Real Estate at Auction! Presented by
History of the Auction Method of Marketing • Ancient Rome The Greek historian Herodotus first documented the auction about 500 B.C. He wrote of his visit to the city of Babylon, where wedding auctions, where women of physical maturity were sold for marriage using a descending method. • Auctioning of chattels (personal property) seems to have preceded the auctioning of land, both types of property were offered in advertisements in the London Evening Post on March 8-10, 1739 • Auctions come to a America - The biggest boon to real estate auctions was the New England land rush, which gave auctioneers their first genuine opportunity to demonstrate their talents in the New World. The method of selling was extremely successful and firmly: established auctions as an indispensable part of the New England way of life. • During the Civil War Auctioneers sold what remained after the battle. Auction banners were displayed, and the colonel or the commanding officer would auction these properties. When the war was over, the surviving auctioneers went to the cities. The reallocation of assets after the war saw a surge in the use of the auction method of marketing of real property.
History of the Auction Method of Marketing • In 1980, the Farmers Home Administration found itself with a growing inventory of houses. The FMHA released a solicitation for the state of Louisiana to sell these houses to the highest bidder, using the auction method of marketing. A Request for Proposal (RFP) was advertised and a contract was awarded. The auction sold all 26 homes in less than two hours. • In 1983, the Veteran's Administration needed to quickly sell 200 properties located in urban areas of Detroit. Almost everyone thought it couldn't be done. Many REALTORS from the area came to witness something that to them seemed utterly impossible. The auction, conducted over a two day period at the convention center, was the beginning of something big for the auction industry, and was successful in selling every property. • Both Ross Dove Auctions and Larry Latham Auctioneers conducted commercial real estate auctions that sold over $500,000,000 in one and two-day auction events. This feat was accomplished by using satellite transmissions to various-cities across the country, allowing bidding to take place in real time. While satellite feeds are still used, the Internet's introduction in 1993 has really changed the Real Estate Auction method.
Negative Perceptions • Once considered a last resort for disposing of distressed property, professionally conducted real estate auctions have now entered the “mainstream” of residential, commercial and industrial real estate marketing and sales. Due to the advancement in technology and quicker forms of communication. • Pennies on the dollar? With a combination of professional marketing formats and the competitive bidding process the seller having
Advantages to Seller • Seller determines the selling date and the terms and conditions of sale • Targeted Marketing designed specifically for property • Requires pre-qualified buyers • Creates an “As-Is” Sale • Creates Fair Market Value • Buyer pays sales commission • Seller can accept or reject high bid price
Advantages to Buyers • Open bidding process reveals all offers • Most of discovery work done prior to sale • Allows for quicker possession • Can be professionally represented • Creates Fair Market Value
Different Types of Auctions • Live on-site Public Auction • Ballroom Multiple Sale Auction • Sealed bid Auction • Sealed bid / Live hybrid Auction • Fax Bid Auction • Internet or Online Auction
Live on-site Auction • Specialized marketing for property • Sale is conducted on property • Real Estate can be sold in conjunction with personal property
Ballroom Multiple Sale Auction • Multiple properties selling in one location on one day with either one seller (investment properties) or multiple sellers • Advantages to Sellers are sharing the costs of advertising to attract similar buyers • Advantages to Buyers are having several opportunities to purchase like properties
Sealed bid Auction • Marketing time is the same as other auctions (usually three to four weeks) • Potential buyers make written offers either mailed or delivered to Real Estate Broker with an exact deadline for bids • Highest offer wins the property
Sealed bid / Live hybrid Auction • Marketing is usually the same, all sealed bids due on a scheduled date and time • At the deadline time, all bids are opened and the top % of offers are allowed to increase their bids in a live, open bidding process usually in a boardroom or office setting
Fax Bid Auction • Specialized marketing for property with date and time of offers due, advertised • All offers are reviewed at the end of timeline and only the top % will have the opportunity to increase their offers • Buyers are contacted and Increases on offers continue on a timed basis usually (30) thirty minute intervals, until final price is achieved and then contracted
Internet or Online Auction • The Internet has erased the geographical boundaries for auction buyers and sellers, allowing auctioneers to expand their markets worldwide • Online Auctions can be used in conjunction with all of the before mentioned auctions • Online Auctions of real property exclusively online traditional marketing can be utilized
Real Estate at Auction! Presented by Tim Stuart of