Presentation on theme: "Selling Real Estate At Auction Mike Jones, CAI, GPPA President United Country Auction Services."— Presentation transcript:
Selling Real Estate At Auction Mike Jones, CAI, GPPA President United Country Auction Services
Why Auction? Auctions offer a fair, transparent process for all parties involved Only an auction reveals a property’s current fair market value Auctions create a unique sense of urgency and excitement Auctions keep the seller in control by establishing a price floor, eliminating a price ceiling, and allowing a choice of time, place, and terms. By providing a predictable sale date, they free the seller to make plans and move forward.
The Value of Selling at Auction When bidders compete, sellers win Set time and place of sale Comprehensive marketing Buyers arrive ready to buy No negotiations Competitive bidding Governmental and judicial requirements can be satisfied Works in good and bad economic times
Types of Auction Single Property Auctions Multi – Property Auctions Nationally conducted events Ballroom events and live Internet simulcasts Title, escrow, & closing solutions 10-100’s of properties offered at one time Multi – Parcel Auctions One property subdivided into many parcels On-Site Auctions Properties are auctioned during a live event Online and On-Site Auctions Properties appear online and can be bid on prior to and during live event Online Only Auctions Properties are available to bid on online only Faxed Auctions Property Bids are submitted via fax Sealed Bid Auctions Bidders submit one bid in a concealed fashion
Reserve vs. Absolute Auction Reserve Auction A reserve is the minimum value the Seller agrees to accept in the auction agreement. The reserve is normally NOT disclosed, it is simply stated that the property is being auctioned subject to a reserve Reserves should be set as low as possible. It should be the Seller’s BOTTOM LINE. If the highest bid is less than the reserve, the Auctioneer can suspend the bids, pull the property or try to get the Seller to accept the highest bid. If no offer is accepted, the Broker can try to negotiate the deal with the highest bidder after the event. Absolute Auction An auction in which the property is sold to the highest bidder regardless of the amount of the winning bid.
Qualification for Auction Step 1 : Determine Sellers Fit with the Auction Method Seller Criteria : Number of owners Ownership structure Length of ownership How was it acquired Is seller capable of up-front marketing funds Seller’s proximity to the property Relationship with neighboring property owners Relationship with the local community Seller’s past auction experience Property history of sales attempts
Qualification for Auction Step 2 : Assess Seller’s Motivation Seller Motivation Criteria : Why are they selling now Do they need to sell by a certain date How long has the property been on the market Establish accurate monthly holding/carrying costs Identify any monthly or annual maintenance fees Determine how long they can afford holding costs Determine post sale plans Seller’s current financial state Attitude toward selling absolute Establish seller’s lowest acceptable price Seller’s ability to pay off outstanding debts if necessary
Qualification for Auction Step 3 : Understand Property Relevant Sales History Sales History : Currently listed If so, how long Current Broker Number, timing and value of any offers Current signage All previously executed marketing Step 4 : Establish Acceptable Price Expectations Pricing Criteria : Current seller price expectation Sellers equity position Identify all loans on the property and title possession Assure property pricing based on current condition & market analysis Attain current appraisals if possible Determine tax assessed value Formulate pricing strategy agreement with Seller
Qualification for Auction Step 5 : Confirm Detailed Property Information Final Criteria: Current condition Status of utilities Current state of local real estate market Legal considerations : hazardous materials, easements, access, economic & functional obsolescence, zoning, deed, HOA & historical restrictions, etc. Assess potential alternative uses Annual property taxes Post auction agreement to convert to traditional listing
Disqualification Turn Down Disqualified Properties General Disqualifying Factors : Unrealistic pricing expectations Long listing period without price reductions Seller overbearing/hard to work with/difficult Seller has hired multiple qualified auctioneers & has been dissatisfied with all of them Unwillingness to give control to the Auctioneer Multiple past failed auction attempts Seller prediction of failure Unwillingness to provide upfront marketing funds Unwillingness to fix bad condition issues Determining seller has not disclosed significant property information
The Value of Differentiation Increases listings Office Location Yard Signs Local Internet Site Telephone Fliers Postcards Exclusive Catalogs National Listings Adv Confidentials Purchased Lists #1 Website National Network 700 Offices Specialty Marketing Largest Traditional and Auction Realtor 10% 4% 7% Commission Rates Local NSP Ads Oldest Local Office EMS Increase Commissions On-Line Bidding Virtual Tours Home warranty Home Mortgage
