Asset Management & Recovery: September 2006

Some of the most honest and friendly people I know are members not only of the National Association of Realtors, but also members of the National Auctioneers Association.  "The Code" as it is referred to by many refers to the Code of Ethics for the NAA.

We are just like regular real estate peole, we just do things a little different sometimes.

Posting / re-publishing of the Code of Ethics is done with the approval of NAA. 

CODE OF ETHICS

National Auctioneers Association 

RESPONSIBILITIES TO CLIENTS AND CUSTOMERS

Article I       Members pledge to protect and promote the interests of the client. This obligation of absolute fidelity to the client’s interests is primary but does not relieve members of their obligation to treat all parties to the transaction fairly.

Article 2      Members must, in conducting an auction, deal with customers in a manner exhibiting the highest standards of professionalism and respect. Members owe the customer the duties of honesty, integrity and fair dealing at all times.

Article 3      Members should, to assure better service to the seller and to prevent misunderstandings, enter into written agreements or, at a minimum, clear oral agreements that set forth the specific terms and conditions of the engagement.

Article 4      Members shall not accept compensation from any party, other than the client, even if permitted by law, without the full knowledge of all the parties to the transaction.

Article 5      Members shall provide the highest level of competent service in those fields in which members are customarily engaged. This competency is attained by education, training, study, practice and experience. Competence also includes the wisdom to recognize the limitations of that knowledge and when to seek the counsel, assistance or client referral appropriate for the circumstances.

Article 6      Members shall not undertake to provide professional services where either they members of their immediate family members of their firm, or any entity in which they have an ownership interest has presently or contemplates an interest, without first specifically disclosing such interest or contemplated interest.

Article 7     Members shall not make a profit on expenditures made for their client without the client’s prior knowledge and consent.  

Article 8     Members shall not engage in activities that constitute the unauthorized practice of law and shall recommend that legalcounsel be obtained when the interest of any parry to the transaction would be appropriately served.

Article 9      Members shall keep monies coming into their possession in trust for other persons such as escrows, trust funds, client’s monies and other similar items in a separate special account, in an appropriate financial institution.

Article 10    Members shall not disclose any confidential client information without the client’s specific consent except as required by appropriate legal authorities. 

RESPONSIBILITIES TO THE PUBLIC

Article 11    Members shall avoid misrepresentation or concealment of pertinent facts. There is an affirmative obligation to disclose adverse factors of which they have personal knowledge.

Article 12    Members must be careful at all times to present a true picture in their advertising and representations to the public. Members shall ensure that all advertising includes the names and information necessary for the public to contact the auctioneer or firm responsible for conducting the auction.

Article 13    Members must participate in continuing education programs and should keep informed on all matters affecting the auction industry and their areas of specialization.

Article 14    Members are duty bound at all times to abide by the laws and regulations which govern the profession as well as those which, if violated, would negatively affect their ability to present to the public an image of behavior that appropriately represents the professionalism of our industry. 

RESPONSIBILITIES TO THE PROFESSION

Article 15    Members should never publicly criticize a competitor using false or deceptive information. Where an opinion of a competitor’s transaction is especially requested, it  should be rendered in conformity with strict professional courtesy and dignity.

Article 16    Members should willingly share with other members the lessons learned through experience and study to better the profession, members’ business practices and how the profession is perceived by society. Members shall be loyal to the NAA; this includes active participation in educational, civic and charitable endeavors.

Article 17    Members should conduct their business affairs so as to avoid disputes with other members. In an instance where a controversy between members arises, they should seek the assistance of the NAA to arbitrate the controversv.

Article 18    Members, having personal knowledge of an act by another member that, in their opinion, is a material violation of the ethical principles of this Code shall treat the matter in accordance with the procedures of filing a grievance.

Article 19    Members charged with unethical practice or who are asked to present evidence in any disciplinary proceeding or investiga­tion shall promptly and voluntarily place all pertinent facts and information before the appropriate body.

You know, the hunt is usually more exciting than the kill.  Well, what do you mean Rich?

There is another blog that I have been reading and responding to about "low ball offers".  I just love them.  Love making them on the buyer side and love negotiating them on the seller side.

I don't want to make this about auctions, but the offer, acceptance process is just a blast.  As the auctioneer, I ask for 200k and then I get it.  Then I ask for $225, get it and tell the last guy "You're Out, Sir".  What a blast.  The sellers love it and the buyers have fun too.

Anyway, there is a saying that the first one to blink looses.  I remember going to a broker interview one day and being the agent looking for a home. 

The broker asked "What kind of a split are you looking for?" 

I reply "100% with no fees"  I'm never going to get it, but who cares.  This is the game. 

"No, really Rich?"

"Why are you laughing, I am not kidding?" says I.

"What do you think is fair?"

"100% and no fees" I say

"You can't get that"

"Well what can I get?"

BLINK !

The NO counter is a great tool.  It makes the buyer bid against himself. It makes them try to figure out what the seller wants in the contract.  It usually gets the buyer to increase the offer price, the deposit and shorten the closing date.

