Why Auction
Why go to auction?
It’s a great question. The answer is simple: Auction means action! Buyers and sellers agree. Auctions are the quickest and most efficient methods of selling goods at market value. The timeless simplicity of bringing buyers and sellers together in a live event goes back 1000’s of years. The auction method of marketing allows buyers to attract sellers that are highly interested and highly qualified and allows them to compete for property.
Why go to auction with my real property?
For most Americans, real estate is the single biggest investment of their lives. When it comes time to sell, auctioning is one of the fastest and most efficient ways to sell real estate. Selling your property, home or investment property at auction takes the waiting out of selling! In today’s challenging real estate market buyers and sellers are increasingly finding auction marketing to be a viable alternative to traditional retail real estate transactions.
Why go with 1st Quality Auction and Realty (A Division of Walton and Associates, Inc.)?
You can trust the professionals at Walton and Associates to make your real or personal property auction as effortless as possible. Walton and Associates auction professionals are highly trained and skilled and have a tremendous wealth of experience. Whether you’re buying or selling you can trust Walton and Associates to treat you fairly and honestly every time.
Auction FAQs (Frequently Asked Questions)
Q… What is the Auction Method of Marketing?Proper asset management is key to any individual or business. There will come a time when hard assets have to be converted to the liquid form of cash. The Auction Method of Marketing is perhaps the oldest and fastest method of converting hard assets into cash. It has been adopted and used by all Federal, State and Local Courts and Governments as the acceptable methodology of hard asset conversion.
Q… I don’t know much about auctions. Are they new and do they work?
Auctions are not new. The first written record dates back to Herodotus the Greek Historian, who first mentioned them in 400 BC. They are not only time proven, but are continuing to grow at a rapid rate. Yes, all world records for price are set at public auction. Please read on and find out more.
Q… I see more and more auctions. Why are they growing so rapidly?
That is correct. Auction sales in the United States (excluding government auctions) annual gross volume is $270.7 billion. This number represents a 5.3% increase over 2006 total of $257.2 billion which was up 7.1% from 2005. If these results were converted to GNP (Gross National Product - the output of a nation), it would rank in the top 10 countries GNP in the world (slightly ahead of Brazil’s GNP.
· Last year 30 million people attended auctions in the United States,
· Last year (2007) real estate at auction generated $58.4 Billion (within this segment, residential real estate auctions increased 5.3%)
· Other segments results are as follows: Auto Auctions $87.8 billion (32% of total live auction industry), Charity Auctions - $16.2 billion (an increase of 4.1%) (Both were 2007 results)
· The overall number of live auctions in 2007 increased by 4.2%
· THE SIMPLE ANSWER TO THE QUESTION IS: AUCTIONS ARE GROWING IN POPULARITY BECAUSE THEY WORK!
Q… When people select the auction route; what do they expect?
They expect to see a rapid way to convert their assets into cash for the highest fair market value in an organized, systematic fashion. They further anticipate a custom designed marketing and advertising program tailored to their unique situational needs. A marketing format that will result in the largest exposure of their assets to ready, willing and able buyers in an open and competitive market place, with a minimal amount of frustration, or personal time commitment.
Q… How does an auction work?
A properly managed auction consists of mutual goal agreement: a written detailed marketing plan based on specifically meeting each of those goals. The plan will include such aspects as: 1. A detailed advertising program based on time lines of agreed upon goals, 2. Proper preparation and management of the assets to not only secure them; but also, ensure that the appropriate purchasers are informed and have inspection access to them in the proper fashion to induce highest prices, 3. Proper conduct of the auction process, from start to finish, by a professional auction firm, 4. A seamless transfer of all details into a "turn key" operation requiring no more hassle on the part of either the seller or buyer. and, 5. Properly Bonded Final Accounting Procedures and Timely Payment to seller in accordance with the auction plan.
Q… Why should I select the alternative of The Auction Method of Marketing?