The Blended Model of Marketing Key United Country Marketing Elements Seven Exclusive Real Estate Catalogs Top Ranked Web Site National Advertising of Listings Proprietary Database of Over 300,000 buyers Highly Skilled, Local Real Estate Experts Technology Solutions UC Home Mortgage UC Land Finance UC Home Warranties Powerful Brand Affinity partnerships with Ducks Unlimited, Rocky Mountain Elk Foundation, Starker Services 1031 Exchange and others Key Accelerated Marketing Elements National and International Campaigns Onsite and Online Auctions Turnkey Event Development and Execution Enhanced Marketing Solutions: In-House Marketing Services Firm Web Site Development, Search Engine Optimization (SEO) and E- marketing Return On Marketing Investment (ROMI) Reporting Multiple International and State Auctioneer Champions along with several Auctioneer Hall of Fame Members Traditional Listing Cycle Auction Cycle 60+ Days Out: Initial Consultation and Market Analysis 60 Days Out: Marketing Plan Development 30 Days Out: Marketing Plan Execution Auction Day: Property Auction Develop and Execute Marketing Campaign Client Engages Broker to Sell Property Manage Client Consultations Manage Marketing Process Accelerated Marketing Consultation
United Country: Full-Service Real Estate Marketing
Positioning Your Office to Win Every Deal Getting Started : What You Need for a Winning Proposal Property Evaluation Data Assemblage Tax records, legal description, liens & judgments, zoning, regulations, deed restrictions, property maps, aerial photography Site Visit Drive by Physical property inspection Digital photographs Know your seller’s motivations Know your target market
Positioning Your Office to Win Every Deal Be Sure You Proposal Has: Cover Letter Title Page Table of Contents Executive Summary Identify objectives of the auction Cost of conducting the auction Marketing expense Commission/Fees Company Overview Brief history Case studies Awards & Memberships Resumes for Key Personnel Identify Company Management (United Country Advisory Team)
Positioning Your Office to Win Every Deal Identify Property to be Marketed Property Description Identify positive and negative features that may affect value Property Photos Location Maps Define the Auction Explain why auction is the best option Method of Sale (live, online, etc.) Type of Auction (reserve, absolute) Timeline – Start to Finish Auction Date Auction Site Open House/Inspection Period Registration Requirements Method of Sale Remote/Absentee bid procedures
Positioning Your Office to Win Every Deal Define the Auction (cont.) Broker/Co-Op Advantages Terms & Conditions Terms of Sale Closing period Title Company Escrow Requirements Marketing Plan Identify target market Components of the campaign (brochures, email blasts, signs, PR, etc) Marketing Budget Engineering/Surveying Upfront or Following Auction Who will Pay Closing Process
Positioning Your Office to Win Every Deal Compensation/Fees Advertising/Marketing Who Pays Commission Who Pays Broker Participation Who Pays Recommendations Summary paragraph explaining why the property makes a good auction candidate and why you’re the best choice as the Auctioneer List of References Proposed Contract Sample Brochures, newspaper ads, website data, etc.
Positioning Your Office to Win Every Deal Tips : Believe in the project Be professional Quality color prints on quality paper Bring enough copies of your presentation for the entire group Dress appropriately BE ON TIME!!
Educating the Bidders Expenses paid in advance Buyers Premium How to Bid Types of Advertising/Marketing Open House Inspections Terms & Conditions PIP – Property Info Packet Closing Process
Due Diligence Materials Assessor’s Tax Card Building Inspection Report Copies of Leases (if leased) Current Survey/Legal Description Current Title Abstract with Covenants, Easements & Deed Restrictions Deed of Record (if appropriate) Demographic & Income Profile Environmental Report Executive Summary of Property Operating Expense Data Photos & maps (aerial photos, property photos, blueprints, floor plans, flood maps, etc) Purchase Agreement & any Addendums that apply Soil Tests Terms and Conditions of the Auction Utilities Detail Zoning/Land Use Restrictions Anticipate everything that could hurt the closing. Take proactive steps to correct any issues before the auction. DISCLOSE EVERYTHING so there can be no issues that jeopardize the closing.
Conducting the Auction Location : Onsite vs. Ballroom vs. Online Absolute, Published Minimum Bid, Subject to Owners Confirmation By the Acre, Bidders Choice, Multi-Parcel Terms of Sale Contracts
Conducting the Auction Arrive 2 hours early to set up and test equipment, register bidders, and answer questions Auctioneer Welcomes Crowd Terms and Conditions Read Questions answered Auction Starts Final Bid Buyer signs purchase and sale agreement and tenders earnest money BE SURE TO COLLECT BACK UP BIDDER INFORMATION Closing Have the title company open a file as soon as the property has been contracted to sell Have current survey completed Inspections, Disclosures and Financing Post Auction Analysis Report Complete Review and Results of the Marketing Campaign, Web Traffic, Copies of all advertising & brochures, market analysis, photos of signage, etc.
