AUCTIONS REALESTATEAUCTIONS.COM (REA) SELLS ALL TYPES OF REAL ESTATE AT AUCTION. REA UNDERSTANDS THAT AGGRESSIVE MARKETING STRATEGIES COUPLED WITH THE IMPORTANCE OF CHOOSING THE AUCTION TYPE THAT BEST REPRESENTS A PERCEIVED VALUE TO THE BUYER, DIRECTLY CORRELATES TO THE AMOUNT OF BUYERS THAT PARTICIPATE IN THE AUCTION AND THE SUCCESS OF ATTRACTING THE HIGHEST YIELD FOR THE SELLER.
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SELECTING THE RIGHT AUCTION COMPANY PROVIDES THE BEST RESULTS IN MONEY, TIME AND EASE. REALESTATEAUCTIONS.COM (REA) IS DIFFERENT AND STANDS ABOVE THE COMPETITION.
In-person and electronic auctions increase the local and international buyer pool. Buyers everywhere are interested in U.S. real estate, whether they are across the country or across the globe. Phone-in bidding capability ensures that buyers and sellers connect, no matter where they are located.
social media contacts in their networks who receive well-crafted and timely updates of news and events at RealEstateAuctions.com. These announcements then flow into the networks of all the individuals and organization with which we’re connected, compounding our reach.
REA does NOT outsource. We are relationship-driven, not event-driven, and have both business development and project management staff in virtually every market. Keeping control in-house of all aspects of the auction process means buyers and sellers receive the best, most efficient and most accountable service.
REA customizes the types of auctions in order to maximize the results. There’s no “one-size-fits-all” mentality or a push for clients to accept a certain type of auction that’s most beneficial to the house. The sellers’ goals and their individual properties are always carefully analyzed to ensure they receive a custom fit.
REA contributes marketing dollars for minimum bid and absolute auctions, keeping marketing fees for Institutions and the general public extremely competitive. We believe in the power of auctions and that’s why we partner with our minimum bid and absolute sellers to market their properties and provide them with unequaled exposure.
Company reaches internationally to attract buyers abroad. Almost 10 percent of U.S. real estate is being purchased by international buyers annually, according to the most recent study by the National Association of Realtors®. That’s approximately $75 billion in buying power.
Buyers do not have to produce ALL CASH at the auction. Specialized and Flexible End-Buyer Financing Packages are available. Our relationships with preferred lenders provide lots of options for consumers, who come to our events wellqualified and ready to bid.
Instantly recognizable, distinctive company name that blankets the industry (www.RealEstateAuctions.com). Our powerful domain name means that our company and its services are memorable and easy to find on the Internet when buyers and sellers look for real estate auctions. When buyers and sellers think of real estate auctions, RealEstateAuctions.com naturally comes to mind!
REA leverages social media services (Leverage 200 million contacts at each auction). Each executive, each auction specialist and every support staff member, as well as the company itself, has hundreds, even thousands, of business and personal
Proven 277-step system to running a professional and successful auction marketed internationally. RealEstateAuctions.com is a well-documented, well-oiled and finely tuned machine that gets results for buyers and sellers!
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AUCTION TYPES
Absolute Auction An Absolute Auction makes more money for sellers than any other type of real estate sale, auction or otherwise. In an Absolute Auction, the highest bid wins, regardless of what that price may be. The result is that there is more participation in Absolute Auctions among bidders because of the perception that a property can be purchased at a bargain price. When multiple bidders share this perception, competitive and escalating bidding is sure to result.
Minimum Bid Auction Minimum Bid Auctions begin at a minimum price established by the seller. RealEstateAuctions.com consults with sellers to help establish this price. Bidding must begin at least at the minimum before there can be a sale. The minimum bid is published and announced by the auctioneer at the start of bidding for that property. These auctions offer a certain level of safety to the seller but are usually not as attractive to buyers as an Absolute Auction. A key strategy for a Minimum Bid Auction is for the seller to set the minimum bid low enough to attract the interest of buyers. Setting the minimum bid too high will discourage bidding.
Reserve Auction Reserve Auctions allow the seller to accept, reject or counter the “winning” bid for any reason. Sellers make this decision before the event ends. This gives sellers protection so their properties will not be sold below a level they determine to be acceptable. However, sellers should be aware that Reserve Auctions typically generate the least amount of interest among potential buyers because buyers know their winning bid can ultimately be rejected.
