The Great Rock Real Estate Team  has inspected several luxury home properties in 2nd home destinations over the last 90 days.  Where the primary “high end” market is showing difficult time gaining traction, the 2nd home market has really been slow.  We are extremely bullish about the accelerated sale platform infusing some much needed momentum into these markets. Accelerated Marketing Partners, a Boston based real estate auction firm, recently announced that they will be conducting an auction on January 16th for homes which represent more than $20.5 million worth of real estate on the Hawaiian island of Lana’i. The residences and homesites being offered are located within private Lana’i developments in Oceanside Manele and Upcountry Ko’ele. Stay tuned, as you will see a few more accelerated sales in 2nd home markets in the months to come.

For further information please visit the auction website at http://www.auctionlanai.com/

Residential continues to be the asset class being absorbed in the market place.  Both bankers and private property owners realize this and are taking proactive approaches to sell their properties. On the Commercial side, the market still is not quite at the bottom.  Banks continue to extend with borrowers and are gradually making moves.  Fortunately, conventional brokerage is able to transact again, as the bid to ask spread is slowly closing. We expect and are paying close attention to Q1 2011 for some commercial opportunities as banks don’t want to write off any more losses in 2010.

Great Rock is busy everyday looking at real estate across a spectrum of asset classes.  We continue to focus on large, premium quality real estate with realistic and motivated sellers.  These sellers are individuals who own real estate that is hard to value/unique or sellers that, for whatever reason, want to accelerate the sale of their real estate.  Sellers generally say “what do I do with this real estate”, because the deals we look at tend to fall outside the box of conventional brokerage.

In the last 90 days alone, we have been in discussions with private real estate owners that own luxury residential homes in Anguilla, Turks and Caicos, Beverly, Sanibel Island (FL), Cohasset, Dominican Republic, Wellesley, Weston, Newton, Concord, Coatesville (PA) and Lake Forest (IL). We also have preliminarily inspected commercial property and land in a variety of New England cities, a School, Golf Courses, Churches and a Marina. 

Jeremy A. Freid
Managing Principal

Once the market went from peak to trough, a slew of new players entered into the auction/accelerated real estate industry.  When a seller makes the decision to leverage the accelerated marketing process, there is some inherent risk.  The ability to execute becomes critical.  One subtle misstep can be the difference between failure and success.  One unhappy buyer can bring about legal exposure to both the marketing agent and the seller.  Experience and trust serve as the two most critical components for success in this industry, both of which Great Rock prides itself on. The following article highlights a potential negative outcome in the Auction process:

Unhappy Seller sues Condo Auction Buyers

Real Estate analysts across the industry consistently highlight the fact that there is $1.4 trillion in commercial real estate (CRE) loans that that will require refinancing in 2011 through 2014. A large amount of these loans are at present “underwater,” meaning the borrower owes more than the property is worth. The concern is that even borrowers who own profitable properties may be unable to refinance their loans as they face tightened underwriting standards, increased demands for additional investment by borrowers, and restricted credit. If this is the case, we believe borrowers will have to take a proactive approach to their real estate holdings in the coming years many of which will require an accelerated strategy. Opus East an independent operating company of Minnesota-based Opus Corp., recently used this approach via the auction platform to dispose of a new office development in Washington DC for $57 million. Please read the article below for details:

Southeast D.C. official building sells for $57 million at auction

Most Real Estate executives kept waiting for the election as they believed it would jolt the real estate industry into a new direction.  Well, it came and we are still looking at the same partisan gridlock in Washington. Experts seem to always point to the next date milestone as when things should change:

“Once Summer is over, people will come back with a proactive attitude”
“After the first of the year……”
“After the election……”

However, no specific near-future deadline will fix the real estate questions that are being asked in the market place:

“When will the bid to ask spread narrow?”
“When will banks start dealing with their problems?”

As we have been predicting throughout the year, we will not see a dramatic unloading of commercial real estate hitting the market.  Nor will we wake up to suddenly find every seller with realistic opinions of their property values.  This will be a slow and gradual process. The Commercial market could very likely be headed on a 10 year track to achieve macro balance. The key indicator to drive this growth will be an increase in jobs. Until we see the job numbers return toward 2004-2005 levels, we won’t be able to discuss equilibrium.

