![Little girl looking](https://www.catholic.org/files/images/media/2024/17141839075_150.jpg)
Going once, twice: Auctioneers bid for role
Chicago Tribune (MCT) - Hard times can be good times for auctioneers, and if the government follows through with its bailout plan, the folks bringing down the gavels expect to get quite a workout.
Highlights
McClatchy Newspapers (www.mctdirect.com)
10/2/2008 (1 decade ago)
Published in Business & Economics
That's what happened during the last financial meltdown a generation ago, when the shopping centers and apartment buildings of failed savings and loans went on the block after the government seized them. Although not everyone remembers that period fondly, it turned into a bonanza for those who played the auction game wisely, snapping up great deals at fire-sale prices. Even more real estate could be up for grabs today.
This time, however, the government is planning to take over a vast amount of property indirectly, through complex investments called mortgage-backed securities, which bundle together hundreds, or even thousands, of loans.
One of the great mysteries of the proposed bailout is how the government would manage the millions of homes underlying its investments.
The nation's auctioneers have an inkling about how it will work out and, no surprise, the endgame as they see it does indeed involve some fast talking. If the government takes on a giant portfolio of residential real estate, some of it, and maybe a lot, inevitably will be sold at auction, they say.
"Ultimately, the government is going to end up being the parking lot of foreclosed housing," said Steven Good, chief executive of Chicago auctioneer Sheldon Good & Co. "We're equipped to service their business. That's where auctions would be effective."
As Chicago auctioneer Rick Levin put it, "This should be a boom for the auction industry."
Like other auctioneers, Levin already is in the business of unloading government-owned property seized through official action, including real estate for sale to the highest bidder. He has the official seal of the U.S. Treasury prominently displayed on the Web site of his Rick Levin & Associates.
Through its takeover of mortgage giants Fannie Mae and Freddie Mac, the government owns thousands of vacant properties. Snapping up mortgage-backed securities would multiply the federal exposure to distressed homes.
That would give government officials enormous market power. And their most important decision could prove to be when to exit their real estate investments.
Federal Reserve Chairman Ben Bernanke stressed to Congress that the plan for helping out banks works only if the government pays more than the current market price, on the theory that the value of the distressed securities it buys will grow over time.
Yet residential properties can't just be ignored while federal officials wait to realize their "hold to maturity" price. Maintenance needs to be performed, taxes and association fees paid, heat and lights kept on. At some point, homeowners who can't pay will have to clear out, and the vacant properties brought to market.
As owner of the securities, the government could influence how the mortgages are serviced, deciding under what circumstances foreclosures would occur, for instance, or when to sell.
"I'm sure the government can impact these things," said Robert Korajczyk, professor at Northwestern University's Kellogg School of Management. "That's definitely going to happen."
Enter the auctioneer.
Residential real estate has become the fastest-growing sector of the live-auction industry, with sales volume rising 46.6 percent between 2003 and 2007, according to the National Auctioneers Association. Last week, the trade group sent a letter to Treasury Secretary Henry Paulson offering its services "during these trying times."
Even in this environment, real estate will move, said Alan Kravets, president at Sheldon Good and a veteran of the savings-and-loan workout.
Savvy investors who remember the fortunes made in those auctions will be hoping for a repeat, he predicted.
"It will be easy to attract buyers," he said. "Somebody's going to be getting a great value."
Government officials should consider moving quickly, Kravets added, to keep their properties from deteriorating and get the overall real-estate market moving again.
"This is all about recovery and mitigating losses. Time is the enemy."
___
© 2008, Chicago Tribune.
Join the Movement
When you sign up below, you don't just join an email list - you're joining an entire movement for Free world class Catholic education.
-
-
Mysteries of the Rosary
-
St. Faustina Kowalska
-
Litany of the Blessed Virgin Mary
-
Saint of the Day for Wednesday, Oct 4th, 2023
-
Popular Saints
-
St. Francis of Assisi
-
Bible
-
Female / Women Saints
-
7 Morning Prayers you need to get your day started with God
-
Litany of the Blessed Virgin Mary
Catholic Symbols Vandalized at Georgetown University, Being Investigated as Potential Hate Crimes
-
The Nativity of Mary: A Prayer for All Innocent Children
-
Eucharistic Unity: Embracing the International Eucharistic Congress in Quito
-
Do you know what really makes Mother Teresa so heroic?
-
Catholic Leaders Call for National Consecration of 2024 Election to the Blessed Virgin Mary
Daily Catholic
Daily Readings for Saturday, September 07, 2024
St. Cloud: Saint of the Day for Saturday, September 07, 2024
Prayer in Time of Suffering: Prayer of the Day for Saturday, September 07, 2024
- Daily Readings for Friday, September 06, 2024
- St. Eleutherius: Saint of the Day for Friday, September 06, 2024
- Prayer for our Family #3 - Mother Teresa of Calcutta: Prayer of the Day for Friday, September 06, 2024
Copyright 2024 Catholic Online. All materials contained on this site, whether written, audible or visual are the exclusive property of Catholic Online and are protected under U.S. and International copyright laws, © Copyright 2024 Catholic Online. Any unauthorized use, without prior written consent of Catholic Online is strictly forbidden and prohibited.
Catholic Online is a Project of Your Catholic Voice Foundation, a Not-for-Profit Corporation. Your Catholic Voice Foundation has been granted a recognition of tax exemption under Section 501(c)(3) of the Internal Revenue Code. Federal Tax Identification Number: 81-0596847. Your gift is tax-deductible as allowed by law.