Asset Management & Recovery: April 2007

I woke up yesterday and prepared for the day.  I looked in the closet at a pair of dress shoes (shoes for work), sandals (shoes for play) and hiking shoes (for looking at lots of property at once).  None of them really looked right.  I came downstairs and looked over in the corner.  There sat a pair of very well used, scuffed, scarred and comfortable combat boots.  I usually don't wear them "to work" anymore since they really don't fit in with my post 1994 profession, but yesterday lacing them up seemed appropriate. 

I'm telling you, Columbus is getting to be a tougher and tougher market.  For the last week it seemed like if it could go wrong, it would go wrong.  Prices are down. Lenders are pulling funding.  Appraisals are not coming in where they should.  This is great if you are a buyers agent, but as someone that primarily works on the seller side this isn't the easiest market to work.

Boots on, I marched into the office and the battle began.  Bedbugs in an apartment, 3 lowball offers, 5 new REO listings, 2 postponed closings, 1 buyer with pulled funding (supposed to close yesterday), 1 commercial listing seized by the IRS and one residential deal that did not appraise (also supposed to close yesterday).

Do you remember the old Army commercial?  "We do more before 9am than most people do all day."

By about 3:30 bedbug guy was dealt with, all 5 new listings were priced, had the clean out & lock change ordered, 2 postponed closings were re-scheduled and I convinced the IRS to let me continue marketing the property.  We got the buyer forwarded to a new lender (we'll see what happens).  At 10:50 pm, the email came through that our re-proposal to salvage the "bad appraisal" had been accepted by the buyer and signed off on by the lender.

Miller Time my butt!  It's Patron Time with a Heineken chaser.

My boots are back in the corner, under guard.  You will get my boots when you pull them from my cold, dead hands !!!

I am currently seeking clients with few or no problems.  Been looking for years, so I am not holding my breath.

I am also seeking more agents, if any have the guts !!!! 

Now I am off to the funny farm...Hey ya, hey yo, hey ya, he he !!!!

I am about to start field testing a very new and innovative way to buy property at auction.  The purpose of this blog is to get it right for the prospective buyer.  It is an online only auction option.  I am going to give you a little insight to how it will work and would really appreciate your feedback, good or bad. 

For starters, the bidding will take place on the "auction" section of my website at http://www.gryphonusa.com/.  We are using a proven platform and partnering with an online bidding platform that I have used before.  In an online only auction, there will be no live bidding at an auction site.

In order to bid, a prospect will need to register with a credit card and have a deposit amount put on hold.  This is similar to reserving a hotel room.  The $$ is on hold, but not charged against the card until you actually buy.  

Terms will be that the property is offered as-is and non-contingent.  These are the same terms as one would find in a live auction.

Bidders will have the opportunity to view the property and all state required disclosures will be provided.  Inspections will be encouraged.  Broker participation will be encouraged.  Agents representing bidders will need to register them with Agency Disclosure forms before bidding to qualify for commissions.  We are also considering a "find a local agent" link for out of town bidders.  The lawyers think that might be a stretch.  There is liability here.

Virtual tours from http://www.realestateshows.com/ will be posted for all of the properties as well as a basic property condition report.  No representations or warranties on the accuracy of the report, of course.  Informational purposes only.  The lawyers think this is good.  Limits liability here.

So, at the end of the bidding period the high bidder is sent a contract, probably via email, signs and sends back via fax with original in the mail.  Working on this part.

If the auction was Absolute, the deal is ready to close.  If the reserve was met, the deal is ready to close.  If the reserve was not met, the seller may accept anyway, may reject or may counter.  This is the same thing that one would expect at a live auction.

Why am I doing this?  Our clients are asking for it for one.  Second, some other auctioneers have already started in on the model and I need to keep competitive.  Lastly, bidders/buyers want it.

I don't think that, right now, it will take off in main stream for owner occupied properties.  Investment properties, land, tax sales, timeshares and the like are good targets though.  Can anyone say Bank REO ??

Agents, please give me your feedback.  If you were working with a buyer and liked one of our properties, what would you be expecting from this platform? 

By the way, I do have a marketing plan to get these properties noticed.  It is a super secret and locked in the safe.

I have one client that others think is difficult.  Maybe we are good for each other.  I am difficult too.

If you haven't been paying attention, the market is down in Columbus OH.  It is a buyers market, especially for investment property.

Anyway, I went to a meeting today where I thought my bank client was going to can me.  This would have been a loss of 38 listings.  Ooops !!

We discussed my capacity.  We discussed marketing options.  We discussed general brokerage vs. auction (online only specifically).  We discussed the board meeting they had last night.  Ooops !!