Sealed Bid Auction In a Sealed Bid Auction, bidders privately submit their one and only “best” offer in writing in a sealed envelope. The bids are opened privately by the auctioneer and seller who do not reveal the bids to any of the bidders. The seller may then accept the highest or best bid, or reject all bids and call for a “best and final bid” from the two highest bidders. The seller may also choose to commence serious negotiations with all the identified bidders. Sealed Bid Auctions are often used for properties that do not have a broad market or appeal. Keeping the bids private helps ensure that if all bids are too low for any of them to be accepted by the seller, the property will not become stigmatized by having a perceived low value in the marketplace.
Two-Step (or Combo) Auction The Two-Step Auction is one in which sealed bids are sought from bidders and if the seller does not accept the highest bid, the top five bidders are invited to participate in live bidding on an Absolute or Reserve basis to determine the winner.
With distinct advantages to each of these common types of real estate auctions, sellers are encouraged to consult with the specialists at RealEstateAuctions.com for the best fit for each particular property and goals. 3
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Minimum Bid
Absolute
REA believes that selecting the right type of auction for each property is the key to realizing the most potential and minimizing risk. Benefits
Maximum Results
Absolute auctions generate the highest prices. Period!
More money for the seller.
Competitive bidding typically causes prices to escalate during the auction, always surpassing the price of a traditional, negotiated sale.* A quick sale at auction removes properties from the books as soon as possible, reducing the carrying costs for the bank or the developer. Aggressively marketed, organized events draw excitement and serious buyers because they know the highest bid wins the property, regardless of price. An Absolute Auction means the deal is guaranteed to be accepted. Minimum bid protects sellers from having to accept a price they consider too low. Sellers set the minimum acceptable price, and the bidding starts from there. The minimum bid is publicized before the auction so all bidders know the status and come ready to buy. A strategic, low minimum bid set-point encourages bidders to raise their offers because they are confident in making a deal. Gives the seller the right to reject the highest bid if it is not high enough.
Reserve
Best used when seller has enough equity in property to allow bidding to start at 50 percent of market rate, and still make profit.
Protects sellers from unacceptable losses but still provides a method for the nonperforming property to be sold if the price is right.
Best used when there is moderate equity in the property, able to counter if winning bid unacceptable.
Allows the seller to counter the top bid, so the property still could sell for an acceptable price to all parties. *For homes, apartment buildings, shopping centers and office properties
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REA UNDERSTANDS THAT AGGRESSIVE MARKETING STRATEGIES DIRECTLY CORRELATE TO THE NUMBER OF BUYERS THAT PARTICIPATE IN THE AUCTION.
WE GENERATE BUYERS MARKETING IS KEY TO ATTRACTING BUYERS, AND NO ONE MARKETS BANK-OWNED AND DEVELOPER-OWNED PROPERTIES BETTER. OUR HIGHLY EFFECTIVE INTEGRATED MARKETING PROGRAM REACHES LOCALLY, REGIONALLY, NATIONALLY AND GLOBALLY.
How we do it An unmatched and powerful presence in traditional and
new media is how we showcase and promote auction properties like no other company. Our advertising efforts include our industry-leading website, billboards, television commercials, radio spots, newspaper ads and robust, multi-layered social networking. We are all witness to the shrinking and disappearing city newspapers. Many cease to exist and it is only a matter of time before they all become extinct. As the new media revolution of social networking continues to explode at an exponential rate, we are particularly effective in this space. Our army of Realtors速, Auction Specialists and support staff are all uniform, in-sync and on-task in broadcasting the message and getting buyers to auction. Each of our associates has Internet networks totaling millions of people with interests in auctions and real estate ownership. These contacts are all leveraged via updates, postings and other outreach on these social media platforms.
Traditional Media, Non-Traditional Discounting Our large purchases of traditional media means we are able to negotiate highly discounted rates. As an added benefit to sellers, RealEstateAuctions.com shares the risk and contributes to the marketing dollars spent by each seller of absolute and minimum bid auctions for the marketing of their portfolio.
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International buyers The weakening U.S. dollar and declining home values make real estate in the U.S. particularly appealing to international buyers. A recent study by the National Association of Realtors shows that these buyers came from 53 countries around the world, primarily Canada, Mexico, the United Kingdom and China/Hong Kong. REA has multiple affiliate relationships with companies, institutions and investors around the world and records their buying criteria carefully in order to market the auction inventory to them effectively.