Case Studies Gene Autry’s Birthplace Property Length of time on the market Seller’s lack of advertising dollars Previous listed price Seller’s reputation Results Pride of the South – Catfish Processing Plant Lead from UC office Sellers focused on equipment sales National competition 45 minute presentation Results McCurtain County Oklahoma Estate Timber company former owner No access roads Issues with resident Not previously on the market Results
United Country and Colliers Turley Martin Tucker team to pursue the auction of two call centers in West Virginia in April 2009 Marketing and promotion targeted commercial real estate investors, commercial brokers, local and regional audiences, and area business owners Results: One sold prior to auction as a full price, cash contract. The other sold day of auction for $1,650,000. Case Study: TRG Customer Solutions Auction
Process: UC trained Colliers brokers on the process Colliers brokers collected inventory from their clients and worked with them to include their properties in the auction Colliers brokers and UC team members secured a marketing fee from the sellers for each property to enter the auction UC Marketing Services, working with a local UC office and Colliers, conducted a 75 day, $100,000+ UC / Colliers branded marketing plan in advance of the auction Case Study: Houston Multi-Property Auction
Results: The Marketing Plan generated over 7,000 targeted visitors to the Houston Multi- property Auction Event Web Site Over 300 prospective buyers registered on the Colliers deal room and downloaded the Property Information Packets (PIP) 164 people attended the event 22 buyers registered at the event with one or more $25,000 deposit checks (some buyers had multiple checks) $2.85 million of property was sold (under contract) prior to or during the event resulting in $250k+ of earned commissions to UC and Colliers brokers $2.0 million of property is in active negotiation between buyers and sellers with closings expected within 60 days The Colliers brokers are scheduling another multi-property auction with United Country in Houston early 2010 Case Study: Houston Multi-Property Auction
Property falls into receivership and court orders sale National commercial real estate firm marketed the property for 6 months. Highest offer received was $8 million dollars United Country was engaged to auction property after $8 million contract failed to close Results: Eight active bidders; property sold at auction for $10,265,000 Case Study: Northwoods Resort
Arvest Bank (Wal-Mart) engaged United Country to auction REO assets in Arkansas and Missouri. 290 residential and investment properties Over 650 prospective buyers in attendance at the live auction. Results: 160 properties sold the day of the auction; remaining assets were marketed following the auction with the majority closing shortly thereafter Auction was carried by all 3 major networks with positive press for United Country and the local affiliate Case Study: Arvest Bank REO
United Country Proudly Welcomes Our Newest Auction Partners Maverick Commins UC Supreme Auctions Phoenix, AZ Gary Hubble UC Colorado Brokers Hotchkiss, CO Jimmie Dean Coffey CAI, AARE, CES, GPPA UC Coffey Realtors & Auctioneers Bloomington, IN Lowell Platt UC Coffey Country Real Estate & Auction Burlington, KS John Nixon UC Nixon Auction & Realty Medicine Lodge, KS Andy Conser, AARE UC Heart of America Real Estate & Auction Atchison, KS David Chelf UC Chelf’s Auction & Realty LLC Smiths Grove, KY Jacob Brown UC Brown’s Auction Company Eunice, LA Mike Watterson UC Watterson Realty & Auction Holden, MO Jake Forbes UC Forbes Realty & Auction Hertford, NC Donald Kracke UC First State Realty Cortland, NE Charles Bennett UC Vista Nueva Inc Portales, NM Doug Walton, CAI UC Walton Realty & Auction LLC Upper Sandusky, OH Rich Kruse UC Gryphon Realty & Auction Columbus, OH Alvin Beadles CAI, AARE, CES UC Beadles Hammar Real Estate Co. Thomas, OK John Midkiff UC Auction & Realty Homer City, PA Lisa Hileman UC Clinch Mountain Realty & Auction Bean Station, TN Randy Land UC Legacy Real Estate Services Chattanooga, TN Mike Walker UC Walker Realty & Auction LLC Lebanon, TN Blake Box UC Box Realty & Auction McAllen, TX Kevin Gallagher UC Auctions & Realty Pleasant Grove, UT Forrest Harkrader CAI, AARE UC Atlantic Coast Auction & Realty Roanoke, VA Rick Manley CAI, AARE UC Atlantic Coast Auction & Realty Roanoke, VA A.Barry Cole AARE, CAI, CES, GPPA UC AB Cole & Associates Auction & Realty Suffolk, VA
“Lets Make It Happen!” Mike Jones, CAI, GPPA President United Country Auction Services