Real Estate Auctions – The New Land Rush

On a sunny afternoon in Florida, an energetic crowd gathers on the lawn of a high end luxury estate. A loud and eager banter between an auctioneer, a group of bidders and bidder assistants fills the air. For several minutes the auctioneer asks for the next highest bid and the bidders respond. Suddenly the bidders grow silent. The high bidder holds his breath in anticipation of winning the auction. The auctioneer calls for one more bid. In a loud clear voice which rolls over the audience he says, “Fair warning, last chance” the auctioneer pauses, “SOLD!” And in less than 10 minutes another multimillion dollar estate has changed owners.

Successful real estate auctions like the one above are happening all over North America and the Caribbean. Recently real estate auctions have been on the rise, the increase in popularity is partly driven by growing inventories and fading buyer confidence. Properties that were selling in weeks using traditional methods are now languishing on the market unable to attract buyers even as seller’s lower prices. Many say the real estate boom is over but savvy buyers and sellers are profiting from real estate auctions.

Real Estate Auctions Work in Up or Down Markets.

Regardless of trends or market cycles, real estate auctions provide an open and transparent process for buyers and sellers. Properly conducted real estate auctions attract ready and willing buyers and motivate them to act now.

The auction method removes the “wait and see” attitude which serves to further depress real estate values. Buyers are always concerned about overpaying. Buyers gain confidence with their purchases at real estate auctions because they can see what others are willing to pay.

When market demand is high and inventories low, real estate auctions can deliver selling prices well above what a willing seller would have accepted in a negotiated private treaty sale. In good selling climates many property owners using traditional real estate methods; negotiating with one buyer at a time, leave thousands of dollars of equity on the table. During up markets real estate auctions are the best way to establish top market price.

Evaluating Your Real Estate for Auction

Not every property or seller for that matter makes a good candidate for auction. First of all sellers must be ready to sell now and for the current market value. Also a real estate auction will not fix problems caused by a downturn in market value of your property, if you owe more than a willing buyer will pay, be prepared to come to closing with your check book.

Properties that do well in real estate auctions have a high uniqueness factor. Ask your self, “What makes my property different from most others?” Maybe you own a resort property or high end luxury home, commercial properties and land do very well at auction. Real estate auctions thrive on uniqueness. If your property is like everyone else’s, the best thing you can do is offer the most competitive price.

Most importantly sellers must be reasonable about setting a minimum bid. A seller must look at the lowest, most current comps and price below that to generate the interest and urgency necessary for a successful real estate auction. Once the auction begins and qualified bidders start competing against one another you can watch the selling price increase.

Locate a Qualified Real Estate Auctioneer

Start by checking with the National Auctioneers Association, the best real estate auctioneers belong to this organization. These real estate auctioneers are well trained and adhere to a standard of practice and a code of ethics. Many attend the annual International Auctioneers Conference where the latest techniques and innovations in the real estate auction industry are presented.

Find out if the company you are interviewing is a full time real estate auction firm. Many real estate agents are getting auction licenses yet have no experience with the auction method of marketing. Conducting a successful real estate auction is nothing like (private treaty) traditional real estate sales. Go with a real estate auction pro.

You’re probably better of with an auction house that specializes in real estate auctions. There are many qualified auctioneers who have generations of experience selling personal property; furniture, dishes, lawn equipment and the occasional rare painting. Selling real estate at auction is a complex matter that should only be attempted by full time experienced real estate auction professionals.

Commissions and fees may vary, sellers must pay all marketing expenses up front and buyers typically pay 10% of the sales price to the auctioneer of which a share goes to participating real estate agents.

Types of Real Estate Auctions

Auctions are effective because they create a seller’s market. Professionally conducted real estate auctions create urgency, a reason to buy today and competition for the property. Terms and conditions of sale are established ahead of the auction. Real estate auctions will follow one of these three approaches:

Absolute Auction

The property is sold to the highest bidder regardless of price- using this process often returns the highest sale price.

Minimum Bid Auction

Seller agrees to sell at or above a published minimum bid price – this method is useful for internet auctions.