Bulk buyers REA has a private database of wholesale buyers who buy in bulk and are invited to join each auction. They are typically cash buyers and are adding to their portfolio at an aggressive and continual pace. These buyers rely on REA to provide ongoing inventory.
Special end-buyer financing Through exclusive lender relationships, we are able to offer creative financing packages that are not available to the public. These financing packages are what assure the sellers that more buyers are able to buy and are already approved before they attend the auction. In addition, there are special circumstances when the seller can contribute financing options as well, to be combined with conventional funding.
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GLOBAL IMPACT
Our real estate auctions are marketed to investors all over the World. Over the last twelve months, over $75 billion dollars of U.S. real estate was purchased by investors from foreign countries as quoted by the National Association of Realtors. We have targeted the top 50 metro cities and 20 countries that buy U.S. properties and have affiliated with local real estate auction agents to attract these investors to our auctions.
UNITED STATES Atlanta Austin Baltimore Boston Charlotte Chicago Cincinnati Cleveland Columbus Dallas Denver Detroit Fort Myers
Hartford Houston Indianapolis Jacksonville Kansas City Las Vegas Los Angeles Louisville Memphis Miami Milwaukee Minneapolis Nashville
New Orleans New York Oklahoma City Orlando Philadelphia Phoenix Pittsburgh Portland Providence Richmond Riverside Sacramento Salt Lake City
Lima, Peru London, UK Manila, Phillippines Mexico City, Mexico Moscow, Russia Mumbai, India Osaka, Japan
Paris, France Rio de Janeiro, Brazil Sao Paulo, Brazil Shanghai, China Tokyo, Japan Toronto, Canada
San Antonio San Diego San Francisco San Jose Sarasota Seattle St. Louis Tampa Virginia Beach Washington D.C West Palm Beach
WORLD Beijing, China Buenos Aires, Argentina Calcutta, India Delhi, India Dhaka, Bangladesh Essen, Germany Hong Kong, China
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CASE STUDIES ILLUSTRATING THE BENEFITS OF AN AUCTION FOR UNSOLD CONDOMINIUMS
SITUATION A 50-story condo building in downtown Chicago had 40 unsold units remaining of 250. Due to a downturn in the economy, sales had slowed to a rate of 10 units per year and the increased elapsed marketing time was eating away at profits. With the construction loan paid off, other investment opportunities presented themselves to the developer, but the carrying costs of the unsold units prevented the developer from investing elsewhere.
SOLUTION The developer was introduced to the financial benefits of taking the remaining 40 units to auction. This process began by assessing the holding costs for the following four years. With these figures in hand, it was determined that the holding costs (including lost opportunity costs) presented a large enough affect on net proceeds and the developer’s own equity upon closing, that a detailed analysis of an auction was warranted. The financial requirements and marketing plan for an auction were established. Addressing these concerns incorporated the answers to three main questions: ÎÎ What is the Net Present Value (NPV) of selling 10 units per year for four years? ÎÎ How much would the 40 units have to command at auction to equal this NPV? ÎÎ How can we create an action-oriented targeted marketing program that will bring in buyers? A Bidder’s Choice auction plan was selected in which the highest bidder wins the right to choose a unit to purchase from a pool of similar offerings (i.e., the one-bedroom units, the two-bedroom units, etc.). Bidder’s Choice increases buyer competition because the bidder for unit X will be bidding against the bidder for unit Y. It also allows the highest bidder to purchase more than one unit at that same bid level. The unit or units selected are then removed from the pool and the second round of bidding commences until all the properties are sold and bidding on the next pool then ensues.
REALIZED BENEFITS The developer quickly realized that in understanding the time value of money for their development, that an auction which sells the units at a discount could in fact increase their return on investment. Supported by a detailed analysis drawn up by the auction team, the developer realized that if the auction sold the units at only 66% of the listed price, they would meet the NPV of individual sales over four years. In doing so, the developer was able to afford to invest in other development projects and protected their equity from further erosion. The developer decided to auction all 40 units in a minimum bid auction, requiring minimum bids at 50% of previously listed prices. Every unit sold at 75%-80% of previously listed prices and closed within 45 days.
