This episode details the absolute auction decision for the Tennessee lemon property previously listed twice without selling, where no reserve price legally obligates sale to any bid received. The auctioneer’s 50+ auction track record showed zero pennies-on-dollar outcomes, with local investor networks consistently bidding competitively even on unsexy land.
Key Takeaways:
- Absolute Auction = Seller Zero Risk Upfront Auctioneer absorbs all $3,500 advertising costs and only gets paid via 10% buyer commission, creating aligned incentives for maximum sale price.
- Local Investor Networks Prevent Lowball Wins Even $4K/acre breakeven pricing (half market rate) attracts wholesale-model buyers willing to move for $10-15K margins through competitive bidding.
- Three-Week Timeline Start to Close Two-week auction period plus average 2-3 weeks to close with 10% immediate EMD and 30-day hard deadline compresses entire disposition cycle.
- Termination Agreements Trump Listing Contracts Getting broker to release with zero commission claim beyond marketing costs unlocked auction pathway—relationship capital paid dividends.
Listen to the full episode to understand when absolute auctions make sense despite the fear factor and how to vet auctioneers properly.
(Podcast transcript below)
Hi, Chris Duff over at Serious Land Capital, vacant land funding partner. Today I wanted to jump back in from yesterday’s podcast about that Tennessee deal going sideways that turned out to be a previously listed property twice over the last couple of years and pretty disastrous scenario that had to get immediately into problem solving.
mode here. So even before we had discovered that because of the lack of interest from the MLS listings, we wanted to examine doing an auction, an online auction specifically for the property. So it seems pretty common within Tennessee. We found a number of folks who
Operated in the area and we were referred over to somebody who’s had a lot of success doing online auctions in that central Tennessee region This guy went out to visit the property over the weekend and He’s like, yeah, I mean that there’s nothing sexy about this property. He’s got a power line going through it Obviously we knew at least at least that in accordance with you know
RDD that We definitely made some key mistakes. We didn’t we miss everything. We just thought okay, it’s we’re getting this at a low enough price per acre in relation to all these other properties You know not the sexiest land again. This was going to be more of a bull market buy We built in a lot of preference to the deal to account for having inferior characteristics But you know, obviously again if market has changed here, this is just a property that I would not have done
Currently, even if it hadn’t been listed previously, in which case it would have just been an automatic no, I wouldn’t have spent more than two minutes on it. But, you know, here we are, 90K deep. so, you know, I asked this guy, hey, like, even if we can break even on this thing, that would be an absolutely tremendous outcome accounting for the high risk issue of
previous time it was listed it was basically listed right above where we bought it at so it’d be an amazing outcome to get out of a lemon property and the auctioneer was thinking yeah it it should definitely be possible but he was recommending doing an absolute auction because that tends to get higher pricing
for an exit here and I wasn’t as familiar with the auction process I had heard of reserve auctions before. So basically the key difference with reserve auctions, you know, the seller can just set a reserve price so that if the bids don’t reach that amount, they’re not forced to sell the property. They can back out during the bidding process. So, you know, it’s
buyers, I can understand why like there could be more hesitation because it’s like, all right, how serious is this sale actually being if the seller has recourse to actually backing out of a transaction and they’re not guaranteed actually get the property or maybe they want to look at other properties where, you know, they can confirm putting money down into it. So, you know, I understand that game theory psychology there, whereas an absolute auction.
Means that as soon as the bidding starts seller is legally obligated to provide marketable title and close on the deal After the bidding process and assuming there is even one bid coming in that price has to be accepted so You know, it is a gamble to go down that route. It was you know
Certainly giving me some trepidation because you know, I was starting to wonder well You know in this area like what happens if it sells for like pennies on the dollar like one person shows up gets you a hundred dollar bid in and We’re staring at like a 90k loss on the property and we have to accept that that price
So I really grilled the auctioneer about this and I double checked his history too. It’s not his first rodeo. I’ve seen previous properties that he’s listed. He’s done this at least 50 times, a number of them even within the last few months in the vicinity of where our property is. And I was like, out of all these ones that you’ve done, have you ever encountered a scenario where it is sold for pennies on the dollar? That’s worst case scenario for…
What could happen for us here? But he’s like, you know that that’s never happened like he has investors who are part of his list that always show up to these auctions and you know, it’s just a competitive process like no one’s gonna allow somebody to Get something pennies on the dollar Because enough of these local investors understand that they can make
You even a relatively small profit is like you know number of these guys who show up like if they can if they can move something for a margin of 10 15 grand That that’s fine for them. Like people aren’t necessarily looking to get flip level prices at these auctions Since they’re local they can move efficiently, you know Almost like a wholesale model Type or maybe they do some value at I’m not sure but he’s like, know that that’s
tends to be the strategy here and that fortunately, even though we have an unsexy property in the area, it’s like that particular county, the land prices are still very high, still, you know, consistent activity and that, you know, the breakeven price that we would need to get to is at, you know, close to half or even below half on a per acre level, you know, like 4K per acre.