I need to say that I love my difficult client.  The board wanted to hire 3 other brokerages to split the work.  He said no, no way, not going to happen.  In his opinion, 1 point of contact is the way to do it.  I guess it helps that my office is only a mile away.

Now I am here to get fired, or so I thought.  Instead, I am told that there are up to 118 REO listings coming up.  What ???

Here is the point, because this can't all be about my ego....

Fair pricing, honesty, hard work.  That's what the client says anyway.  Hmmm......  What happened to good looks and B.S.?

Maybe the Grumpy Hat and Shrimp Sticker were good luck.

Below is an article that I wrote for an investor group newsletter.  Hope it helps everyone understand a little better.

Auction- auc·tion (n) a sale of property to the highest bidder. Websters

For centuries Auctions have been the ultimate mechanism for establishing values and facilitating quick and fair exchanges of goods and property all over the world.  Recorded history describes auctions as early as 500 BC and auctions were said to be the primary means of sales throughout the Roman Empire. 

Considered at one time to be appropriate only for distressed property, a larger percentage of the value of real estate and commercial assets are being sold at auction than ever before.  Some studies suggest that by 2010, close to 30% of all real estate sales dollars will be generated by auctions.

Buying property at auction, whether it is real estate or personal property (cars, antiques, etc.) involves a couple of simple steps.  First you need to find the auction.  You just need to know where to look.  Second, you need to be aware of the terms and conditions of auction.  Third, you need to attend the sale.  This sometimes is not required, though, since many auctioneers sell online too.  Lastly you will need to attend the closing, just like a traditional sale, with some modifications.

In order to make money buying at auction the first thing you need to do is find them.  These days, almost all auctioneers have their own website and their own mailing list.  Registering for an auctioneers e-mailing list is by far the best way to find out about auctions.  In addition, many auctioneers also sell property outside of the auction or before the auction.  Some items are only advertised to the members of the mailing list before they are sold.  In addition to the e-mailing list (many don't send in the mail anymore) you will want to stay on top of your newspapers.  In Columbus, auctions are advertised in the Sunday Dispatch Auction Section, Daily Reporter Newspaper, Business First and Tradin' Times.  It is also good to register with other websites such as http://www.auctionzip.com/ and http://www.nationalauctionlist.com/.

Now that you know where to look and you have found property that you like, it is time to find out about the terms and conditions of sale and conduct your inspection.  Usually, the property is open for inspection only at specific times.  If you miss the inspection period, you might not be able to get inside before bidding.  Some typical terms of sale will likely include that you are buying the property AS-IS, your deposit will be non-refundable, the purchase is 100% non-contingent, you may be required to pay all closing costs including title insurance and closing will be within 30 days, sometimes less.  Typically, terms and conditions are posted to the auctioneers website well in advance of the sale and are always provided when you register at the auction.

Brokers planning to represent a buyer at auction should also make themselves familiar with the terms related to brokers as they are quite different from a general brokerage situation.  It is typical for auctioneers to require the broker to register the buyer with the auctioneer at least one day before the auction and also attend the auction with the prospect.  Additionally, the buyer co-op is not always 3%.  Lastly, not all auctioneers will allow a licensed agent to receive a commission if they are also the buyer.  It should also be noted that not all real estate auctioneers are Realtors, so you can't always count on MLS.

If you have gotten past inspecting the property, understanding the terms and want to bid at the auction there are several options.  The most common is attending the sale in person, but bidding live, online, is becoming more popular.  When you arrive at the auction site you will usually be required to complete a registration form that outlines the terms of sale and requires you to acknowledge them with your signature.  Sometimes, if a deposit is required in the form of cash or certified funds, the auctioneer will request that you present these funds for verification as part of registration.  Following registration, the auction will begin, the auctioneer will solicit bids and ultimately the high bidder will be determined.  Right there, on the spot, the high bidder and the auctioneer will complete the purchase contract and the high bidder will remit the deposit funds.  In some cases, the seller has already signed the contract, yet most times the auctioneer will need to acquire the sellers signature and then fax or mail you a fully engaged agreement.

Following receipt of the sellers signature, the next thing the auctioneer will do is send the completed contract to the sellers preferred closing agent who has already conducted a title search and is prepared to close extremely quickly.   Since the title work has already been completed pre-auction, closing can occur even the same day, however some buyers do take the entire 30 days allowed under the contract.

Following the closing, you own a new property at a price just one bid higher than the rest of the crowd was willing to pay.  Congratulations.

Just booked and this is the first place it is posted.  AR and Localism readers will FIND OUT FIRST.  Next will be the folks on our email list. 

On May 23 at 1:07pm, Gryphon Realty & Auction, in conjunction with Rasmus Asset Advisors of Alexandria, Virginia, will sell A-Plus Family Bowl at Absloute Auction. 

