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Marketing Real Estate at Auction


Overview of Real Estate Auctions Who ... Non-Accrual vs Accrual Corporate Sellers Real Estate Department & Corporate Investment Office Real Estate Brokers ... – PowerPoint PPT presentation

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Title: Marketing Real Estate at Auction

Marketing Real Estate at Auction
  • Edward D. Durnil, CAI, CES
  • Tranzon Asset Advisors
  • Hosted by the Kentucky Auctioneers Association

Overview of Real Estate Auctions
  • Who are the Sellers and How do we find them?
  • What type Property sells at Auction?
  • When is the ideal time to sell?
  • How best to market Real Estate for Auction?
  • Setting the Stage for Success Property
    Preparation, Information Packages, Inspections
  • Closing the Deal Successful Settlement of Real
    Estate Auctions
  • Legal Considerations when selling Real Estate at

Sellers Who are They?
  • Types of Sellers
  • Private Individuals, Estates, Closely Held
  • Lenders-Local/Regional/National
  • Corporate Sellers
  • Accountants Attorney Prospects
  • Real Estate Brokers
  • Nursing Assisted Living Facilities
  • Farm Service Organizations
  • Real Estate Developers Builders
  • Other - Discussion

Sellers Where to Find Them
  • Successful Prospecting
  • Estate Sales
  • Target Estate Attorneys Accountants
  • Estate and Financial Planners
  • Lenders- FDIC McFadden Directory
  • Determine the Target Market Local vs Regional
  • Learn the terminology REO, Book Value,
    Appraisal Write Down, Non-Accrual vs Accrual
  • Corporate Sellers
  • Real Estate Department Corporate Investment
  • Real Estate Brokers
  • Residential and Commercial

Sellers Where to Find Them
  • Successful Prospecting
  • Nursing Assisted Living Facilities
  • Director/Management
  • Farm Service Organizations
  • Farm Credit workout sales
  • Agriculture Related Businesses Create
    Relationships to be Top of Mind
  • Bankruptcy Insolvency Professionals
  • Amercian Bankruptcy Institute NAA Discount
  • Turnaround Management Association
  • Real Estate Developers Builders
  • Other?

  • Cold Calling Research Techniques - Online
  • Local Service Clubs Rotary, Optimist, etc.
  • Target local attorneys CPAs who service
    Estate Planning, Bank Counsel
  • Networking and Patience are Key to Successful
  • Ask to Attend and Present at Realtor Events
  • Become the Resource for Your Community
  • Letter Campaign
  • Buffalo Nickel OREO Starlight Mints
  • Provide Information Short Simple
  • Repetition of Campaign One and Done will not
    work Top of Mind Critical for Success

Seller Auction SuccessThe winning formula
for the times
  • Real Estate Auction Advantages
  • Speed of the Transaction vs Listed Sale
  • Reduction in Ownership Costs-Interest, Taxes,
    Insurance, Liability, Utilities, Property Care,
  • Non-Contingent Sale Pre-qualified bidders
  • Seller Determines the Terms of Sale
  • Seller can control pricing Absolute vs Reserve
    or Published Minimum
  • Increased Exposure and Visibility to Market
  • Price is Set by Competitive Bidding
  • Concrete Plans can be made for the Future

Real Estate Auction Property Classification
  • Residential Real Estate
  • Single Family Investment, Luxury, Vacation,
  • Multi-Family 1-4 Family, Over 4 Family,
    Apartment Communities
  • Commercial Real Estate
  • Retail Shopping Centers, Free-Standing,
    In-Line, Big Box, Neighborhood
  • Office Low Rise, High Rise, Condo,
    Free-Standing, Medical Specialty
  • Restaurants Fast Food, Dine-in, Event Center
  • Hospitality Hotel/Motel, Convenience Store
  • Other Self Storage, Car Wash, Auto Dealership
  • Industrial Real Estate
  • Manufacturing Light Manufacturing, Heavy
  • Warehouse Logistics, Terminal, Climate
    Controlled Freezer/Cold Storage
  • Special Purpose Real Estate
  • Entertainment/Recreation Oriented Gym, Golf
    Course, Educational
  • Land Agriculture Real Estate
  • Agricultural Use , Timber, Livestock Recreation
  • Development Commercial, Industrial or