So that that stands in our favor that it you know on sexy land but still what we need to get out of this is still gonna be Cheaper than anything else out there and he’s also hoping hey, you know with land like this, know, some of those out-of-state buyers and so forth You know, I could buy sight unseen you online auctions people do that all the time. But you know, that’s The scenarios that we have to consider here and
you while we can’t guarantee the result, to me, this still felt like, okay, well, we already saw previous history of this property being listed on the MLS. I think it was marketed worse, worse quality photos and all that, but you know, didn’t move at like a hundred K roughly. So what is our best option to get the most possible back or, you know, lose the least amount of money. It’s probably this auction, even, you know, this absolute sense.
where, hey, once this thing starts, we have to accept the result that comes out of it. And I was also, you know, when it’s an absolute auction to the auctioneer takes more risk personally, because us as the sellers, not, you know, we’re not fronting any cash for any advertising expense. That’s all the auctioneer and.
he has to get enough commission from the buyer because it’s like a lot of options, 10 % commission paid by the buyer on top of the purchase price. So us as the sellers were only covering whatever title would necessitate on our end to actually do transfer marketable title over to the buyer.
Plus the buyer has to immediately put down 10 % cash EMD for the property and then close within 30 days. And he says, yeah, most of these auctions, like they’re closed within two to three weeks after the auction. So you’re like, usually this is done three week auction period and usually no more than three weeks for the actual close process. yeah, and so the auctioneer is incentivized, hey, he has to put up all of this.
Advertise all this these advertising dollars and doesn’t get paid back until the auction is successful So that incentive is in our favor for him to get as high of a price as possible Plus again, you know notoriety if you get a bad result You know the word of mouth would not be good where it’s like hey, we signed up for this guy He couldn’t deliver us all we ended up losing, you know tens of thousands dollars on this
And he was indicating that as investors were going to come in and get us a better result here. big risk here. I’m going to be sweating bullets during that three week period once it’s live. And I asked like, how soon can we get this? First, we need a determination agreement from our broker because you can’t do an auction while it’s being actively listed on the MLS. Fortunately, our broker is very understanding. It’s like, yeah, I get it.
I’ll send you over the termination and you whenever you guys sell this, like just come back and like cover whatever my marketing expenses were. I’m not expecting any commission, like best possible response we could have wanted because on the listing agreement, we probably had like another four months of being under contract. So we got that taken care of. And then on the auctioneer side, he needs to confirm, you know, that there’s actually a marked marketable title. So, you know, it goes to a title company and sorts all that out.
Very fortunately, the title company we use to close on the property is the one that he goes to. So we already had the owner’s titles policy, OTP, for that property. So that speeds it right along. No survey needed. Sometimes he says that that’ll be required and it can delay the process. And we are gonna be live in two weeks. So May 22nd is when the auction goes live. We’ve already signed the docs.
It’s go time to figure this piece out. Again, I did not come by this option. Willy nilly here really grilled the possible outcomes here had to assess the risks. I like out of out of all our remaining options here, sitting back on market or taking a admitted gamble on a absolute auction here that this is our best chance to salvage.
what is a major fire within our portfolio. So wanted to provide you that info as we learn this and are going through it at the moment and crossing fingers about this auction. I will let you know as soon as we have some updates there. With that in mind, SiriusLand.Capital for any funding needs. We actually have ton of leads coming back and it was a slow month last month, but now there’s just so much. That’s why I’m like
trying to get capital back out of some of these deals because there’s some real screamers out there even as conservative as I’ve come now like nothing under 2x like we got one in Florida earlier today that seems like a two and a half X even in this difficult macro that you know 135 K by I would really love to do that thing could sell for at least 320 maybe more closer to 400 potentially
Could be really interesting there and then there’s a handful of others that have come in as well So, you know activities creep in creeping back up plus there’s some other like quarter million five hundred thousand dollar ones that Yeah, you just got to be patient can’t can’t over lover here We have those really big deals coming back. So that huge Texas one’s gonna inject us with like 600 cash back in knock on wood at most three months from now
Hopefully sooner than that should be sooner than that in this Louisiana deal is still looking really good as well. So Can’t rush the process Deals are gonna be there. We’re growing steadily working through the more difficult times as well recapitalizing and Going from there. So just to mention it from that side and land daily diligence just got off that some really solid deals reviewing their Facebook group. We’re almost out of thousand thousand members, too
It’s been steady growth there, very exciting to see. And landpricer.ai, ton more progress on that end. It’s been hard to balance our funding business with that. A lot more work, continued steady progress there that I’ll comment on shortly. Subscribe and share with that. Take care. Bye.
