Posts Tagged ‘potential buyers’
Winning to Lose?
December 29th, 2009 | 
Author: An Examination of Real Estate Auctions
Real estate auctions are becoming more prevalent as the fallout from the devaluation of real estate continues. Growing up on a farm, I would often attend agriculture equipment auctions with my Dad. In the beginning, the worse the weather, the more excited we were to attend the auction. We believed that we would be able to buy things at a discount because people wouldn’t want to attend an auction if they had to stand outside in the freezing rain. We could not have been more wrong; rainy day auctions seemed to bring a premium. The most common phrase at a rainy day auction is some variation of “Man, I didn’t think anyone would be here”. More people show up to farm auctions on rainy days because they don’t think anyone else will be there. Ironically, this shared perception results in an increased number of auction participants, which in effect increases the competition and tends to increase prices. I hypothesize that as a buyer you are better off going to farm auctions on sunny days. What affects asset prices at real estate auctions?
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