Timing is Everything
  • Tailoring the Sale to the buyer
  • Commercial Auctions tend to Sell Best during
    business hours on business days
  • Residential Luxury RE can be sold during the week
    or weekend evening sale
  • Land Auctions should work for the audience
  • Agriculture Lots weekend or evening sale
  • Commercial or Industrial - weekday

Choosing the Best Type of Real Estate Auction
  1. Live On-Site
  2. Live Ballroom or Meeting Room
  3. Sealed Bid
  4. Online Auction
  5. Hybrid Auction Sealed Bid to Live or Online

Best Auction Method
  • Live On-Site
  • Ballroom or Meeting Room
  • Use when there is high interest
  • Low Chance of Controversy
  • Neighboring Owner doesnt want sale to occur
  • Family members in disagreement
  • Clear Ability to Maximize Value
  • Use to avoid Weather issues
  • Multiple Properties in different locations
  • Create added interest by selling same type assets
    reduce risk of losing buyers vs onsite sale of
    multiple properties

Best Auction Method
  • Sealed Bid
  • Online Real Estate Auction
  • Seller desires Private Sale
  • Best to use if there is a potentially small buyer
  • Specialized Asset
  • Refinery
  • Multi-Million Dollar Residential
  • Multiple Oil/Gas Leases
  • Other - Discussion
  • Virtually All Asset Types sold this way
  • Lowers cost of Sale very little staffing needed
  • Creates Efficiencies for Buyer No Travel Costs,
    Ease of Bidding
  • NOTE Explain bidding process and procedures very
    exactly Engage Counsel

Best Auction Method
  • Hybrid Sealed Bid
  • Allows for better Client control of process
  • Sealed Bid first qualifies buyers Bid is
    usually accompanied with certified funds deposit
  • Second Round of bidding (live or online)
    maximizes value for client
  • Seller could accept high sealed bid if it is
    significantly higher than others
  • Works exceptionally well for unique assets

Marketing for Success
Marketing for an Auction Event Best Practices 1.
Creating a comprehensive blueprint that will
bring qualified a qualified buyer pool to your
next auction! 2. Budgeting for the broadest
audience penetration. 3. Executing for Success
Create Your Plan
  • Effective Marketing is Planned
  • Developing a Budget Rule of Thumb 1-2 of
    Property Value
  • Print - Local Newspapers, Regional Newspapers,
    Targeted Publications
  • Internet Marketing Interactive Website Usage
    Information Package Downloadable
  • Asset Specific Website Postings Loopnet,
  • Signage Professionally Prepared
  • Detailed Information Packages
  • E-Mail Internally developed lists vs. purchased
  • Warning Spam!

Planning Timing
  • Signage 4 to 5 weeks in advance
  • Newsprint Commercial 4-5 weeks (assuming three
  • Residential 3-4 weeks prior (assuming three
    runs) same for Agriculture Land
  • Internet Postings 5 weeks prior to event
  • Email Three separate blasts plus two reminders
    before the auction (1 4 days before auction)

Budgeting for RE Auctions
  • Budgeting
  • Developing the Media Mix
  • Real Estate Auctions Require extensive marketing
  • Budgets should be both local and regional
    depending on the asset
  • National Advertising
  • Publications WSJ Barrons
  • Email
  • Webpostings
  • Social Media Facebook, LinkedIn, Twitter
  • Newsprint 40 minimum 60 maximum
  • Internet 20 to 25
  • Signs 5
  • Email 15 - 20
  • Social Media 3 or less
  • Information Packages 5 -10
  • Brochures 10-15
  • Administration 5 to 10