This is a fully outfitted 24 lane bowling alley with kitchen, bar, party room and unfinished basement on 1.63 +/- acres.  Physical location is 2617 Mahoning Ave., Youngstown, OH 44509.

Brokers are welcome and co-op will be offered.  Online Bidding is also available if you can't make the live event.

See Gryphon's website at www.gryphonusa.com for details.  Preliminary information available now.  Details to follow.

Quick Online Tour

See you at the Auction !!!!

I had a great picture, but something is wrong with the picture thingy..... 

Here I go again !!  I need to ask for advice one more time.  Does the type of sign you place in front of a property really make a difference? 

I'm not talking about high end listings or even mid level listings.  I'm not even talking about listings that will attract a homeowner.

This is about what I call "investment grade".  These are also affectionately referred to as "Crack Houses" and, recently, started coming with a free toaster compliments of the listing agent.

Gryphon Real Estate Sign costs about $30.  If I only order a couple it is higher.  Something about custom color mixing, which reminds me that I need to go kick that "marketing expert" I hired a few years ago in the butt.

Metal Sign Frame costs $17.50.  Darned frame lady won't give me a discount no matter how many I buy.  Need to kick her in the butt too.  At least I didn't get talked into the darned custom sized signs !!!!!

Flyer Rider costs about $10.

So here is my dilemma.  I loose one frame/sign combo for every 5 listings.  In a given month that means between 2-3 losses x $57.50.  Couple that with damaged lox boxes, and I am up to about $200 in losses a month.  Lock boxes don't get stolen anymore since I now use ones that have a special lock on the shackle.  People do continue to try to break into the lockboxes to get the key, though.

Before you burn out your brain wondering about why am I loosing so many signs, I will tell you.  CRACKHEADS STEAL THEM FOR THE METAL IN THE FRAMES.

So here are my options:

Bolt the signs to the houses. This really doesn't work that well as vandals rip them down for fun or spray paint over them.  Damn Crackheads.  Damn Gangbangers.

No sign.  This means no sign calls though.  Not all that big of a deal considering the quality of most sign calls here.

 "What you a rentin it fur?'  I'm not, its For Sale.  Can I move in without a deposit?  I told you it is not for rent.  Ok, I'll buy it.  Do you have any money?  No.  --- Needless to say I am not going to drop everything, run right out and show the place to this guy !!

Side Question - Is a For Sale Sign in the yard like a Crackhead beacon that screams "nobody lives here so come steal the copper pipe, furnace parts and appliances" ?

Which Way Did It Go?  It's in the scrapyard or on its way there.  This brings up another question.  How many sign frames does it take to buy a rock of crack?

So here is my brainchild idea.

Crappy coroplast "we buy houses" type signs.  $3 each + $.50 for the wood stake.

So agents - I put it to you.  Are you going to show the property with the crappy sign in front?  Does the crappy sign send a crappy message?  Does the sign matter at all in this type of property?

Buyers - Please jump in here.  Is it the sign in the yard or the boards on the windows that are getting you to call?  Inquiring minds want to know !!

Lastly, how do you keep the thieves from breaking in?  I have tried to make the house smell like dog crap inside, but that didn't work either.

Sign question was actually serious.

Ladies and Gentlemen,

There is another first in my life today.  The third party loan servicers are looking to auctions to sell REO property for the lenders they represent.

This afternoon I received a call from a very nice man in Orlando who received an email from the president of his company.  The president received an email from someone else who had received an email from me about my upcoming REO auction of homes in Columbus OH.

Let's call my new friend Bill.  So Bill asked a lot of great questions and wanted me to send him information on how our company can help him sell real estate that is not moving through traditional means.  Of course I did.  Not a bad package if I do say so myself.

The thing that I find so interesting is that the servicers have not been very receptive to auction marketing in the past.  I have been doing this for 11 ++ years and this is the first call from a servicer that I have ever received.

I am looking forward to working with Bill in the future and hope that we are able to help him.  General brokerage or auction.  The point is that the lenders are looking at different ways to do it.

Next first.  One of my banks told me today to plan on an auction every month for the next 4-6 months.  "Plan them Rich" they said.  "We have the property."

It looks like we may be increasing our auction vs. brokerage percentages this year.  I love it when I am right.  Hey Melissa !!!!  Look, I predicted it !!!!!

Oh, and the email thing works !!!!!!!!!!!!!!!

I was recently interviewed by Matt Carter from Inman concerning bank owned sales and short sales.  He contacted me after reading my blog on A/R.  This is pretty cool.  I have inserted the links if you want to read.

http://www.inman.com/Member/specialreports/0404nmit07/story.aspx?ID=62738

http://www.inman.com/Member/specialreports/0404nmit07/story.aspx?ID=62740

They have linked to my blog and my website in the articles. 

Great end to the day.

R