Private Auction - Selling a new Method.
Posted by Super Admin on Tuesday, September 14th, 2010 at 11:35am.
Fourteen Years ago Mark Faulkner of Faulkner Real Estate in Ulysses, Kansas was approached with a rather unique opportunity. Rob Oglevie of Grant County Bank Trust department called Faulkner with approximately 3,000 acres of land in four counties and two states to sell for the Goldie Sullivan Estate. Normally Mark, a licensed Broker and auctioneer, would sell large tracts of land by auction in order to attract attention and obtain the highest sales price in a timely manner. This sale however presented logistical challenges and Mark debated over where to conduct the auction and whether or not he needed to hold more than one auction. In the end he developed a sales system that would offer the benefits of an auction with the control of a private treaty sale. This one sale, and sales method, became the catalyst that would send his company to a new level and separate them from the competition.
The Sullivan sale went smoothly and all of the land was sold using Mark’s new “Private Auction” sales method. Since that time the “Private Auction” has grown in success and numbers. As of September 2010 Faulkner Real Estate has completed “Private Auctions” for over twenty-six Sellers in nine counties and three states. So why has this method proven so successful and how do they do it?
“Its like an auction, only over the phone.” states Faulkner. The “Private Auction” is a method of selling in which prospective buyers are informed of the selling guidelines and date at which bidding will not end prior to. Bids are taken by phone with each active bidder being given the opportunity to make additional bids until bidding is closed (one bidder remains). Bidders receive a call back notifying them of the current bid when a higher bid is received. During the auction process bidder's names are confidential; however the current bid is public information. A "Private Auction" may be marketed as either "absolute" or "subject to owner confirmation".
There are many advantages to the "Private Auction" method over a private treaty, public auction or even a sealed bid sale. For one, the bidders can bid from anywhere. Mark has stories of bidders traveling the east coast and Martha’s Vineyard while bidding on farm ground in western Kansas. One bidder traveling through from Iowa saw one of their big custom signs and called out of curiosity. He ended up buying his first piece of land outside of his home state. Also bidders have time to study the property, bid, study more and bid again. Often at a one-day sale bidders are forced out of their comfort zone or not able to bid to their full potential because they just don’t have time to crunch numbers or talk to their banker, or as Mark says, “talk to their wife.” This flexibility allows more buyers more opportunities to bid, and achieve their highest bidding level.
Many people think Faulkner Real Estate is conducting an online auction like E-bay which offer many of the same flexibility advantages, however they lack one key ingredient - personal selling. Mark’s son Chris Faulkner, the companies marketing manager and an Associate Broker explains that “often a property would not reach the sales price it does if it was not for a well-trained agent encouraging and assisting bidders during the sale.” So is the “Private Auction just for land? Chris goes on to state “whether you're selling a 2,000 acre farm on the plains or a strip center in the city, the “Private Auction” method will work for you.” After 14 years of completing “Private Auctions” the Faulkner team has had time to hone their sales method and are quick to answer any of the standard objections. Here are a few of the questions they receive, and their answers:
· Can I bid at a Private Auction?
o Of course! Like a public auction anyone interested in bidding may. Bidders should be prepared to close within 30 days of the contract of the property and deposit 10% earnest money in most cases. Pretty standard stuff.
· Do I know who is bidding ?
o Bidders are not disclosed until the bidding is closed and contracts are signed. Each bid and bidder is recorded in a log and can be provided after the contracts are inked.
· How do I know you’re not bidding?
o Like a public auction, you don’t always know who is bidding. However you can check the bid sheets at the end of the auction. Also, we would lose credibility quickly if we were to pull bids “from the air” whether at a public or private auction.
· When does the auction end?
o The auction could end at any time after the posted date that bidding will not end prior to. Our bid by date is always on a Tuesday. We leave the auction open all day Tuesday, but come Wednesday morning the auction will end once everyone is done bidding and a winner is acknowledged. Often, like most auctions, bids come late in the process and it is not unlikely for an auction to run into Thursday or Friday.
Using this sales method, Sellers benefit from maximum exposure to the buyer pool, unlimited price potential; flexibility for buyers allowing for higher bidding, and owner confirmation offering control for the Seller. Also, the uniqueness of the “Private Auction” sales methods generates the "buzz" necessary to draw greater interest and more active, and competitive bidding. Bidders may also engage in active bidding from anywhere by phone!
Additionally, the private aspect of the “Private Auction” allows more players to take a part in the process. Often at a one-day public auction bidders are influenced by the competition. However with the “Private Auction” they can feel comfortable bidding alongside anyone and have time to prepare for bidding to their maximum potential. Chris shares the example of a tenant bidding against their landlord. Often times the tenant may not be the winning bidder, but they risk upsetting their landlord and possibly loosing their future lease ground by upsetting them.
The Faulkner team is currently marketing property in Kansas, Oklahoma and Colorado. They work with large and small sales and enjoy the challenges and opportunity each new property provides. When it comes time to sell your property make sure you take the time to study the market and consider trying a new way of marketing your real estate.