Auction to unload new condos, homes
Bids in 1-day sale start at $30,000
Bids in 1-day sale start at $30,000
BY ALEJANDRO BODIPO-MEMBA
FREE PRESS BUSINESS WRITER
November 16, 2006
In a dramatic sign of southeast Michigan's lagging housing market, properties with opening bids as low as $30,000 will be offered Sunday in what is believed to be the largest-ever auction of its kind in Michigan.
Neumann Homes, a Chicago-based builder with extensive operations in Michigan, is trying to recoup its investment in the area by conducting a one-day auction of 87 homes, lots and condos in nine communities.
The auction will be at 2 p.m. Sunday in Troy.
Homebuilders including Neumann say Michigan's sagging economy -- with the nation's highest unemployment rate and job cuts at Detroit's automakers -- has saddled them with excess inventories and limited options to make a profit or merely break even.
"Every builder in the U.S. is facing a downturn, and everybody is left with excess inventory," said Laurie Tarver, division president for Neumann Homes in Michigan.
"Then add to that the sluggish economy and lack of job growth in Michigan. The bottom line is, no builder wants to do an auction, because it means you need to get the return quicker than you wanted."
A look at what's for sale
Neumann Homes, one of the nation's largest homebuilders, with operations in Illinois, Colorado and Wisconsin, has built 11,000 homes since 1985.
It is putting 23 single-family homes, 24 condos and 40 building sites up for auction, including luxury homes and condos in Rochester Hills, Clarkston, Highland Township, Lake Orion, South Lyon, Milford, Southfield, Pontiac and Novi.
Minimum opening bids will range from $30,000 to $200,000.
"The advantage of having an auction as a builder is you have the opportunity to sell a lot of property in one day," Tarver said. "For consumers, it's the deal of a lifetime. It's definitely a buyers market."
These developments are among those in the auction:
• Middlesboro at Oakhurst Golf & Country Club, 6855 Oakhurst Ridge Road in Clarkston.
• Oakland Knolls, 44 Londonderry Lane in Rochester Hills.
• Pine Bluff Estates, 2742 Overbrook in Highland Township.
• Fountain View, 1106 Fountain View Circle in South Lyon.
Bids for 21 of the homes, condos and lots will be sold on an absolute basis -- meaning that they will be sold at the highest bid, regardless of the seller's desired minimum bid.
The remaining properties will be sold on reserve, which means the seller has the right to refuse a bid if it doesn't reach a predetermined price.
Successful bidders will be charged a 3% service fee. Bidders must provide a cashier's check, certified check or cash for the minimum amount of the property's listing.
"As far as new product, this is the largest auction of new property in Michigan, to the best of my knowledge," said Bob Roggeveen, president of Auction Services Group, a Chicago-based company that is conducting the Neumann Homes auction.
Some of the proceeds from the auction will go toward paying off third-party lenders, recouping Neumann's initial investment or providing money to reinvest in Michigan.
Other Michigan builders are considering similar auctions.
Jim Babcock, president of the Building Industry Association of Southeastern Michigan and chief executive of the Babcock Building Co. in St. Clair Shores, recently put up for auction homes he built in Monroe.
"It's no secret that new home sales are slowing down and our members are doing all types of things to be creative and move product," he said. "Auctions are becoming more common."
Slump seen as temporary
Taking the unusual step of auctioning off properties is evidence that Michigan's housing economy is among the worst in America. Michigan single-family housing permits -- a proxy for the number of homes builders plan to construct -- declined 35% in September, compared with September 2005.
In metro Detroit, permits were down 45%, according to the Michigan Association of Home Builders. Overall, permits in southeastern Michigan have fallen from 24,359 in 2004 to 7,429 for the first eight months of this year.
But even as developers find it more difficult to sell properties, they say the downturn in the housing market is temporary and Michigan will be on the mend by 2008.
"I think we're right around the bottom of this cycle," said Robert Filka, chief executive officer of the Michigan Association of Home Builders. "It will probably take another 12 to 18 months before things start to pick back up."
