Eric Nelson, founder of Eric Nelson Auctioneering, said buyers' bids totaling
about $7.5 million were rejected because of indecision among nervous lenders,
the pending bailout and last week's stock market plunge.
This is the reason the bailout wont work as expected. If you know that you will sell something to the government, no matter what it is, then there is no market. Because a) who would sale for less money than the gov. is going to pay, and b) who would buy something that is in direct competition with the gov. The Price is going to be artificially high.
This is why free markets are so important. They keep things level, at "market value". For example if the price of houses were too high for the value, then people will stop buying them, or will over extend themselves to buy them and struggle to make the payments, often losing it to foreclosed. The housing market then decides that the price of homes is too high an they are lowered in order to sell. The other option is have gov take over and infuse a ton of $$ to try and keep the house price at the high level. This does nobody any good.
"I think the sellers were surprised that the lot prices came in so low. One
of the sellers walked out in the middle of the auction on his lots. He paid
about $231,000 for each of his lots, but they were getting $100,000-plus
bids," Nelson said.
Nelson said many lenders are anticipating better deals in the wake of a
federal bailout."They're thinking, 'Why sell the properties for 50 cents on the
dollar' when they may get 75 cents or 80 cents through the bailout?" Nelson
said.
I bet they wont get their bailout, and end up selling for less on another auction.
On a side note, the reason the stock market went up the other day is because "Financial Hank" announced that the gov would be buying bank shares. So what do you do when you hear that? Go buy shares in those banks. Or is it really consumer confidence that the gov fiscal plans are right on track??
No comments:
Post a Comment