The Tranzon Auction Leader

Quarterly Newsletter - Fall 2007

The Tranzon Auction Leader is published quarterly by Tranzon LLC, national experts in accelerated marketing and auction sales. This E-newsletter focuses on trends, auction highlights, and expert analyses on how a professionally marketed auction may maximize an asset's value.
It's Been a Long Hot Summer
The title of our opening article in the Spring 2007 newsletter read "The Big News in the Residential Market - Lenders Tighten Their Belts".

This past August, everyone's belts tightened so much that the markets could not breathe. We will not repeat the widely reported seizing in the debt markets on Wall Street. We will focus on what we are seeing on Main Street.

In the Spring Newsletter we noted that if liquidity continues to retract, Real Estate problems would start surfacing in certain markets that heretofore have been pretty healthy. We have seen that play out. Residential markets that were strong throughout the adjustment up through this summer seem to have slowed measurably. The residential slowdown appears pretty widespread.

We have just started seeing a return to some semblance of normalcy in many markets. The "headline shock" of the July and August credit market problems is appearing to wear off. Buyers and sellers are slowly coming back into the market. Attendance at Tranzon residential auctions across the country has been steadily on the rise giving credence to marketing that stands out.

There seems to be ample liquidity to fund new home purchases and sound investment property. Anecdotally, we have seen the "informal" sub-prime market come to life in the past month after lying dormant for years. Entrepreneurs, who prior to recent years provided much of the capital to "less-than-prime" borrowers, are back in business. And they have money to lend.
So we are not seeing conditions commensurate with a real estate debacle. Liquidity exists. And buyers have the interest in buying property, the need to buy property, and the money with which to buy property. What they do not have is confidence, which will take awhile.

All of which makes for a challenging market for residential real estate. At the same time that we have a huge pool of property for sale, we have a diminished pool of buyers. Today's challenge in brokerage marketing is how to make a property stand out from the sea of opportunities. Effective auction marketing has been accomplishing this by communicating a sense of urgency and opportunity to the market, much more so than at any time in recent years. Tranzon's success rates (percentage sold to percentage deeds offered) have increased sharply over the last three months.

Another challenge is dealing with an environment of falling values. We say "values" rather than "pricing" on purpose. It appears that in most of our markets, prices are not coming down to a level to accurately reflect current "values". One reason we believe sales have slowed so much is that sellers have not, or cannot, adjust their expectations to today's environment. This is a market that relates well to auctions, where the auction market sets the pricing, thus the value, for the sellers to approve, or reject.

Commercial Stays Strong
Commercial property markets remain quite solid. We are seeing good success in our auctions of commercial properties. We have noted that pricing has leveled off, but it has done so at strong levels. The underlying fundamentals appear to remain favorable.

Important to auction sellers, these strong markets have kept appetites strong for properties that have a "story" as many auction properties do. Buyers are willing to purchase properties with issues or requiring some effort to stabilize

On the financing side, we are seeing lender tightening in this market also for the smaller, less financially strong investor-buyer. This has been going on for most of 2007 and does not appear to have gotten materially more difficult.

In recent months we have had successful sales of assisted living facilities (both operating and closed), convenience stores/service stations, retail, small office, apartments and industrial property. Commercial property is moving at auction pretty much across the board.

Properties generating cash flows are still in high demand and, as noted, there is still an appetite for turnaround situations. If there is a weakness we have detected, it is in land sales, where some of the speculative bloom has come off the rose.

Our observation of rosy conditions in the commercial area is not without some concern. We note, as do others, the relaxed underwriting of loans in recent years and the over-leveraging that appears to have been permitted in some situations. We do expect a moderate worsening in the performance of commercial loan portfolios, but we are not looking for anything resembling what we have seen in the residential market.

National Selling Power
Some of our upcoming auction events illustrate the ways sellers of real property can leverage Tranzon's national selling power and access the benefits of the auction methodology in selling real estate. All of these are recent or near- term sales, which we present to give you an idea of the breadth of situations in which a Tranzon auction might be of value to real estate owners.

Builder Inventory Reduction Sale. A number of builder-owned properties in Summerville and Beaufort, SC.

Eight acres plus development parcel in Raleigh, NC. Ideal for multi-family development.

