We’ve been telling folks for years that auction marketing would continue to increase in popularity. Some time ago the National Association of REALTORS predicted that auctions would comprise 20% or more of all real estate transactions by the year 2010. We believe current economic conditions are accelerating this trend and that the numbers will be higher, sooner.

Why?  Because auction companies like TRAC do more than just sell properties…. we are real estate problem solvers. And there are plenty of problems out there. During our weekly sales meetings we devote significant floor time to discussing ingenious new methods of moving real estate in difficult markets. As a result, properties that before might have seemed impossible to sell have been given new life. Today I would like to briefly highlight one of these methods, a program we developed which is called “the Full Disclosure Auction.”

In the Full Disclosure Auction, we take on a real estate problem which is prevalent in the Mid-Atlantic: a seller owns property which has a value roughly equal to or slightly in excess of the current balance of all mortgages and liens on title.  Some REALTORS® may look at this situation as a short-sale opportunity. We don’t… not just because short sales are tedious and unpredictable and lenders are often unresponsive, unreasonable and uncooperative, but because a short sale puts no cash in the seller’s pocket and solves little in the credit and credit reporting context. Instead, we look at this as an opportunity to provide an exit strategy which addresses these issues while at the same time requiring us to drive bidding above and beyond the level required to pay off existing liens in order to earn our pay. That’s right, we often structure these transactions in such a maner that we take the risk that even with a successful sale, we may earn little to no money.

With a Full Disclosure Auction, the seller authorizes us to post the reserve. Thus there is no mystery on the buyer’s side as to what price will be required to own the property. Further, as stated above, the auction company earns money only if it is successful in driving bidding north of the posted reserve. How can we make such a deal work when other real estate professionals cannot? Analysis, investment and targeted marketing.

1. Analysis: we perform our own evaluation of each property and the surrounding market. We accept only those properties which we feel have a high likelihood of a successful sale based upon all of the circumstances.

2. Investment: the TRAC team invests significant time, energy, money and more into each property to present it in the best possible light. If site cleanup or repairs will enhance the value, our team will take on the work.

3. Targeted marketing: buyers must be located and drawn to participate in the auction. Depending on location, value, and other factors, we assemble lists and reach out to each prospective bidder directly. We create the interest and urgency necessary for a successful sale. We pre-sell a large percentage of properties enrolled in these auction programs as a result.

This program is just one of many we offer our sellers. If you are a seller and it sounds like a Full Disclosure Auction or some other method might solve your real estate problem, please feel free to contact us to discuss further.

–Tom Gimer, Principal, x111

Tags: dc auctions, full disclosure, md auctions, posted reserve, real estate auctions, reserve, solutions, trac auctions, tracauctions, va auctions

This entry was posted on Wednesday, April 29th, 2009 at 7:33 am and is filed under Auctions, General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.