Louis Dakil can proudly say he was a part of the first real estate auction for the Resolution Trust Corporation, a now defunct U.S. government-owned asset management company established in 1989. This was among his most memorable real estate auctions since 1983, the same year he earned his real estate license and started Dakil Real Estate, Inc. as an offspring of Dakil Auctioneers, Inc.
At first, Louis wondered why the Trust was looking to sell all those homes. The response was so simple it was almost confusing. “Have you ever tried to mow 100 or 200 lawns?” They asked him. Add in maintenance, taxation, insurance, utilities, and the vandalism risk, and the uncontrollable factors proved to be too much.
In the early 1990s, Dakil auctioned off the first wave of 100 properties at the Sheraton in downtown Oklahoma City. Even with the Federal Savings and Loan Insurance Corporation debacle and a volatile economy, the auction returns produced more than 90% of appraisal value and closed within 30 days. The second auction of 90 to 120 homes produced similar results.
The memories are fond because of the success and sheer volume. But they also serve as a reminder of the role auctions would eventually have on real estate.
“You have everything to gain and nothing to lose. The only thing you’re going to lose is your wasted time, insurance payments, tax payments, utility payments, and not drawing interest or dividends on your money,” Louis said.
“People get caught in tradition. Traditions are being broken. You see it every day. You better get with the new world.”
A common misconception with real estate auctions is how they are a last-ditch resort for homeowners hoping to offload property that is providing diminishing returns.
That is, in fact, becoming a false narrative. Even real estate brokers are turning to auctions.
“The biggest trend is people are finding out real estate auctions aren’t a sign of desperation,” Louis said. “Instead of making auctions their second choice if they can’t sell their home in six months to four years, they’re making auctions their first choice before they even price it.”
That trend started several years ago — even as far back as 2010 — once the housing market stood on firm enough ground following the 2008 stock market crash.
The current market, specifically in Oklahoma, is short of supply and high in demand. Basic economics come into play here. Prices are increasing thanks to Sun Belt growth in the region. Louis said diversification, low unemployment rates, and a general positive attitude has helped drive up property value and, thus, boost the real estate market.
Dakil holds anywhere from 150-200 real estate auctions each year. Louis estimated 75% of property sold is within city limits, while the remaining 25% comes from agricultural and rural properties.
There’s a reason real estate auctions are becoming more popular — simplicity for buyers and sellers alike.
For buyers, all you need is the high bid for a transaction to occur and ownership to change hands. How many times have you put in multiple offers on houses in an area only to go back and forth with a real estate agent, combing over every nickel, dime, and inspection report imaginable? The back and forth produces annoyance and aggravation.
Sellers are warming up to real estate auctions because they have a certain date and time. No longer do you have to wait six months or five years to receive an offer. Since you can’t control the price either way, Louis said it makes sense to go the auction route.
“With an auction, you can sell it to the highest bidder or you can set a minimum and accept or reject it, but you still have a certain day and time,” he said. “People today, time is your most precious commodity. We don’t know how much we have.”
As a refresher, here’s guide on real estate auction certifications and what you need to know from a buyer and seller perspective.
When conducting real estate auctions with Dakil, you have access to a national database of high-net-worth buyers coupled with a fair, expedited, and uncomplicated process.
Successful settlement of a property takes 30 days. Even if Dakil doesn’t sell a property at the auction, it generally moves off the market a week to a month afterward. Also, Dakil works with every realtor in the state and helps buyers with expired listings sell their property.
Take a gander at Dakil’s real estate page, and you’ll find a majority of properties than range in the half-million to million-dollar range. Within the past five years, Dakil made selling high-priced homes a priority in Oklahoma. Recently, the push became more proactive to tackle a growing need.
“I saw the need of selling bigger homes because the popularity is slowing. Not because of affordability, but because of a downsizing syndrome,” Louis explained.
So far, so good, as Louis classified these sales as “fantastic.” Louis gave an example in Nichols Hills, a posh, upscale neighborhood of Oklahoma City, where more than 50 properties are listed for more than $1 million.
Traditional houses are becoming less popular as millennials grow older and become first-time homeowners. Throw in slow population growth and smaller families, and house-hunters don’t feel the need to buy large, lavish properties.
“They don’t need that much square footage, so they downsize and go to a smaller home. They want one level homes,” Louis said. “You give me a home that’s a ranch style with two to four bedrooms and an office, and I’ll sell it in a heartbeat. A two-story home, people don’t want that.”
As with most goods, the higher the price, the more narrow the cone is at the top. Not everyone wants to battle jumbo interest rates on million dollar properties. The sweet spot generally comes between $175,000 to $500,000.
Changes to property tax deductions and interest rates are making it less attractive to take on large debt that approaches, in some instances, seven figures. For example, you can’t deduct more than $10,000 from your taxes no matter how much property you own. Similarly, interest rate write offs are capped at $750,000, or $375,000 if you’re married filing separately, which incentivizes buying more affordable properties with annual property taxes no greater than $10,000.
The result is the need for an alternative buying and selling process instead of the traditional real estate model of listing and waiting.
“Many of the homes I get have been on the market for two to five years,” Louis says.
Oil and gas and real estate auctions have been pillars of Dakil’s business for nearly four decades. Combined, they account for half of Dakil’s business. The remaining 50% is split between commercial/industrial auctions and appraising.
This wasn’t done by accident. Dakil wanted to remain diverse, never allocating more than 20% of business to one client. A longstanding enterprise in real estate auctions, even when the industry wasn’t as fruitful as it now is, helped balance the portfolio of Dakil Auctioneers, Inc.
The market was much different when Dakil first dipped its toes in the real estate waters. An economic downturn created an oversupply of houses with little to no demand.
Dakil sold 100s of houses in foreclosure out of necessity during the 1990s. Louis recalled times when he’d enter a neighborhood, peering down one side of the street at 20 or so houses only to see half of them for sale.
“Theoretically, real estate doesn’t lose value if it’s maintained. You may not gain value, but you maintain value through maintenance,” Louis said. “Even through maintenance, Oklahoma City was going through a depression, through deflation. OKC property values were decreasing monthly. That shouldn’t have happened.”
Thanks to falling interest rates, the current housing market is on the upswing. You can now secure a 30-year mortgage for less than 4%. Louis joked how he had interest rates in the 13-15% range in the 1990s and thought he “was doing great!”
This buyers market allowed Dakil to cash in on sellers eager to offload their property to the highest bidder, while also targeting buyers interested in a hassle-free purchasing experience.
“It’s changing. It’s good. This is an evolutionary process. If you don’t adapt to it, then you’ll be a dinosaur,” Louis said.
Interested in buying or selling a house at a real estate auction? Get in touch with us today using this contact form or call us directly at (405) 751-6179.