"But Rich, there needs to be a sellers market for that to work !" some might say.

Ok, just use "let it expire" counter then.  It makes the agents jump through their skin.  Trust me.  Happened today.

Today was a pretty good day around the old neighborhood.  When the deals flow, they flow and when they don't, they don't.

As an owner of a small business, we go through the pains of feast or famine.  Today was feast.  Some days are famine.  I have found that the business rolls in cycles.  I have had my own shop for 3 years, but in the same industry for over 10.  For the past 10 years the summer has been slow and the fourth quarter packed with opportunity. 

Not only was I able to secure a couple of really good meetings, I was able to help one of our partner companies secure appointments as well and was able to refer out two solid deals to others.

I am always worried about where the next deal will come from, but hard work, a referral network and sometimes just plain luck keep us going.

I hope others had a good day as well.

If you deal with investors from time to time, now might be a great time to get out there and renew the relationships.  We see sellers that have been on the market a while get a little more reasonable in the winter months.

This winter may be even better, especially for vacant or under rented properties.  Investors don't want to pay the gas bill and tenants move to new properties slower in the cold months.  That means that there is a better chance that the home vacant at Thanksgiving has a higher chance of being vacant through the new year.

Not just for investment properties, this also applies to vacant primary residences.  Seller is in Florida with a vacant home in the snow belt.  They are paying mortgage, heat and all the other carry costs.  Doesn't sound fun to me.

Rich Kruse - Gryphon

I talked to the auditor’s representative today, (because the place to register is not yet “up” on the site) and he says the registration notice and materials will be emblazoned across the site by the end of the week.

I would like to reach out to brokers and agents looking for a different way to sell property around the United States AND agents in Ohio looking to specilaize in working the REO and investment markets all over the state. 

If this sounds like you, give me a call.  I am willing to train highly motivated people in the auction industry and bank deals.  

Rich Kruse - Gryphon

614-885-0020

rfk@gryphonusa.com

I have prepared, and gotten approved for 2 hours of CE, a class on the basics of selling real estate at auction.  It is designed to provide information to real estate agents on how to represent buyers at auction, how to work with auctioneers to sell your listings and how to determine if a property (and seller) is going to be a good fit for an auction.

I have taught the course a couple of times locally and have had sell outs at each event.  I would be willing to teach at events anywhere in the state of Ohio.  Out of town sessions might have a fee associated with it.  I am in Columbus.

The NAA and NAR leaderships are actively discussing ways the two professions can work together and now is a great time to get in the know on real estate auctions.  Recent trends towards this method of selling show significant increases in the amount of property sold at auction.

Please call me or email if you are interested in having a seminar at your office or other meeting place.  I can be reached at 614-885-0020 or rfk@gryphonusa.com.

You are not in Ohio - No Problem.  The auction community is full of very experienced professionals, many of whom I would call my dearest friends.  Pick a location and I can probably find you a presenter.

Need an auctioneer anywhere in the country?  No Problem.  I can find you the right person in any state.

Is there anything in particular that you want to know about auctions?  Maybe I can answer here.

Rich Kruse - Gryphon

I was speaking to my attorney today and he re-taught me a lesson that I had forgotten.

We were drafting some documents and he told me that he had some templates that he could work off of from a past client.  As a joke, I remarked that the fees should end up being lower since he didn't need to draft from scratch.  His response was the the time would be less and the bill would be less, but that I should look at the deal as paying for the value of his work.  This also was a little bit of a joke since I can't remember the last time I paid full boat over there and he was truly kidding, but it brings up a good point.

Real Estate Agents should not be afraid to charge for the value of the service.

I guess this is a little reminder for our friends that do a lot of buyer representation.  If you think that driving all over town is a waste of your time, either don't do it or figure out a way to make a buck on it.  Not everyone is going to agree with me here, but I have no problem with charging a buyer prospect an hourly rate for trying to find them a property.

Would I also keep the commission over the hourly rate?  I will leave that up to your imagination.

What is it worth at auction?

That question is never going to be able to be answered until the bidding stops, but we can guess.

I like to play what I call the guessing game where the market gets to tell us what they are willing to pay even before the auction.  During an open house, the prospective bidders guess that final sale price of the house in exchange for a prize.  The trick is to make the prize big enough to attract enough attention to the game.  $50 or some cookies are just not going to get it done.

Why do auctioneers do this?  Information !  I want to know what the bidders are thinking.  Armed with this data, the auctioneer can set seller expectations more easily and know which bidder to spend more time working on.

If I know that a bidder thinks the property is worth $500,000 and then that guy shows up on auction day, my job is easier.  Especially if the undisclosed reserve price is below his guess.

Typically we will not get all of the open house attendees to offer a guess, but we do receive enough.  I've got to tell you, it is very unusual to have the bidding go outside the range of the guessers.

How often have I given away the prize?  With pleasure, every time there was a correct guess.