Many of my Auctioneer friends and colleagues sell portfolios of bank-owned or institutionally-owned real estate. That is a fine and needed business, and my friends make a good living selling those assets, but our business is much different. As a small company, we have established our niche as agents for individual owners who have a need to liquidate one or sometimes a few properties, and whose goals are necessarily different than those of banks and institutions.
Banks have to go through processes to sell properties acquired through a foreclosure in order to meet guidelines of insurers, investors and the FDIC. While we sometimes wonder why a bank does not just liquidate and move on, there are numerous reasons why that is not possible for them. Thus, they contract with an Auction Company to “try” and sell large numbers of properties, and pay those companies up front for marketing, and going through the auction process. Rarely are those properties offered as “Absolute” or with a minimum bid reserve price, but they are sold subject to the seller’s confirmation. The company is paid for their efforts through a commission IF the property sells, and through an administrative (“no-sale”) fee if it does not. So in effect, the Auction Company wins either way. Not a bad deal – but also NOT a good way to keep buyers coming back for more. You see if they are only able to sell 20% of the properties offered, they still do very well, but it is all a “Numbers Game”.
Our business model is very different. Three bad things result from our failure to sell a property on Auction day. 1) We lose a referral – and our future business is dependent on word of mouth referrals. If we have spent someone’s marketing money and NOT delivered a result (a sale) then we will not be getting good word-of mouth advertising from the disgruntled seller. 2) We lose potential buyers/bidders for future auctions. Folks will not keep coming back if they are unable to buy what they have come to buy. 3) We do not make money if we do not sell a property.
So, for us it is definitely NOT a “Numbers Game”. Since changing our model seven years ago to sell ONLY Absolute or with a disclosed reserve (minimum bid), we have sold 93% of the properties we have brought to Auction. The properties we sell are a large portion of each seller’s net worth, and so the disposition of that property is very important to a human being – and we take that responsibility VERY seriously.
So if one’s client is a business who deals in numbers, and the consignments keep coming, there is certainly nothing wrong with the “Number’s Game”, but we think the more important number for us is the 93% success rate we have achieved by making each Auction a “must succeed” event.]]>