Auction is not only time proven but it is also time certain. You select and know when you will receive your funds. Auction creates a strong sense of urgency - why wait months for buyers to make up their minds. The seller sets the deadlines and forces the market to respond. Auction sets the seller apart from other competitive sellers. Auction Seller sets the terms - no haggling or negotiating - reduces frustration. Auction creates increased competition between & among buyers- why place yourself at the mercy of a single buyer who not only determines price: but may also demand unusual or stringent demands prior to actually closing the transaction.
Q… Why should I change my current situation?
It is a very well accepted axiom that "Time is Money" but coupled with what Edward Young said, "Procrastination is the thief of time" one can predict the outcome; loss of money. Often it is difficult to change directions and course, however, one thing is certain: the asset not sold carries with it costs to the seller. If the asset is idle not only does it occupy space, time and thoughts, but it also has carrying costs. This prevents the seller from future plans; not to mention the real cost of money which means that the owner is not free to invest in other areas.
Some other thoughts regarding change, "Even if you are on the right track and not moving ahead, eventually a train will get you," It is sheer lunacy to continue doing things the same tired old way and to expect different results," and Mark Twain said, "Why not go out on a limb. Isn’t that where the fruit is?" If your goal is to convert the asset to cash; then The Auction Method of Marketing is the best way to accomplish that objective.
Q… I am afraid that my assets will not attain highest price. What happens if a "disastrous auction" occurs: I could end up giving my assets away for pennies on the dollar?
In almost 30 yrs. of auction experience, we have not had this situation occur. That does not mean that we have always met the anticipated dollar goal (although many times we have exceeded the original expectation) but we have always achieved a reasonable proportional amount.
One of the most difficult things to anticipate is final selling price. We do know that anticipated appraisal price often varies between "Experts" in the field; often resulting in both negative and positive actual real life prices. It is "Apples and Oranges". The true value of the asset is determined when buyer states, "I will write a check for this amount" and seller says, " I will sell at that amount" until that occurs (which is what an auction does) any further discussion of value is merely academic.
Q… With The Auction Method of Marketing, I am afraid that I will lose control of the situation?
Actually, auctions do exactly the opposite. For the first time YOU THE SELLER are in control! The seller sets and controls the TIME - TERMS AND CONDITIONS.
TIME - You the seller, set the exact time of the sale! The Buyer is forced to meet your schedule. Why go through the long drawn out process of a standard
sale where the Buyer determines when they will buy?
TERMS & CONDITIONS - The seller sets all terms and conditions of the sale.All items are sold "AS IS, WHERE IS, IN IT’S PRESENT CONDITION
WITH ALL FAULTS AND BENEFITS" All sales are final! No returns! This also reduces any lingering liability and potential litigation. You also set the way moneys are to be paid and received. We, of course, are fully Licensed & Bonded by the State of Ohio. We also carry our own Multi-million dollar Liability Insurance which further lessens the effect of any potential litigation.
Q… Can I set a minimum price on my assets? or, Can I bid on my own assets?
Although this type of auction (a reserve auction) is possible, it is not recommended for the following reasons:
1. The amount of people that will bid on the asset is greatly reduced because the buyer does not perceive this approach as an auction. In the perspective of many buyers it is merely a "normal" transaction attempting to achieve unrealistic goals under the guise of an auction - the buyers will not attend this type of sale.
2. Who sets the value? It is either set by the seller who is not an expert in value, or by unfortunate business situations that demand an unrealistic result. As good as the Auction Method of Marketing may be it is not a "magic wand" that will rescue the seller at the last moment before a disaster, and finally,
3. What happens if the asset does not sell? Both the seller and potential buyers are frustrated (not to mention the auction firm), there are attendant advertising dollars to be paid, lost time, anticipation, etc. and what do we then do with the unsold stale asset?
