Auctions Offer a Third Option for Selling Property

By Leanne Goebel
Four Corners Business Journal Correspondent

Jan 23, 2006, 06:00 am



PAGOSA SPRINGS, Colo. -- Ask most people how many options they have for selling property and they will say two: List it with a Real Estate Agent or try to sell it "by owner." But a third option is on the rise. The number of Real Estate Auctions in 2005 was 15 percent higher than the number in 2004.

The National Association of Realtors predicts that by 2008, one in three properties will be sold at Auction. Most Real Estate Auctions today are not foreclosure or distress situations; rather they are the result of a seller choosing a cost-effective, accelerated method to sell a property at a true market value. Auctions are win-win situations where sellers obtain immediate cash and buyers purchase properties for a price determined by open, competitive bidding.


The Four Corners is home to a Master Franchiser for the only Franchised Real Estate Company in the world, Pacific Auction Exchange. PAX Auction Option, LLC is one of 33 franchises nationwide and was recently named "Franchise of the Year 2005," by their parent company in California. Auction Option LLC is owned and operated by Aristotle and Janelle Karas and is based in Pagosa Springs.


In addition to "Franchise of the Year," the company placed first and second in the "Highest Auction Price" category. They sold a property in Kailua Beach, Hawaii for $14,630,000 and the Ptarmigan Ranch in Durango for $1,078,000. The Karas' were also awarded the prize for "Most Number of Auctions." They hosted 20 Auctions in 2005.

"For me," Janell Karas, Franchise Director, said. "The number one thing is that we are pioneers in this industry. We can offer someone a different way of doing (Real Estate)."

Karas outlined for The Business Journal what she called "a totally streamlined way taking a property and getting it sold."

PAX meets with a seller. "As long as the seller doesn't have crazy expectations, it's usually a good fit. If they say 'I have to have my property sold in two months,' or 'I just want to get rid of it,' then they are probably a good candidate."

According to the National Association of Realtors, a good Auction situation is one where the seller needs immediate cash, has a partnership or marriage break-up, is moving out of state, wants to liquidate an estate, is retiring, is auction minded, has a listing that is about to expire, has already purchased another house, knows the Auction will bring a fair market price, has financial problems, or has high carrying costs on the property.

In a Real Estate Auction, there isn't a traditional market evaluation or appraisal. The buyer doesn't name a price and hope that someone will pay that amount. In an Auction, "The Auction Broker gets all the buyers together and we see what the market will bear," Karas explained. "Every property is unique. I don't know if the property is desirable. We don't do a 'per square foot' price analysis. It is what it is."

What the Auction company does is market the property to attract potential buyers. In the case of Kailua property, marketing was done via an elegant brochure and DVD, Web sites and a network of other Real Estate Auction Brokers. The Kailua property was ideal for auction because it was unique and because if its uniqueness, difficult to appraise. The builder had high carrying costs for keeping the property and wanted to create an urgency and excitement about the property similar to that surrounding a Picasso at a Christie's auction.

A good Auction property is one that: has a lot of equity (25 percent or more), is unique and there is enough interest to encourage competition, has high carrying costs for the owner, is vacant, or is difficult to appraise.