Bringing it Together
  • Execution of the Plan
  • Design of Marketing Newsprint Ads
  • a. Simple, Clean Design
  • b. Placement of Ads Odd Page, lower right
    placement is best
  • c. Run times should be weekly at minimum
  • d. Display with Color where possible
  • e. Photos of the property is essential along with
    brief descriptions with plat if necessary
  • f. Always display website for more information
    great tool to let prospective buyers obtain more

Bringing it Together
  • Execution of the Plan
  • Brochure Webpage Design
  • Similar to Newsprint but with more content
  • More Photos
  • Detailed Survey/Plat
  • Property Information Package on Website with
    Title, Environmental Report, Timber Survey,
    Property Condition Report

Provide All Legally Required Information in
Marketing Auctioneers Name, Buyers Premium,
Electronic Marketing Low CostHigh Impact
  • Email
  • Internal Lists collect local parties email
    address build list internally always ask for
  • B to B Business Lists created from Realtor
    groups, Lenders, Community Groups much more lax
    spam rules for business email vs personal
  • External Lists Can be purchased Brokers,
    Principles, Investment Groups
  • Internet Marketing
  • Low Cost for the amount of impact
  • Post to KAA, NAA, Asset Specific Sites
  • Commercial Loopnet, Costar, PropertyLine
  • Residential MLS if board member
  • Land,, etc.

Buyer Tracking Seller Follow-up
  • Always set up website to require Information
    Package downloads to obtain prospective bidder
  • Contact bidders within 24 hours of download or
  • Successful Real Estate Auctions require 5
    contacts with prospective bidders email or
    phone (at least 2 contacts should be via
    telephone or in person)
  • Ask for feedback does it meet their needs, have
    they reviewed the package, where are they
    obtaining financing, when would they

Seller Updates Seller Conditioning
  • Weekly reporting to your client
  • Keeps Seller up to date Prepares them for
  • Written Report with Notes from Buyer Follow-up
  • Conditioning the Seller
  • Predicting Results very difficult at an auction
  • Short Timeframes Require Absolute Honesty with
  • Do Not Puff or Make the marketing results Better
    than they are
  • Recommend at least one in person or phone
    conversation with seller weekly in the last weeks
    prior to auction

Closing the Transaction
  • No Real Estate Auction is complete without a
    successful closing
  • Title Company or Legal Office could provide
  • Always run title update prior to auction avoids
    post sale issues such as unreleased mortgages,
    incorrect or missed signatures for prior
    transfers, etc.
  • Provide Commission Statement Create paper

Ethical issues in Selling Real Estate at Auction
  • Do Not Bid At Your Auctions Create office
    policy outlining this and enforce it with staff
  • Lawfully Promote Clients Best Interests
  • Provide Customer with Honesty and Fair Dealing
  • Never Discriminate or Classify a Potential Client
    or Customer
  • Do Not Profit from Marketing Expenses Paid by
  • Do Not Attempt to Practice Law
  • Maintain Separate Escrow for Auction vs Real

Ethics in Real Estate Auctions
  • Provide Buyers with all Pertinent Material Facts
  • Never try to hide a problem they always come
    back to haunt you
  • Abide by all Laws Regulations governing the
    sale Local, Federal State
  • If you are not familiar with an Asset Type
    Partner with a Company that has dealt with it
    Complicated Sales are Not the place to Learn on
    your own
  • Always Utilize Written Agreements Statute of
    Frauds requires Real Estate Transactions be in

Additional Materials Resources
  • National Auctioneers Association
  • Loopnet Commercial Real Estate
  • National Association of Realtors
    (Auction/Realtor Committee)
  • Co-Star Free Distressed Property Newsletter
  • Kentucky Auctioneers Association Tremendous
    Resources for Real Estate and Personal Property