The Tranzon Auction Leader
Volume V - Fall, 2005
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.
The Market-Sellers
One clear trend that we are seeing in many of the "hot" markets in which we operate is a propensity of smart money to be selling property. We have clearly seen an increase in experienced real estate investors and owners, turning to auction to sell real estate, in the belief that now is the time to sell. They are turning to the auction method to increase the likelihood of generating a bankable transaction while the real estate climate is still good.
There is also a larger group of less experienced real estate sellers out there who are looking to sell real estate, but they have very high price expectations. This group of seller is extrapolating the sales gains of the past year forward and seeking valuations that have yet to be realized in the markets.
The problem these sellers are encountering is that the VELOCITY OF INCREASE in real estate prices appears to have slowed or stopped in most of our markets. In these cases, properties are sitting on the market causing a back-up in inventory. Listing price reductions are starting to appear.
Our summary on the seller market is that more than at any time in this real estate cycle, we are seeing the behavior of the smart money indicating that the current real estate boom has or is close to having, run its course.
The Market-Buyers
Similarly, we are seeing more cautious buying behavior from the smart money. Offsetting this, there is still plenty of new money in the market, and lenders appear to continue to feed the fire of the acquisition market.
An interesting phenomena is the number of buyers who are either expressing "buyers remorse" over the high prices they are paying or having difficulty getting financing for high valuation purchases.
It is important to note that there seems to be some discipline entering the
buyer market in most of the regions in which we operate. 
We attribute this to economic price fatigue. Prices of certain
property have ascended to points in many markets where they can go no higher
based on the economics of the property, or the ability of the property to
support financing.
The Market-Properties
Property continues to move well at auction. In the residential markets, affordable housing is still, in general, in strong demand and bringing good prices. The upper end of the markets continues to look spotty to us. We are seeing an increase in the inventory of higher priced homes in many of our markets, which has halted the upward trajectory of prices. We are in fact, seeing selected price reductions in the high-end markets.
Residential land parcels have been strong. They are the one area in the residential space that we are still seeing upside pricing surprises. Again, the stronger sub-segment here is the more affordable parcels as opposed to upper end parcels. Waterfront property also continues to draw great attention and big prices at auction despite the apparent adverse impact of hurricanes and gas prices on the attractiveness of waterfront vacation real estate.
We are seeing some softness or at least sideways movement in the
agricultural land market. After a very strong run in farmland pricing in recent
years, it appears that the recent run-up in fuel prices and the disruption in
river transportation brought upon by Katrina may be the impetus to slow this
market down. Agriculture is very dependent on energy and we have seen a
significant impact on farmers' willingness to pay top dollar for ag land. In
addition, we expect that the Federal Reserve's continued increases in short-term
rates have impacted farmers' appetite for new property. Counterbalancing the
waning demand of the farmer is continued strong interest in farmland from
investors.
We continue to see excellent interest in commercial properties, even those that have languished under traditional listings. For example, Tranzon successfully sold a major distribution facility in Kentucky that was on the market for a number of years. Interest in multi-family offerings and income-producing commercial property in general also continues to be strong.
Vacant commercial real estate is garnering plenty of
interest, but the pricing is conservative. Private sellers thinking they can put
a non-incoming producing asset on the market and attract a high valuation offer
are often not seeing speculative price objectives realized. However, those with
reasonable valuation expectations are quickly moving their property via
auction.
A Trend for the Future
While the strong real estate market of the past year has greatly reduced the
problem properties held by institutions and individuals, we are hearing that
when the next "wave" of problems occurs, institutions may be more inclined to
quicker resolution of these assets via auction. By focusing on disposing of
problem assets sooner rather than later, institutions can avoid putting on
overhead to 
manage/turnaround assets and avoid the holding costs of these
properties. With regional offices and a national marketing presence, Tranzon
member companies are uniquely positioned to service these institutions' needs to
dispose of property anywhere in the country.
The Power of Auction Marketing and the Power of Tranzon
A Tranzon auction is still a great way to bring excitement to assets that are languishing on the market under conventional marketing methods. Two recent auctions for a lender featured "tired" properties that were on the market for some time, garnering little interest. One was a food processing plant in the northwest, the other a recreational facility in the south. Both sold at Tranzon auction at bids substantially above the seller's minimum requirement.
In an environment where there is plenty of money available to finance real estate and 1031 money chasing deals, high interest on the part of both institutions and individuals to invest in real estate, and historically high levels of valuation, the power of auction marketing is something many sellers of real estate should consider.
Combine this with the national buyer database that exposes your property to interested real estate buyers across the country at little cost, and the marketing reach and expertise of Tranzon, and you have a potent real estate sales option at your disposal. Tranzon's website, averaging over 40,000 hits per day and listing close to 100 auction properties recently, is one of the most viewed real estate auction websites today. Recently, one of our member companies posted a listing on our website before ANY other marketing was done. Within two hours, ten information packages on the property were downloaded by interested parties!
Have you seen our new ad header? Tranzon members have adopted a new ad format for national publications that features the Tranzon lightening bolt in the header. We expect this to further build brand recognition for Tranzon among our buyer community. By increasing the equity in our brand, we can enhance the confidence buyers have in Tranzon's auctions and maximize the value we deliver to our seller clients!
About Tranzon
Tranzon is a unique organization in the real estate industry. 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 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 45 states and the District of Columbia generating over $600 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.
We are excited about our business and would welcome the opportunity to speak with you directly about our company and capabilities.
CLICK HERE to send an email to request more information on Tranzon or to have Gwendolyn Carnes contact you.
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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.
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