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Thoughts on Business

Posted: 05/05/2014

Assessing the various auction types

There are a lot of ways to do an auction these days, and various auction companies tend to favor one or the other. This can be confusing to someone who wants to sell, whether it’s a single property or an entire portfolio.

To touch on the ultimate question of which is best, the answer is that it depends. Let’s walk through the major ones one by one and consider the various advantages and disadvantages. While all of the methods can be used for either real estate or other assets (such as personal property or machinery), I’m going to focus on real estate, because that’s our main business at John Dixon & Associates.

Before I describe the various approaches, let me say that regardless of the one you go with, you need to make sure that your auction company meets several criteria:

  • Up to the marketing challenge. Use one that will actively market your property and provide detailed information to bidders. No matter which format you use, it’s critical to remember that people buying real estate always need to see the property and do their “due diligence” research, even if they’re buying online. That means you need to use a company that will make provisions for inspections and provide the necessary documents. The property needs to be presented favorably with good photography, of course, and bidders need to be properly qualified to ensure the integrity of the process.
  • Properly equipped. Ensure that your company has the right tools for the format it is using. For example, if you’re doing an Internet-only auction, you’ll need to make sure the company has a proven, secure, user-friendly system for displaying your property, qualifying bidders, and taking bids. If it’s a live auction with simulcast, ensure that the audio, video and connectivity are reliable, and that the bid assistant communicating with the online bidders is qualified to handle any questions that come up, whether technical or related to the property.
  • Properly licensed. License requirements for auctioneers and real estate brokers vary from state to state. Make sure your company is properly licensed for your sale.

Now, let’s move on to some of the auctions available.

Live Auction
Before we move on to the various types of auctions involving the Internet, it’s important to note that even today, the live, public-outcry auction continues to be the heart and soul of the auction industry. This is where my roots are, and even when we make use of the Internet, the overwhelming majority of our sales involve a live auction, where people gather into a room and enter their bids while a bid caller conducts the sale. This is also a favorite for most of our bidders and is most assuredly the most fun!

Timed Internet Auction

When it comes to auctions using Internet technology, this is probably the format with which most people are familiar, because it bears similarities to the format on EBay. Your property is shown with full information, photos and other critical information, and bidders may enter their bids within a defined timetable. This timetable can be for weeks or just a few days, but lately, more auction companies seem to favor shorter time periods.

Here are some of the advantages of a Timed Internet Auction:

  • Bidders may choose any time to enter their bids within the allotted time frame.
  • A bidder may enter a maximum bid, with the system raising the bid up to that amount as needed.
  • Costs may be lower because the auctioneer may not incur the costs of a live auction.

A common concern, of course, is that many feel that the more relaxed time frame and the absence of a live auctioneer can reduce the urgency and ability to get the highest possible price.

Timed online followed by live auction

In this hybrid arrangement, an online Internet auction is conducted in the days leading up to the live auction, then the high bid serves as the opening bid for the live auction. Its use for real estate appears to be declining, but there are still a number of companies using it. It’s still very common in auctions of personal property. Since we rarely sell personal property, we’ve had few occasions to use it.

One reason often given for using this method is that it caters to both the bidder who prefers an online format and the one who prefers to participate in a live auction. Since most serious bidders are going to want to participate up to the very end, most would probably participate in the live event regardless of whether they had entered online bids, which would seem to make the online unnecessary. However, the online portion might provide a “security blanket” of bids going into the live event.

Live auction with simulcast

This is the format we use most commonly at John Dixon & Associates, because it allows bidders to be either live in the room or bidding via the Internet, depending on which they prefer. (Older bidders seem to prefer live bidding, while younger ones are more likely to bid online.) Either way, they compete head to head, at the same time, for the same properties.

It’s common for us to sell 30, 40 or even 50 percent of our properties in a major portfolio auction to online bidders. This can vary widely, of course, depending on the number, type and value of assets being sold.

Whatever you do, make sure it’s done well

There are more possibilities and twists, but these are the major ones. Ultimately, the most important thing is to do it well, and to work with a company that has a strong track record for professionalism, integrity and solid results.

We’ll be talking about these and other options in a webinar on May 8, from 3 to 4 p.m. Eastern. You can register here.

Meanwhile, we can have a dialogue without waiting until we can meet in real time, so I invite you to offer your comments on this post.

Posted: 07/23/2013

Auctioneers Hall of Fame induction

I had the great and unexpected honor of being named to the Auctioneers Hall of Fame last week. In keeping with National Auctioneers Hall of Fame tradition, I was kept in the dark, and didn’t realize I was being inducted until my associate Joe Tarpley — one of our agents at John Dixon & Associates — began summarizing highlights of my career, which began in 1976.

Only 140 members have been inducted into the Hall of Fame, so it’s humbling to be part of such an esteemed group. The Hall of Fame is nominally a recognition for lifetime achievement, but in truth, the people who deserve credit for this are the associates who have brought such energy, creativity and hard work to the business, as well as to the family members who have been so supportive.  

Posted: 10/22/2012

North Georgia auction demonstrates growing strength in real estate

I’ve been involved in lots of successful auctions in my time, but the three-day auction we conducted last week (described in the press release below) was special by any standard. The turnout was outstanding, and the seller was pleased with the results.

It also reinforced my view that the real estate market is bouncing back, perhaps more quickly and strongly than people realize. We had a lot of perceptive bidders who understood that the best time to buy is at a low point in the cycle. But they could also sense that the bargains they’ve seen for the last couple of years won’t continue indefinitely, and they wanted to build their portfolios while they can.

Smart bidders!

John

Hundreds of bidders turn out for $8 million auction of bank-owned properties

GAINESVILLE, Ga. (Oct. 22, 2012) — Bidders showed up in Gainesville by the hundreds last week for a three-day auction of approximately 175 properties, including office buildings, land, restaurants, homes and home building sites, among others.

The result was a combined total exceeding $8 million, according to John Dixon, president of John Dixon & Associates, which partnered with the Metro Brokers Bank Asset Team for the auction for Community Bank & Trust.

“We expected a strong turnout because of the variety and quality of the properties we were selling, but this was frankly a stronger turnout than even our optimistic estimates. It was three days of pure excitement,” said Dixon.

Ronald Gailey, assistant vice president-special assets for the bank, said he was pleased with the outcome. “We achieved our goals and then some. The folks at John Dixon and Metro Brokers Bank Asset Team did an excellent job. Crowds were great, and bidding was vigorous across the board,” he said.

Over the three days, the auction drew approximately 550 bidders — 250 who jammed into the room for live bidding and another 300 who joined the auction via Internet simulcast and cast their bids remotely. And those numbers do not include those who attended on more than one day, Dixon said. “Many came all three days, but are only counted as one bidder. We had standing room only crowds all three days.”

 On Tuesday, a group of properties in the northeastern corner of the state sold for approximately $3 million. On Wednesday, properties spread out over north Georgia sold for approximately $2 million, and on Thursday, properties stretching from Rome to Augusta sold for another $3 million.

John Dixon & Associates, based in Marietta, Ga., is a leading auctioneer of bank-owned properties throughout the United States. Individuals seeking additional information may contact the firm at 770-425-1141 or visit www.johndixon.com.