Many sellers have already been doing a reserve auction and do not like the results. Actually, this type of approach should properly be termed a "reverse auction" not necessarily a reserve auction. The general scenarios are as follows:
1. The seller incorrectly sets the value on the asset. If the value is set too low then the asset is quickly sold, and the lingering doubt is always, "It sold so quickly, I wonder if I sold it too cheaply." Our firm has seen this happen many times where an offer is made close to the appraisal price and the client looks to us for the answer… should we take this offer or go to auction. It has happened where much to the delight of the seller that the asset sold at auction at a higher price. One of many examples that come to mind, is where auction results were actually $500,000.00 higher than pre-auction offers. If the pre offer had been taken, obviously the buyer and seller would have been happy but the $500,000.00 would have been "left on the table" due to poor value assessment.
2. More often than the undervaluing of the asset is the situation where the market value of the asset is incorrectly projected at too high a value. This approach results not only in time delays, loss of money to maintain, frustration by the seller and no offers of any type or size from potential buyers. The seller is only left with the "reverse auction" ploy of price reduction after price reduction until a buyer secured. When price reductions occur it negatively motivate potential buyers to wait and see "how low will they go:" meanwhile, nothing has happened to the asset except that it is stale on the market and potential buyer begin to think that something is wrong with it.
One point to remember is that if value is overvalued; then the seller now has a self devouring asset. Over time equity is reduced, lost or destroyed. Why not save all this time, loss of money, frustration, etc. by putting the asset up at public auction and letting the public determine the fair market value?
Q… What guarantees come with an auction?
With an experienced auction firm: 1. The auction will be properly marketed and advertised which will result in highest fair market value, 2. The asset will be sold to the largest audience of ready willing and able buyers and 3. That the seller will receive their cash in an expedient manner as agreed upon in the written plan and auction agreement.
Q… How soon can we do the auction? What is the timetable of events?
This answer varies depending on the type of asset, complexity and scope of the auction. If there are no unusual circumstances the minimal time needed following sign of agreement is 4-6 weeks to properly photograph, advertise, set up and execute the auction.
Q… Why can’t I do my own auction?
You certainly could, however, the advice of Abraham Lincoln fits this situation, "The lawyer who represent himself has a fool for a client." Your fees to the auction firm not only include their experience but also, their knowledge and expertise in securing top results!
Q… Do auctions work for all type of assets and situation?
No, frankly they do not. One example that comes to mind is the situation where a couple has purchased a new home three years ago with no money down and do not have any equity. They must obtain the new price amount on a used asset that is three years old.
Equally, important though, is that auctions will work on the liquidation of most hard assets into cash; rather than attempting to outline specific situations contact your auction firm and talk to them and mutually determine if this marketing method works for your situation.
Q… Will I have an advanced written marketing plan for the conversion of my assets?
We can only speak for our firm on this subject; with us, absolutely yes, there will be a mutually agreed upon, goal oriented task specific, custom written plan given to our clients.
Q… How much of my personal involvement will be required in this auction process?
Generally minimal; if you wish to have a more "hands on" involvement with the project just let the auction firm know what your wishes and extent of involvement are they will formulate the plan accordingly.
Q… What are the settlement accounting procedures?
The seller receives an itemized final settlement that indicates the assets prices, detailed and receipt supported itemization of all expenses agreed to in the plan, notification of purchaser/s, net amount due you (we normally pay with a bank cashier’s check) as agreed on prior to the sale.
Q… When will I finally get the cash for the conversion of my assets?
At final settlement; or in the case of real estate, at final closing.
Q... What are your commission rates?
These vary by project; however, they are always competitive. Due to this approach it is not our policy to quote rates until they are a part of the final written plan proposal.
Q… Will there be any problems in receiving funds? What about bad checks?
Part of our service to the seller is to keep this type of problem to a minimum. It is nothing for you to become concerned about and this is why you want to employ the professional experienced auction firm as your representative. In almost 30 yrs of auction experience, we have only had a few minor delays and to date have never been unable to get the seller their funds.
