Wednesday, February 28, 2007

Interview With An Auctioneer

The Houston Chronicle interviews an auction veteran. "Ron Laird is not a fast talker and doesn't use a gavel much during his work. But he's auctioned off thousands of properties in Houston and across Texas since he got into the business nearly 25 years ago."

"Q: What types of properties are best suited for selling at auction? A: Properties that have high demand are going to get your best competitive bidding. Fully leased up, income-producing properties do extremely well at auction and will maximize the sales price."

"That's just the opposite of what brokers say. They say it has to be someplace way out in the middle of nowhere where there's no market at all. We've auctioned those properties. The more isolated they are, the more they need the auction method because we market on such a big basis."

"Properties that make sense in the traditional market of real estate make better sense at an auction. I've been trying to tell people that for years, but I don't think I've made many converts among the real estate brokers."

"Q: What types of preparations need to be done before an auction from both the buying and selling ends of a transaction? A: From a seller's end, properties sold at auction are sold on an 'as is, where is' basis.'

"There's no due diligence after you arrive at the sales price. We make full disclosure of all due diligence prior to the sale. Whether it be environmental reports, title reports, surveys, all that's provided to the buyer upfront in order to give that buyer a better comfort level bidding at auction because there's no contingencies."

"From a buyer's standpoint, he needs to thoroughly investigate all aspects of a property and review the due diligence that's provided. Maybe do some of his own. In an auction contract, there's only two blanks: the name of the buyer and the sales price. Therefore, we have a 100 percent closing ratio. We don't have deals fall through."

"Q: Can you identify any trends or changes you've seen in the business of property auctions? A: One of the things that is changing is handling more and more higher-end properties. Most of our residential properties are priced at $600,000 up to the millions of dollars. That's a new trend for Texas and for Houston. It's done all the time on the East Coast and West Coast."

"Q: How many people usually attend an auction? A: I've had 80 or 90 people show up for one property. I don't want 80 or 90 people."

"You send out 10,000 brochures. You advertise this property to a million people. What you're looking for is three or four bidders. You will arrive at market value, maybe more. It's not unusual to have 20 to 30 people show up. Shortly after the bidding starts, you're down to three or four serious people."

"We usually publish a minimum reserve price right in our brochure. That eliminated all the people who thought they were going to come out and buy a $1 million house for $50,000."

"In a real estate auction, you don't use that bid calling like those cow sellers. Everybody can understand where the bid is, what we're asking for, because the majority of people never have been to an auction. Am I going to scratch my nose and end up with a property? No, it's not going to happen."


At 6:13 PM, Blogger PaxBayArea said...

Great article! Too bad some Real Estate Brokers are having such a difficult time wrapping their brains around this basic concept of auctions. What a great "tool" for them to add to the many services they provide their clients.


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