Seller Confirmation or Reserve Auction

With a reserve auction, the seller “reserves” the right to accept or decline any bids usually within 48 hours of the auction. Reserve auctions are used when there is a lien on the property from a lender or a court ordered sale with a minimum selling price.

How Important Is the Fundraising Auctioneer to the Success of Your Event?

I want you to think about the term “Fundraising Auction”.

A “Fundraising Auction” is an event where items of value are gathered, and then sold in a competitive bidding situation, either in a Silent Auction format, or in a Live Auction format by a Live Auctioneer. And since typically the best items are saved for the Live Auction, arguably it is the Live Auction that should generate a significant portion of the proceeds in any Fundraising Auction.

So why do so many non-profit groups consider the Fundraising Auctioneer to be the least valuable component in a Fundraising Auction?

The Hosting Facility gets paid.
The Printer gets paid.
The Caterer gets paid.
The Liquor Store gets paid.
The DJ gets paid.
The Florist gets paid.
But the Auctioneer … the individual who is expected to raise the lion’s share of the event’s proceeds… is expected to work for Free. And is usually under-appreciated for the professional services he/she provides.

I’m not trying to underscore the value of the invitations & programs, food, booze, music, and decorations. All are important in their own way. But each of these are “Expenses”. It is the Auctioneer who is going to bring “Revenue”… and thus, the “Profits”… into any event. Which is the ultimate objective of any Fundraising Auction.

Here is a real-life example of how under-appreciated the Auctioneer can be. In two comparable events we worked last year, during the dinner portion of the event one non-profit group sat the Auctioneer (me) at a table with the DJ, the Interns, the Volunteer Staff, and other event “Help”. The 2nd non-profit group sat the Auctioneer (me) directly next to the CEO of their organization, where we chatted about how important the pending revenue would be to their organization. Which group do you think valued the services of the Fundraising Auctioneer more?

Don’t ever under-estimate the value that a professional Fundraising Auctioneer can bring to your event. The Auctioneer adds value as a pre-event consultant. And the Auctioneer can change an event from a moderate to a huge success.

A Case Study Once I was scheduled to call an Auction for a major local non-profit group. They represented a very good cause and they had a strong and dedicated following. Their event was sold out, quality Live & Silent Auction items had been solicited, and the Special Pledge Appeal had been choreographed and was ready to go. The facility was first class, the appropriate caterer was booked, and the food was ready to cook.

But quite unexpectedly, some unseasonably inclement weather forced the event’s cancellation. Despite all of the committee’s hard work, cancelling the event was the proper decision considering the circumstances.

So the Event Committee scrambled to re-schedule the event for the following weekend.

They confirmed with the Hosting Facility.
They confirmed with the Caterer.
They confirmed with the Liquor Store.
They confirmed with the DJ.
They confirmed with the Florist.
Since they already had the Mailing List of those scheduled to attend, no new invitations had to be printed as all were contacted by email or telephone. So with everything in place, the group went ahead and re-scheduled the event for the following weekend.

But guess who they failed to confirm? You got it… the Professional Auctioneer. They thought so little of the Auctioneer’s contribution that they “assumed” that the Auctioneer would be available and at their beck and call.

But the Auctioneer already had another Fundraising Auction booked for that date with another non-profit group. It was only hour away from the re-scheduled event, and things could have been easily worked out. All Group #1 had to do was start their event one hour earlier, or one hour later, than the Group #2, and the Auctioneer could have helped both groups on the same day.

But because Group #1 failed to anticipate a possible Auctioneer conflict, because they failed to confirm with the Auctioneer before re-scheduling their event, their preferred Auctioneer had to bow out and they had to scramble to locate substitute “Volunteer” Auctioneer only days before their event.

And it cost them.

