Upside Down Land Auctions

Has anyone else noticed that the current sim auctions are selling for anywhere from 5 to 20% more than what land is selling for on the grid. Now I am talking about the full sim auctions to the regular land baron suspects, not the smaller Linden$ auctions to mostly individuals.

So why would (insert name of bad land carving avatar) buy a sim and then turn around and sell it...... at a loss of around $200 US dollars PLUS incur the tier on that sim????

At one point, I recall that there was some speculation that these avatars buying the sims at auction were, in fact, alter egos of LL. I also recall that the consensus was that this couldn't be true because, among other things, that would be fraud under California law vis a vis any real customer of LL that had their buy price driven upward by sham bidding. At that point though, there was still a profit in land sales.

Now....... I am really beginning to wonder again. There are "avatars" that are losing $1,000 a day on over paying for 5 or 6 sims and then selling them for less than the purcahse price..... leaving the tier out of the equation. This isn't logical market behaviour.

Any thoughts?

Somehow, with all the crushing workload they have I just don't see the Company having spare time enough for money-losing land conspiracies.

All they have to do is not open sims, and the price goes up.

As for human nature, some guy once dumped LOTS of cash on LindeX then tried to write an article about how it was all some big scam.

The only person trying (and failing!) to manipulate the market on large scale, was HIM.

So based upon that act of financial insanity, I'd guess we are probably looking at more not-so-smart moves by regular folk. Maybe these folks are betting on market collapse or something.

Makes no sense to me.

All the sims been sold lately are located in Nautilus continent which has A LOT of waterfront and water in it. These sims are been purchased from LL for around L10-11/m2. The parcels I've seen for sale in these sims are priced for around L11-12/m2 and up to L14-20/m2 for waterfront. So the landbarons are still making a profit.

I could understand the financial reasoning that underlies the over market purchases of small parcels of land. Someone just really wants it.

But to spend $10,000 every round of sim releases to buy $8500 worth of land (plus pay close to $1000 tier on it). That isn't speculation, its insanity. And how can a person continue to do this every week or so? Its not that they want to use the land, just flip it..... at a huge loss.

Perhaps its part of some elaborate credit card scam since they get cash in exchange for credit card debt.

I suppose that until LL is done with their "A Sim for Every Avatar" campaign, the speculation will continue because on grid prices will continue to go down.

Some land sellers make money through extortion. They sell most of the parcels at regular prices, but they put in an ad farm of 16sqm plots that are sold at extortionaire prices. Or, perhaps, they sprinkle a few small collections of 16sqm plots through the sim. Neighbors who don't want ugly rotating porn signs have to buy the 16sqm plots at inflated prices. It's not a lot of money in an absolute sense -- a few bucks (US) for a 16sqm parcel -- but it can add up if the land seller does it all over the sim.

Is it possible that some land sellers are making their money back this way? Selling most of the sim as a loss leader, and then using extortion (i.e. selling ad plots at exorbitant prices to the neighbors who want to ugliness) to make up the difference?

-Rob

Rob,

Its a thought. But I can't imagine having a multi-thousand dollar business plan based on selling those clipped parcels. If I see a parcel with cut outs on it, I move on.

Whats funny now though is that there are thousands and thousands of unsold parcels.... that someone bought at auction and are now paying tier on.

I can't figure it out.

It could be a business planning a stunt like coldwell banker did.

For a large company losing a few thousand even isnt much if it gets them in the news for a while accost the country or the world, if they can come out looking beneficial community, even better, as it still costs less then it would for a 30 second ad on a local tv station.

It's simple. It is a formula that been around for awhile. Buy a sim at a high price. When you sell your land at the lower price, people buy from you because they think they are getting a deal, but are not really selling it but renting it. You make up your lost in rents.

its the uncontrollable button pushing urge to "win" its what i was watching at christmas wondering why people did this crazy bidding. It seemed to me it was people who just could not let go of a sim and would buy it at any price.

....must.... not....loose....auction....