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CASE STUDIES ILLUSTRATING THE BENEFITS OF AN AUCTION FOR FORECLOSED SINGLE-FAMILY HOMES
SITUATION Foreclosed homes taken back by the former First City Bank in Texas were taken on by Collecting Bank N.A. of Houston., which ordered disposal of all 475 of these residences. These holdings included houses, duplexes and condominiums throughout the State of Texas.
SOLUTION The auction method of marketing and sale was selected to provide the quickest avenue of disposal for the highest possible return. One-fourth of the offerings were designated “Absolute,” meaning that the highest bid won the property, regardless of price. Absolute auctions typically result in the highest sales prices because they draw the greatest level of interest from buyers because of the distinct possibility of making a great deal. The decision to offer so many properties Absolute was a sound strategy, as witnessed by more than 5,000 attendees who came to the auctions held in six cities across Texas during the 10day auction sale.
REALIZED BENEFITS When the gavel fell on the last property, 475 properties had been sold, eliminating toxic assets from the bank’s balance sheet. Individual blocks, neighborhoods, even entire communities began a return to normalcy as formerly vacant homes became occupied again. End-users and investors alike were able to purchase properties at a price and in a fashion highly unlikely in a traditional real estate transaction model.
ILLUSTRATING THE BENEFITS OF AN AUCTION FOR A HIGH-END ESTATE HOME
SITUATION Developer of an opulent, single-family home in the southwest corner of the upscale community of Wilmette, Illinois, was struggling to sell the property in the face of a general economic downturn combined with recent, expensive re-building that made the property highly unique.
SOLUTION The reserve auction method of marketing and sale was selected to provide the quickest avenue of disposal for the best possible return, given the particular circumstances. This strategy was decided upon following extensive consultation with the auctioneer, who explained the potential impediments to the sale of the uniquely designed property combined with a continuing and daunting slide in the overall real estate market.
REALIZED BENEFITS A sale price of $1.65 million was achieved. Following the sale, as the market continued to deteriorate, the seller wrote to the auctioneer with his appreciation, stating “I am eternally grateful to you for talking me into accepting the buyer’s bid. Otherwise, the out-flow would have continued. Thank you once again.”
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According to a commissioned industry study by the National Auctioneers Association, auctions are expected to account for onethird of all real estate sales in the United States in the coming years as consumers and sellers recognize the distinct advantages of the auction method.
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AUCTION MYTHS Auctions are for distressed properties only All types of real estate are being auctioned today. At contemporary real estate auctions, you will typically find single family homes, townhomes, condominiums, multifamily properties, commercial buildings, retail properties, vacant land and more, all being offered by lenders and private individuals who simply want a faster and more efficient way to bring their real estate to market and sell it at real market value.
Auctions are a sales method of last resort
Auctions attract unqualified buyers
Quite the contrary. Auctions have evolved into a preferred delivery method of product to the consumer. Soon, it is estimated that approximately 30% of all real estate sold in the U.S. in the next few years will be via auction. Real estate investors and end users are fueling the growing popularity of auctions because they want more choice, more speed and less reliance on ordinary real estate sales methods. In other words, they want an efficient marketplace.
Auction buyers are extremely well qualified. Auction buyers realize that they will be signing a contract at the auction that has no financing, due diligence nor attorney approval contingencies included or permitted. Buyers must have financial pre-approval before the auction event, or be able to purchase with cash. (Excellent property information provided by us before the auction will allow them to conduct their due diligence in advance and bid more freely and with greater confidence at the auction).
Auctions don’t result in the best prices
Auctions require buyers to pay cash
Actually, they always produce results far greater than what can be obtained via the ordinarily brokered sale for properties for which there is market depth. Auctions create competition among buyers and immediate price confirmation. Auctions bring multiple qualified buyers to the point of decision, in which they must act at that moment or lose the opportunity.
Most buyers of auction property obtain mortgages for their purchases and do not pay all cash.
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Auctions require too much lead time Speed and efficiency are what makes auctions so attractive to buyers and sellers. The preparation time for properties to be part of an auction is a matter of weeks and usually no longer than 45 to 60 days. Most traditional sellers experience a longer time frame where properties often languish for many months, sometimes even a year or more, while potential buyers trickle in, each doing expensive and time-consuming inspections, negotiations and contingencies. The real estate auction method employs a huge amount of marketing to draw people to the event, where multiple individuals are typically interested in the same properties.
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