Learning Points

The Live Auction is usually where the profits are made at any Fundraising Auction.
A Professional Fundraising Auctioneer can be vital to the success of any Fundraising Auction.
The better Fundraising Auctioneers usually get booked quickly.
You need to recognize the important contributions that a good Auctioneer can make to your event.
Michael Ivankovich is a Bucks County Fundraising Auctioneer based in Doylestown PA, and serves the Great Philadelphia PA area. He has been a professionally licensed and bonded Auctioneer in Pennsylvania for nearly 20 years, has been named Pennsylvania’s Auctioneer of the Year, and has considerable experience in conducting Fundraising Auctions. Michael loves helping groups raise needed funds for good causes and one of his specialties is the “Special Pledge Appeal” or “Fund-A-Cause Appeal” which usually enables clients to double their revenue in a single evening.

Are You Killing Your Small Business?

What you do and do not do on a daily basis has a long term compounding impact on your Small Business success. Depending on the approach you take and the level of self-sabotaging you engage in will have real effects on the outcome of your business, including whether or not you are actively killing your Small Business.What does killing your Small Business mean?Killing your Small Business means that you may be making decisions that are sabotaging your business success and unwittingly committing to a course of action that will eventually see you fail.
It is about the self-sabotaging behaviours that people employ on a conscious and subconscious level to stop themselves from being successful, to slow things down or to completely undermine their goals.
It is a bad habit that can cost you your Small Business;
It is a bad habit of ego-centric, failure enduring decisions etc that do not serve your highest purpose;
It is allowing fears to drive your Small Business direction and kill it from the inside out. Often this is a slow and painful death – one small decision, action or inaction compounding over time.
What does killing your Small Business look like?Imagine that you decide to put on an event to show off your services and bring in more clients/customers, more money and build your business. As a result of this decision, you go about setting up the event, sorting out the details, thinking about the costs and considering what profit you will make. You’re excited and ready to go, but, then something strange happens and you lack the motivation to do the basics well to get the message out there to your niche audience. You find yourself unwilling to step out of your comfort zone and be vulnerable.
Worries begin to fester about your ability to pull the event off;
You worry that people will see you as an imposter;
Fear takes root and all your decisions and actions are now run through this internal filter;
You think about giving up;
You think about retreating because it all seems to hard to get off the ground;
You may even worry that you will have too many people show up for the event and what will you do then?
Fear burrows deeper in your gut and whispers, “Who do you think you are? You know you can’t handle it, you’re not ready, you need more time. You’re a fake, fraud and you’re not going to cope if they all come.”Subconsciously you sabotage your every effort to grow your business through inactions and not following through. You now live in Excuse Central! You feel overwhelmed and the last thing you want to do is take action.You may be asking, what person in their right mind would be doing this! It’s insane and it doesn’t make sense.But from an emotional safety perspective it makes perfect sense to the Small Business Owner who fears too much success too soon. They may fear not being able to handle the abundance and prosperity that could flow from their awesome idea.I never said it was rational.Internally their subconscious seeks to keep them safe through avoiding situations that have the potential to be successful.Say hello to procrastination!This kind of self-sabotaging behaviour may not even be something that they can see themselves, however, anyone around them who is trying to help them get off the ground and grow their business can see it. Bystanders are often fraught with frustration as they watch you abort your best efforts.If a bystander tries to intervene when the Small Business Owner is not ready to receive their message of how to help, it can lead disagreements, resentment, anger and parting of ways.Fear and an out if balance ego that feels threatened are insidious weeds that, if left unchecked, can become an out of control jungle of compounding self-sabotage behaviours that have a flow-on effect, resulting in you actively killing your own Small Business.Where to from here?If you have begun to see yourself in this scenario, that is a good thing to acknowledge. Admitting that you have a fear that holds you back is an empowering step forward. It is an opportunity for you to explore what is really going on inside you.
Check in with yourself to see if your ego has flared up in response to help and give humility a go, you may just end up being more successful than you thought and experience greater support from like-minded people;
Reflect on what you are doing or choosing not to do. Ask yourself the hard questions to get to the deep reason as to why you do not want to be successful right now;
Consider what might be holding you back from success and nip fears in the bud because honestly, having too many people want to attend your event and know about your Small Business is a good problem to have!
Daily reflection on your thoughts, behaviour and resistance will help you to avoid killing your own Small Business.