A great number of professionals would have been overwhelmed by a request to quick sell a home in the current housing recession. As Dr. Joe Abal of Abal Auction Real Estate responded “ no problem, let’s get it done”.
The client had a simple request considering 8 months of probate activity in the Leon County, Florida courts had slowed the estate liquidation process which included a parental home.
The client dreaded the fast approaching end of the year tax deadline which included property taxes and the fact that the monthly holding costs for the home included electricity, water, insurance, sewer and water. Monthly maintenance of two households was proving to be a financial hurdle.
The Abal Auction team met with the client and laid out the auction proposal which included no seller’s commission which would automatically increase the seller’s net gain at closing. Also discussed was the auction terms and conditions which the auction company would prepare for the bidder/buyers.
The critical selling point was the Abal Auction team’s list of seller benefits which included:
1.0 Seller pays zero commission.
2.0 Seller knows when property will sell and close.
3.0 The aggressive marketing campaign increases interest and visibility.
4.0 Assurance that the property will be sold at true market value.
5.0 Property is sold ‘as is’, no seller warranties.
6.0 Fast selling time reduces long-term carrying costs.
6.5 Seller is taken out of the negotiation process.
Included in the terms were legal closing conditions that the buyer would pay all costs including taxes, survey, appraisal, and any inspections. As with any auction, there would be no negotiating on conditions. The property was sold ‘as is’ with all faults and no warranties or guarantees.
One of the crucial aspects was having the client specify the type of auction. The auction types came down to Absolute or a Minimum Bid auction. There are Reserve auctions, but the Abal Auction team does not conduct Reserve auctions.
Ironically, reserve auctions produce the worst bidder attendance because buyers/bidders assume the seller doesn’t know what the property is worth and hopes the auction will tell them with a bidder appraisal.
The most attended auctions are Absolute auctions. Absolute auctions begin with no bid. The price is zero and bidders run the bid up to what they believe is fair market value. Hence, the rationale that auctions will always develop fair market value by asking cash buyers to step in front of the podium and bid the property to what they believe is fair market value. The bidder pays the fair market value through his high bid. Of course, if he undervalues a property, the bidder has to assume and be prepared that another bidder could place one bid higher than his bid.
To influence the buyer Abal Auction required the seller, their client, to purchase a complete home inspection by a licensed certified home inspector. This inspection was the topping to the sale and an intricate part of the Abal Auction full disclosure property information package (PIP).
The auction property information package (PIP) included PDF documents which were all downloadable. The PIP included the tax bill, home inspection, photos, property appraiser data, school and local data, survey and a house diagram of approximate square footage. Also supplied to potential bidders was a list with logo’s of participating banks and lenders.
This PIP is where the auctioneer can make or break a sale. As stated by Dr. Abal “we hide nothing, disclose everything, and we encourage a potential buyer to come to inspection with any inspection officials they want – as long as they realize that stated in the terms is the fact the buyer pays for any inspection”.
The key to the auction process is marketing. Abal Auction selected their own bidding platform which is embedded in their website. They augmented this with signs, print medium, e-blasts and press releases. The topper was their web social marketing. The web marketing is something the auctioneers do not discuss outside of their office. A proprietary marketing matrix developed by Abal Auction includes all facets of today’s social networks.
The final item is to market the property for 29 days and then step in front of the live crowd by using the Abal Auction team’s auction partner Proxibid, Inc. to run a webcast auction.
The webcast allows Abal Auction to offer online live bidding in competition with live bidders in the room. Of course, Abal Auction takes pre-bids for 29 days on the website. So by the time the auctioneer steps in front of the crowd and computer, the Abal team pretty much knows where the money is at. “If I didn’t, I wouldn’t be doing my job”, stated Abal.
The end result, the house sold in Leon County, Florida, in 13 minutes. It took 9 minutes to read the legal offering statement and 4 minutes to call bids. Two bidders were on the computer, one from Canada and one from South Africa. The eleven bidders in the room were from a cross section of 2 – 3 counties in Florida.
How did the auction seller do? Fantastic!! The Abal auction team exceeded her expectation by $23,000 and her closing costs were $20. dollars because she asked for her funds to be delivered by wire transfer. The funds and closing took place in 5 days. The final metric was that Abal Auction Real Estate sold the house in 29 days and 13 minutes and closed the deal in 5 days.
Dr. Abal stated “we feel we met our client’s needs and provided documented results”.
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