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Marketing Real Estate at Auction

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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


1
Marketing Real Estate at Auction
  • Edward D. Durnil, CAI, CES
  • Tranzon Asset Advisors
  • Hosted by the Kentucky Auctioneers Association

2
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
    Financing
  • Closing the Deal Successful Settlement of Real
    Estate Auctions
  • Legal Considerations when selling Real Estate at
    Auction

3
Sellers Who are They?
  • Types of Sellers
  • Private Individuals, Estates, Closely Held
    Corporations
  • 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

4
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
    Banks
  • Learn the terminology REO, Book Value,
    Appraisal Write Down, Non-Accrual vs Accrual
  • Corporate Sellers
  • Real Estate Department Corporate Investment
    Office
  • Real Estate Brokers
  • Residential and Commercial

5
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?

6
Sellers-Prospecting
  • 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
    Prospecting
  • 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

7
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,
    etc.
  • 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

8
Real Estate Auction Property Classification
  • Residential Real Estate
  • Single Family Investment, Luxury, Vacation,
    Condominium
  • 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
    Catering
  • Hospitality Hotel/Motel, Convenience Store
  • Other Self Storage, Car Wash, Auto Dealership
  • Industrial Real Estate
  • Manufacturing Light Manufacturing, Heavy
    Manufacturing
  • 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
    Residential

9
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

10
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

11
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

12
Best Auction Method
  • Sealed Bid
  • Online Real Estate Auction
  • Seller desires Private Sale
  • Best to use if there is a potentially small buyer
    group
  • 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

13
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

14
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
15
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,
    CoStar, PropertyAuction.com, LandandFarm.com
  • Signage Professionally Prepared
  • Detailed Information Packages
  • E-Mail Internally developed lists vs. purchased
    lists
  • Warning Spam!

16
Planning Timing
  • Signage 4 to 5 weeks in advance
  • Newsprint Commercial 4-5 weeks (assuming three
    runs)
  • 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)

17
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

18
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
    information

19
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,
etc.
20
Electronic Marketing Low CostHigh Impact
  • Email
  • Internal Lists collect local parties email
    address build list internally always ask for
    referrals
  • 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 LandAuction.com, FarmandLand.com, etc.

21
Buyer Tracking Seller Follow-up
  • Always set up website to require Information
    Package downloads to obtain prospective bidder
    information
  • Contact bidders within 24 hours of download or
    call
  • 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

22
Seller Updates Seller Conditioning
  • Weekly reporting to your client
  • Keeps Seller up to date Prepares them for
    Outcome
  • Written Report with Notes from Buyer Follow-up
  • Conditioning the Seller
  • Predicting Results very difficult at an auction
  • Short Timeframes Require Absolute Honesty with
    Client
  • 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

23
Closing the Transaction
  • No Real Estate Auction is complete without a
    successful closing
  • Title Company or Legal Office could provide
    Assistance
  • 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
    trail.

24
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
    Client
  • Do Not Attempt to Practice Law
  • Maintain Separate Escrow for Auction vs Real
    Estate

25
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
    writing

26
Additional Materials Resources
  • National Auctioneers Association
    auctioneers.org
  • Loopnet Commercial Real Estate Loopnet.com
  • National Association of Realtors Realtor.org
    (Auction/Realtor Committee)
  • Co-Star Free Distressed Property Newsletter
    Costar.com
  • Kentucky Auctioneers Association Tremendous
    Resources for Real Estate and Personal Property
    Auctioneers kentuckyauctioneers.org
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