Numerous development lots for sale in a trustee-directed sale in Houston, TX.

Greater Washington DC ballroom sale of residential homes conducted in cooperation with one of the largest real estate brokerages in that market.

84,000 square foot +/- office building in Sherman, TX.

Sale of tax-delinquent properties in Michigan conducted for one of the counties there.

20-unit multi-family building in Cambridge, MA.

Two farm properties in Pennsylvania.

Industrial buildings in Kentucky, Virginia, and Connecticut and industrial-development property outside of fast-growing Charles Town, WV.

An equestrian farm in central Florida.

There is much more, but we are out of room. Hopefully, you get the idea that Tranzon has expertise in numerous property types in markets throughout the US.

Energize Your Property Listing With a Tranzon Auction
With the property markets slowing in many regions and time on market extending, a Tranzon auction structured specifically to address your needs is an option worth exploring. The average period between signing of a listing agreement and the Tranzon auction date is five to six weeks.

If you have property that you want to sell in a timely manner, please contact us to discuss if Tranzon can provide a solution to your needs.

Filling a Niche for Financial Institutions: Tranzon Marketed Auctions
In the last newsletter we pointed out how a professionally marketed foreclosure auction can increase the likelihood of a third party successfully bidding at a foreclosure auction, and how this strategy can work in many jurisdictions.

Tranzon has significant expertise in the area of foreclosure auctions, allowing for a great strategy to minimize the costs of taking back property.

Tranzon can also fill lenders' needs in instances prior to foreclosure in which the lender is in a cooperative situation with a mortgagee who is unable to service his or her loan. In cooperation with their lenders, property owners can engage Tranzon to affect a timely sale of their property.

Lender cooperation manifests itself in a number of ways. Most commonly, the lender provides the marketing funds for the auction to facilitate the sale. In addition, the lender takes a realistic viewpoint on the value of the property and will accept a lower payoff than the legal balance.

While no lender likes to take a loss, this scenario avoids a much more costly foreclosure as well as increasing potential delays caused by heavy caseloads for the courts. It also allows lenders to avoid the cost of REO ownership and exposure to declining markets.

In more traditional cases in which property is taken into inventory, Tranzon has a long and successful history of assisting financial institutions in turning their inventory quickly, minimizing holding costs. With the pace of real estate owned picking up and a flat to down pricing trend, it makes sense to consider accelerating the turning of REO inventory.

For all commercial and residential property for which lenders want more than the implementation of a mass sales strategy, Tranzon's real estate auction service can deliver the highest possible price in the shortest possible time period for lenders.

About Tranzon
www.Tranzon.com

Combining an auction marketing program with Tranzon's national buyer database and listing on www.tranzon.com exposes your property to interested real estate buyers across the country. Tranzon's website, averaging over 100,000 hits per day and listing over 100 properties recently, is one of the most viewed real estate auction websites in the country.

We are a real estate auction group founded on the premise that combining the powerful auction selling process with a highly professional organization with national resources, and regional member companies having local market knowledge, offers a compelling value proposition to sellers of real estate desiring to sell their property for the highest price possible in the shortest time possible. The member companies of Tranzon have experience in selling virtually all types of property, and our staff includes among the most respected names in the industry with backgrounds in finance, law, and accounting, to name just a few. Tranzon member companies auction over 1,000 properties every year. Since our founding in November 2000, we have conducted auctions in 46 states and the District of Columbia generating over $800 million in sales proceeds for our clients.

Tranzon member companies are independently owned and operated. References to "Tranzon" refer to Tranzon, LLC, and its member companies collectively.

CLICK HERE <mailto:gcarnes@tranzon.com> to send an email to request more information on Tranzon or to have Jeff Levin contact you.

CLICK HERE <http://tranzon.com/team/team.aspx> to view Tranzon's Team.

CLICK HERE <http://www.tranzon.com/> to go to Tranzon's home page at www.tranzon.com <http://www.tranzon.com/> .

CLICK HERE <mailto:info@tranzon.com> to request a copy of Tranzon's Brochure, "Selling Real Estate at Auction".

THE TRANZON AUCTION LEADER is published by Tranzon, LLC., 7204 Glen Forest Drive, Suite 105, Richmond, VA 23226. Our toll-free number is 866-TRANZON.