Asset Management & Recovery: June 2007

To some, this post might sound like me just beating a dead horse.  I've got to tell you though, the ways real estate professionals market property for sale is changing.  Today there are websites, email, media relations and TV.  You guessed it.  I am also going to spout off about real estate auctions.  This afternoon is another first as our first ever ONLINE ONLY property auction kicks off due to client demand.

Back to the story.....

Yesterday I received an interesting call.  It was from a Top Producer here in Columbus. We have been talking on and off for a few weeks about working together to offer higher end properties at auction.  He wants to be able to offer his clients all of the options available to them.

Yesterdays call was even more interesting though.  We were not talking about his clients properties.  We were talking about his.  His house.  Nice area.  Desirable.

We talked about timing of the auction, specific issues such as 4^th of July Holiday.  We talked about specialty ads in publications targeting executives.  We discussed TV and Press Relations.  We discussed (the evil) email.

I am supposed to meet with him at the property this afternoon to discuss things more in depth.  He is really serious.

I'm not saying that auctions are right for every situation or every property.  That would be a stretch.  They can be good for a lot of properties and a lot of situations however.

If I have not yet convinced you to investigate auctions as an option for selling property, I am going to keep trying.  I would encourage you to reach out to a real estate auctioneer in your area for details.  You can find them here on Active Rain and Localism or you can go to http://www.auctioneers.org/, the website for the National Auctioneers Association.

I leave you with this thought.  Over 80% of the properties that I have offered at auction have sold.  If they didn't, it was because the seller could not afford to take market rate for the property.  Over 98% of the properties that end up "In Contract" close.  95% of the properties that close, do so without timeline extensions.

All of us have "former lives".  For me it was retail liquidation.  Boring !!!

Before my wife and business partner, Melissa, decided to put up with me at work, she worked at the White House in the Clinton Administration for about 7 years.  Her office was actually in the West Wing.  Now, when the former President or Senator Clinton come to Columbus, Melissa is involved in staffing the events that they are in town to attend.  This is my attempt to bait her into telling all of you about her day and to post pictures to Localism. 

Today, Melissa was with President Clinton on the 50 yard line at the OSU Graduation.  See her blog for the story. She doesn't blog much, but her life is a lot cooler than mine.  

For Immediate Release

Online Only Auctions of Local Properties Begin

From The Comfort of Home or Office, Bid on What You Want From Where You Want

Columbus, OH  -  What many call the "eBay Model" of selling has hit the local real estate market in Central Ohio.  It's a little different though, according to Richard Kruse, president and lead auctioneer for Gryphon USA, Ltd.

Gryphon is utilizing not only traditional means, but also cutting edge techniques to sell items for their clients.  Currently ten (10) single-family properties and one (1) three-unit multi-family property are up for bids, online only, including:  833 Fairwood Ave, 76 Rodgers Ave., 2431 Vendome Dr., 1408 S. Ohio Ave., 1439 Cordell Ave., 772 Northview Ave., 815 Heyl Ave., 565 Bulen Ave., 2287 Jermain Dr., 2411 Lindale Ave and 53-55 Belvidere Ave.

The online only auction will begin to accept bids on June 13, 2007 and will end on June 27, 2007.   Log on to http://www.gryphonusa.com/ for registration and bidding.   

"We have realized that not everyone wants to come to a live auction event.  Many enjoy bidding from the comfort of their home or office and many are outside of the Columbus Metro Area, so we have created a model to make buying and selling easier." noted Kruse. "We are the first in our area to provide some type of online bidding option for all of our real estate auctions.  The buyers like it and our sellers are demanding it."

Kruse said the demand for additional online options is not surprising as buyers are typically looking online to find property and then calling the listing agent directly for more information.  Buyer agent participation, says Kruse, is encouraged however close to 80% of auction bidders are representing themselves.

Kruse said that all of their auction properties may be previewed in advance of the auction. For appointments, call Showing Service at 614-255-5588. For more information on this or other auctions, contact Rich Kruse at 877-5-GRYPHON or visit http://www.gryphonusa.com/.

About Gryphon

Columbus, Ohio based Gryphon USA, Ltd. and its subsidiary companies focus on the wind down and liquidation of single assets through and including entire companies.  The company maintains a real estate brokerage practice, auction group, property management division and appraisal division. Co-founder Richard Kruse regularly holds engagements as court appointed receiver.

Contact Information:

Richard Kruse

Gryphon USA, Ltd.

9387 S. Old State Rd.
Lewis Center, OH 43035
email: rfk@gryphonusa.com

Online: www.gryphonusa.com
614-885-0020 tel
614-573-6344 fax

I receive offers every day that are well below the asking price, have super silly terms and super long financing contingencies.  To a certain extent, I can appreciate the effort although it wears on me a bit.

Today I countered an offer that contained financing contingencies, appraisal contingencies and no deposit.

We countered that my office would hold a modest $500 deposit.  The financing and appraisal contingency would be waived within 5 days, as would the inspection contingency.