I tend to give the auction buyers the benefit of a doubt. They're sinking a lot of money into SL, so they probably have a plan.

You have to realize there are different business models employed by land dealers. The landbot model is to buy for bottom dollar and resell for slightly more. The profit comes from land that is bought for a good margin under the market bottom. Their land ends up filling the first few screens of land for sale, but it would be a mistake to take this market-bottom price as the market value for land in general. Much of the land being sold at the market bottom is undesirable: it is oddly sized, for example, so that one has leftover tier; it is next to an ad farm of 16m2 plots; it is boxed in by parcels with ban lines placed around them; it is on the side of a cliff; it is next to abandoned land littered with ugly prims; it is oddly shaped in a way that makes building problemmatic; and so on.

Most good land is going for several lindens more per m2 than the market bottom. People that have very specific land requirements (e.g. waterfront land with enough dry land to build on, enough water to put a boat in, on the water side bordering a completely water sim owned by LL that one may boat on, and big enough to build a castle, beach house, and boathouse) often pay double the market bottom price. Land dealers in this niche are knowledgeable as to what kinds of land people are willing to pay extra for, and what features or combination of features justify what prices. This could be the class of land dealer that is buying these sims; as has been pointed out, many of the recently-released sims are abundant in prime waterfront.

Then there is special land--double prim land, for example, or land with special terrain modification permissions. Again, the price will be high. This does not apply to the new sims being released, however.

Finally, consider that the sim buyers may not be simply planning to divide up their new regions for resale at a flat low price. They may be "cherry-picking"--buying entire sims for certain very prime parcels, the profit on which will surpass any loss on the remaining parcels of land. Or they may be planning to develop the sims and rent out homes and offices. Or they may be advertisers, guaranteeing they'll have 16m2 plots in prime locations by being the first buyer and reserving those ad spots for themselves. I'm sure there are other business models out there you and I haven't begun to imagine.

But then again, maybe their business models are just based on mistaken assumptions...

well the land where i took the head up my butt photo was new land and was priced at 8 cents per sq meter and that was a week or so ago now (possibly more) I was standing on a mountain top and was tempted to buy it all.... So i'm not sure about this plan or whatever I went to look at the cheapest land and it was very nice indeed.

Sims at auction are mainland sims. You are talking about an estate strategy.

Sims at auction are mainland sims. You are talking about an estate strategy. For that, you have to be an island owner and all islands cost the same amount. You can't rent mainland by accident. If you buy mainland it's yours.

If you saw mainland for 8 cents a meter, then you head was certainly up your butt, because that's impossible. Did you mean L$8 a meter?

sigh

you know something i'm sorry if i didn't put in the proper abbreviations but it was still 8 cents per unit and yes I almost bought it and I was one of the first ones there

so maybe your just too slow

Mainland for 8 cents a meter? Me thinks not... a landbot would have gotten it. if not, a land baron. It would not have lasted more than 30 seconds. sigh indeed. However land was around L$8.5 a meter and that is what you saw a few weeks ago, unless you were on an estate with a convenant. PLease trust me on this.

You Don't know what your Talking about! There are no respectable LandBarons or Flippers who cut their land into 16 mm Plots! There are a select Few who buy a piece and cut it up for ad farms! The worst being SPIDERMAN!

8 lindens sheesh

try not flaming me next time i might actually apologize for making an ooopsy slip of the keyboard/mind

have you ever paid in anything other then lindens inside SL? the answer is no. So knowing this it was an oversight on my part i put cents instead of lindens I'M SOOO SORRY for opening my mouth as usual. Maybe one day when someone actually replies to my posts it wont be to insult me (but i doubt it).

When you corrected yourself you said cents again. You said it twice. YOu are very helpful with your answers on other topics. Land just is not your area of expertise, as proven time and time again by your posts.

Some people are willing to pay more for mainland that is not all polluted by 16m ad squares.

It makes sense then that a full sim with none of these items in it would then fetch a higher price when reselling parcels as well.