FREE PRESS BUSINESS WRITER
November 16, 2006
In a dramatic sign of southeast Michigan's lagging housing market, properties with opening bids as low as $30,000 will be offered Sunday in what is believed to be the largest-ever auction of its kind in Michigan.
Neumann Homes, a Chicago-based builder with extensive operations in Michigan, is trying to recoup its investment in the area by conducting a one-day auction of 87 homes, lots and condos in nine communities.
The auction will be at 2 p.m. Sunday in Troy.
Homebuilders including Neumann say Michigan's sagging economy -- with the nation's highest unemployment rate and job cuts at Detroit's automakers -- has saddled them with excess inventories and limited options to make a profit or merely break even.
"Every builder in the U.S. is facing a downturn, and everybody is left with excess inventory," said Laurie Tarver, division president for Neumann Homes in Michigan.
"Then add to that the sluggish economy and lack of job growth in Michigan. The bottom line is, no builder wants to do an auction, because it means you need to get the return quicker than you wanted."
A look at what's for sale
Neumann Homes, one of the nation's largest homebuilders, with operations in Illinois, Colorado and Wisconsin, has built 11,000 homes since 1985.
It is putting 23 single-family homes, 24 condos and 40 building sites up for auction, including luxury homes and condos in Rochester Hills, Clarkston, Highland Township, Lake Orion, South Lyon, Milford, Southfield, Pontiac and Novi.
Minimum opening bids will range from $30,000 to $200,000.
"The advantage of having an auction as a builder is you have the opportunity to sell a lot of property in one day," Tarver said. "For consumers, it's the deal of a lifetime. It's definitely a buyers market."
These developments are among those in the auction:
• Middlesboro at Oakhurst Golf & Country Club, 6855 Oakhurst Ridge Road in Clarkston.
• Oakland Knolls, 44 Londonderry Lane in Rochester Hills.
• Pine Bluff Estates, 2742 Overbrook in Highland Township.
• Fountain View, 1106 Fountain View Circle in South Lyon.
Bids for 21 of the homes, condos and lots will be sold on an absolute basis -- meaning that they will be sold at the highest bid, regardless of the seller's desired minimum bid.
The remaining properties will be sold on reserve, which means the seller has the right to refuse a bid if it doesn't reach a predetermined price.
Successful bidders will be charged a 3% service fee. Bidders must provide a cashier's check, certified check or cash for the minimum amount of the property's listing.
"As far as new product, this is the largest auction of new property in Michigan, to the best of my knowledge," said Bob Roggeveen, president of Auction Services Group, a Chicago-based company that is conducting the Neumann Homes auction.
Some of the proceeds from the auction will go toward paying off third-party lenders, recouping Neumann's initial investment or providing money to reinvest in Michigan.
Other Michigan builders are considering similar auctions.
Jim Babcock, president of the Building Industry Association of Southeastern Michigan and chief executive of the Babcock Building Co. in St. Clair Shores, recently put up for auction homes he built in Monroe.
"It's no secret that new home sales are slowing down and our members are doing all types of things to be creative and move product," he said. "Auctions are becoming more common."
Slump seen as temporary
Taking the unusual step of auctioning off properties is evidence that Michigan's housing economy is among the worst in America. Michigan single-family housing permits -- a proxy for the number of homes builders plan to construct -- declined 35% in September, compared with September 2005.
In metro Detroit, permits were down 45%, according to the Michigan Association of Home Builders. Overall, permits in southeastern Michigan have fallen from 24,359 in 2004 to 7,429 for the first eight months of this year.
But even as developers find it more difficult to sell properties, they say the downturn in the housing market is temporary and Michigan will be on the mend by 2008.
"I think we're right around the bottom of this cycle," said Robert Filka, chief executive officer of the Michigan Association of Home Builders. "It will probably take another 12 to 18 months before things start to pick back up."
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