Jeremy Freid
Managing Principal

In prior blogs, we’ve discussed in great detail how the accelerated marketing platform is a great fit for unique and hard to value assets. This category includes churches, marinas, golf courses, or our recent 843 acre Berkshire land auction where structured terms and a deadline date provide incentive for buyers to act. Mark Phelan of REJournals.com highlights the growth of the auction in another asset class: commercial real estate. Please click below to understand the benefits of the auction for commercial properties.

Taking a Closer Look at an Old Way of Selling Property

Sam Siegel
Associate

Over the past two years, how frequently have you seen a press release announcing the sale of a good quality piece of real estate being sold at auction? A few transactions on a one off basis, but nothing on a macro volume level that many experts predicted.

The majority of real estate auctions performed by Auctioneers are banks conducting a mortgagee/foreclosure sale of property. You will find somewhere in the press release that the Lender was the high bidder at the Auction. Banks are using these Auctioneers (there is a glaring delineation between Auctioneers and Real Estate Auction Companies) to run the legal drill in order to cleanse the title, take the property back on their books, and then decide what to do with the real estate.

Where we are approaching years end, no bank wants to take the losses at this point. Balance sheets are balanced and they are socking away reserves in preparation for 2011. We are hoping to see some proactive approaches being taken in the first half of next year. Great Rock has been receiving a lot of calls from bankers for opinion of values and submarket data on absorption and pricing, so we believe banks are “teeing” things up. We also think we will not see a tidal wave of property come to the market, but rather a slow and steady unloading. Private sellers are getting more realistic, but it’s the banks that really need to make the moves to create any “unclogging” of the system to inch us closer towards equilibrium.

On October 19th, Velocity Marketing Services will sell 25 units at Auction using the minimum bid method of sale.   When Great Rock Real Estate  is contacted by a prospective seller considering selling their multi unit mid or high rise project through our platform, we often refer them to either Velocity or Accelerated Marketing Partners.  They are the industry leader in this submarket providing a “Win-Win” for all parties involved – a tremendous opportunity for the buyer to purchase a great product at a one time low price, while allowing the owner to accelerate the absorption of their project in a definitive time frame. 

Below you will find a recent article on their upcoming sale:

Audubon Park Auction

Jeremy Freid
Managing Principal

Real Estate is a very large industry, an industry with many imperfections. The type of real estate and a seller’s situation are usually the result of these imperfections.

In the spectrum of real estate assets, not everything fits inside the conventional box of traditional brokerage. Unique and hard to value real estate presents challenges in trying to market in a timely manner, the maximization of value, while properly structuring the terms in the sales of:

• Boarding Schools with multiple buildings in one sale
• Churches with a large congregation auditorium
• Golf Courses
• Marinas
• Portfolios or owners of multiple Real Estate holdings
• The largest home in town
• The most unique home in town
• The largest tract of land in town
• Castles
• School Buildings

Aside from the real estate being unique, what happens if the seller’s situation calls for the sale of the property to take place sooner then the natural marketing time a conventional listing may take?  These situations could be:

• Empty nesters wanting to finally get into the city
• An aged/tired listing
• Court mandate
• Bank is involved and is tired of “Extending”
• Sellers need for liquidity
• Tax purposes
• Divorce

Great Rock Real Estate exclusively represents real estate owners that either own hard to value/unique properties, or for whatever reason, want to accelerate the sale of their premium real estate.  Our conventional real estate associates handle 99.9% of the real estate sold everyday; Great Rock handles the .1% which fall into the “imperfections“category.

Jeremy Freid
Managing Principal

The article below covers an upcoming auction of a vintage commercial property in Augusta, Georgia. It emphasizes numerous benefits of using an accelerated marketing platform to market real estate which we’ve highlighted in past blogs including:

-A specific date of sale provides potential buyers the incentive to act
-It attracts a broader audience of interested parties
-It achieves fair market value for the asset at that given time

 Auction to Settle Market Value of Vintage Building

Sam Siegel
Associate