The purchase offer is for $40,000 on an asking price of $57,000.  The asking price is below market.

The buyers agent went nuts.  How can we possibly get past an appraisal in 5 days?

Well, Goober.  I hope your client would know that they can get financed for this lowball offer in advance of trying to waste my time and yours and that you would know the property is well worth the asking price, so the much lower counter shouldn't be a problem for the appraiser.  Why are you afraid of loosing $500?  Can't your guy qualify?  Are you afraid that you mis-valued the property by over 30% the wrong way?

No?  Ok.  Sign.

In the State of Ohio if you write a personal or business check over $1,000 but below $2500 that you know is (a) not going to go through due to insufficient funds or (b) have written knowing that following receipt of goods or services you are going to cancel the check through your bank, you may be guilty of a fraud felony in the 5^th degree.  The recipient of the check may be able to recover up to 3 times the face value of the check, plus all court costs, attorney fees and bank fees.  Oh, and then there are the criminal penalties.

A word of advice, don't tell your employees "just pay them, we will cancel the check later" and expect to get away with it. 

......In case you didn't know......

I read a recent blog (not the first here) about negotiating commissions and fee reductions.

I am the first to admit that I have reduced fees on the back end in the past to make a deal go through.  Might I suggest, dear readers, that (a) this is not the norm and (b) you had better have a good reason for asking, other than you need to make more money on the deal on your end.

Let's say, for the sake of argument, that an agents fee might be equal to approximately $10,000 at closing.  Percentages don't make a difference here.  Let's just use cash.

As a seller, you might think that this fee is a little high.  I will briefly point out that the agent does not get the entire $10,000.  Some goes to the broker, some to his assistant, some to marketing fees, some to board dues, some to the agent on the other side.  Just like any business owner, we have overhead.

Back to the conversation.  You, as the seller, want the agent to consider taking a lower fee.  Ok.  I get that.  You want a lower price.  Life is like that.  Guess what?  I want a higher price.  After overhead, the $10,000 ain't a great payday.

A lot of people ask me what my fee is.  I like to tell them that it is more than you want to be charged, but less than I want to charge you.  It always gets a smile if the person asking the question has EVER been in sales.

Back to the conversation again.  In the event that I or anyone else would consider taking a lower cash fee, there needs to be a reason.  There needs to be upside in the deal somewhere else.  The guy that is just going to cave at the question is going to lose you money somewhere else, trust me. 

So I ask you, Mr. Seller, why should I take a reduced fee?  I'm willing to discuss it, but what else is in it for me?  What do you have to trade? 

• Can I use your timeshare at no cost?  You might pay $250 for the week, but it would cost me $1500 for a hotel room.
• My wife would love a mink coat and the wife you just divorced seems to have left hers in YOUR closet.
• Do you ever drive the dusty 1972 Cutlass in your garage?  I have been looking for one to fix up.
• How about selling me a hot tub at your dealers cost?  You are not out any money, you just don't get a profit.  We both win.
• Is that Mr. XYZ in that picture with you?  I have been trying to get a meeting with him for 2 years.

Now I am not saying that I, or anyone else, are definitely willing to barter for commissions or even partial commissions.  My point is that there needs to be some advantage for both sides if a fee reduction is to be considered.  Agents are taught never to negotiate fees and some might even act insulted.  I think that there are more than 27 ways to skin a cat. 

That said, here is my personal disclosure.  I guarantee you that I will end up with more "value" in the "stuff" than the cash value of the decrease.  Call it New Math.

Now, I need more listings, a hot tub, an alignment on my car, a vacation, the guts of my grill rebuilt, some landscaping, my office cleaned and a bunch of other things.  Who wants to negotiate fees?

I have posted on this before, but it might be time for an update.  This is serious folks, so if you were looking for Landlord Man or Evil Rich then read no further.

Over the past 2 weeks I have been involved with 4 offers that were so outrageous they did not even get a response.  Before you jump on me, I am the seller on one and the client was most definitely consulted on the other 3.

The reason I bring this up is that many agents (and buyers) are under the impression that any offer presented MUST receive a response.

I offer this point for consideration.  There are, on may purchase offers, a paragraph that states "offer open for acceptance until____________".  Technically speaking, the offer is no longer valid after this date and, by extension, has self destructed.

The seller does not need to respond.

Might it be considered bad form not to respond?  Maybe.  Might it be a great negotiating tool?  Sometimes.

Also consider this.  Have you ever been in a situation where someone asks if you will take X and you say "No".  The next question is "will you take Y"?  You don't need to counter and bid against yourself.  Many buyers will do it for you.

There is also a sales theory that basically outlines that the person who blinks first will always loose.

I'm not saying that these negotiation tools are good for every situation, nor am I saying that they should be used by everyone.

What I am saying is that if you present an offer thinking that you are going to test the water and get a counter, you might just be kidding yourself.  You might get a NO response or you might not get anything.  This is the risk that you may be taking by playing "silly buyer games" with purchase offers.