 2.07 +/- acres with 300 ft of road frontage on Broadway(Route 49). The 7379 +/- sf building has 6064 sf on the first floor and 775 sf on the second floor. The layout of the first floor consists of a reception lobby, a 56-seat dining room, a 70-seat center dining room, and a solarium dining room seating 36, for a total seating capacity of 162. The first floor also con- tains a six-fixture ladies room and a six-fixture mens room. The second floor contains an office. Heating is provided by a gas-fired, forced-air system.

BANK OWNED- Like New (5 years old) 1-Story 4475 +/- sf, wood frame construction 3 unit retail center condominium with 22 car macadam paved parking lot, concrete bumpers, concrete curbs, sidewalks, walk- ways, road signs, two curb cuts for ingress/egress situated on a professionally landscaped one acre lot. The floorplan consists of the right side (closest to SR 47) unit #1 is 1000 sf with open area and rest room, the middle unit #2 is 2475 sf with 75% open retail area, 25% for storage, restroom and finished walk-up attic, the left side unit #3 is 1000 sf with open area and a rest room.

Richard G. Warner, President/Founder NJ & PA Licensed Real Estate Broker Office: (856) 769-4111 E-mail: rich@warnerrealtors.com www.WarnerRealtors.com

Made with FlippingBook - Online catalogs