Wednesday, March 9, 2011

Are you getting the best price for your REO listings?

At the end of January, I attended a Hudson & Marshall "live" auction in St. Louis with a buyer client of mine.
In case you haven't seen a Hudson & Marshall auction, they do a very nice job. You can check out their upcoming auctions at their website Hudson and Marshall
The auction was for 57 homes around the St. Louis area. The 2 properties he was interested in were at the end of the list so we observed for about an hour before he got to bid.
It started out with about 125 people but when we got to his 2 properties only about 30 people were left. As a result, he ended up getting an 8-year old home in a very nice area at an amazing price. He'll easily make $40K+ when he resells it in 3 months (required holding time by Fannie Mae).
During the auction, I kept track of the winning bid amounts and after it ended I went to Hudson & Marshall's site to see which properties actually sold (Bank has to agree to winning bid). As it turned out, only 20 of the 57 sold (35%).
In reflecting on this experience and the process, I thought I'd share some ideas that would have made this auction more successful.
  1. Get the local listing agent involved - For whatever reason, the local listing agents in my area don't update the MLS listing with the auction information. Typically the REO agents have lots of properties so someone (i.e. Hudson & Marshall in this case) should be contacting them and making sure they update the MLS listing with the auction location, date & time.
  2. Incorporate online bidding - The technology exists to allow online bidding during these "live" events. There is no reason they couldn't have reached at least 100+ more people online in addition to the 125 in the room. That creates more competition and will end in higher winning bids.
  3. Reach out to buyers agents - Hudson & Marshall could put a marketing campaign together aimed at buyers' agents to bring their buyers. They are a fun way to buy and although the agent only gets a 2% commission, it's one of the easiest transactions I've ever done. Hudson & Marshall collected earnest money did all the contract work etc. I showed the house to my buyer, came to the auction and collected my check at closing. That's it!
  4. Local advertising - I don't know where Hudson & Marshall advertised for this event, I never saw it. I found out because I frequent their site looking for deals for my buyers. However, there are great inexpensive venues such as local real estate investor meetings. They could have easily doubled their on site attendance with an email to these groups in my area.
These are just a few ideas, but the bottom line is that there is a "HUGE" pool of buyers looking for these bank deals and there is big missed opportunity by not marketing them properly.

No comments: