Brokers and auctioneers come to see eye-to-eye.
At Express Auction, we've seen a breakdown of the "us vs. them" mentality between auction firms and traditional brokerages as both sides have had positive experiences when joining forces to sell a property. Express Auction has embarked on various initiatives to arrange both formal and informal affiliations with traditional brokerages, which include an educational component, institutionalized discussions and joint pitches. Of course many auctioneer-broker relationships start from working together to tackle a "last resort" situation.
The partnerships often get jump-started when a broker listing is about to expire; a property has been on the market for months with little or no interest; a property has fallen in and out of contract; or when the asset itself is a distressed property and may be cash-flow negative.
The broker benefits in a number of ways, including salvaging a commission on the auction sale.
Auction firms, however, can expand their new relationships with brokers beyond "last resort" auctions by adding complementary services to a broker's suite of services.
An informed broker can leverage the fact that he can offer the auction service and knows that in certain situations auction firms such as Express Auction can truly hit a home run for their client. Auction firms go beyond the mere implementation of the auction, performing typical brokerage firm tasks from making an initial pitch to jointly making a proposal.
Once an engagement has been obtained, Express Auction handles the entire transaction from putting together the due diligence/information packages and documentation, producing and distributing postcard mailers, posting signs, and placing print and internet advertising.
With the assistance of the agent, the auction house handles all of the marketing and promotion to eventually setting up the actual auction event and ensuring a smooth closing process.
It is for these reasons that the leading real estate trade association now recommends brokers consider auctions as a viable alternative for the disposition of real property.
Client satisfaction with the auction process can stem from one or all of the following situations:
* Speed of Sale: An auction can take a property from list to close in less than 90 days, without sacrificing value.
* Seller Sets the Terms: These generally include: no contingencies; "as is, where is" sale; no warranties; substantial "hard money" deposit; and 30-day close.
* Valuation: Empirical studies show that properties sell for higher prices at auction then they do in a negotiated transaction. Our experience has shown this to be true.
* Transparency: Sellers know the whole auction process is transparent--the timing of an auction is guaranteed, the rules of the auction are fixed and the bids are made publicly.
* Wider Audience: An auctioneer's proprietary method of advertising and marketing enables a very large universe of buyers to be reached. This action-oriented marketing program forces a market reaction because it is coupled with a predetermined sale date.
* Win/Win for Buyer/Seller: The buyer of a property at an auction is also a winner because he avoids protracted negotiations, is afforded a level playing field and has the confidence in knowing the price paid is the minimum necessary to buy the property.
Even without having an affiliation with an auction company, brokers can benefit from both the buy and/or sell side of an auction transaction. On the buy side, brokers can bring clients to our auctions, promote a sale, and distribute our information packages to clients. On the sell side, brokers can refer listings directly, or work with us to get a listing. Coop fees are always paid to brokers who refer property owners to us or bring buyers to our auctions.
By Oren Klein and Joshua Olshin Northeast Division of Express Auction