By Marcie Geffner & Paula Hess

How to Become an Auction Listing Agent

You are preparing for a listing presentation, in which the seller has solid equity in the property but needs to relocate quickly. He’s concerned that his home lies squarely in a market that is depreciating quickly. (You are too.)

This property and seller may be ideal candidates for a real estate auction, says Mike Hynes, regional sales director with Pacific Auction Exchange (PAX), a real estate auction franchise. And you may be a candidate to become an auction listing agent.

REALTORS® become auction listing agents, Hynes explains, when a real estate agent partners with a real estate auction company or firm. Hynes’ franchise is benefiting from an increase in the public’s awareness of auctions.

“Records are set at auctions,” states Randy Wells, president-elect of the National Auctioneers Association, at the 2007 NAR Realtor® Conference & Expo. According to Wells, auctions can “freeze” the market and guarantee a timely closing. Because auction property is sold as-is, there are no contingencies to trip up escrow. “The things that can bog down a standard transaction are eliminated with an auction,” agrees Hynes.

According to Hynes, his franchise typically spends 30 days marketing a property and 20 to 30 days in escrow. The seller picks from three marketing plans and pays a marketing fee of 1.25 to 1.5 percent of the selling price.

“We are not a retail auction company or a ballroom-style auction,” stresses Hynes. “We qualify sellers. Our sellers are not in foreclosure or short sales. We are ideal for sellers with 30 percent or more equity in their home. We are perfect for sellers who are aware that the market is depreciating 6 percent each month.” –P.H.

The National Auctioneers Association (www.auctioneers.org) has launched a multiple listing service designed specifically for real estate auctions: www.naarealestate auctions.com.

Auction What Ifs

* What if you have 12 qualified buyers with cashier’s checks in hand, but only one property for sale?

* What if you earned a referral fee for bringing that one qualified seller to the escrow table and those 11 would-be buyers (who lost the bidding war) became part of your farm?

* What if you did not have to market a property or hold an open house and could promise your seller to complete escrow in 60 days?

The Auction Process

* Agent presents the auction option to sellers as part of the listing presentation;

* Agent meets with an auctioneer or auction franchise; auctioneer will screen your seller (and the property) and determine if the seller and property are candidates for auction;

* Auctioneer meets with seller, preferably with referring agent in attendance;

* If the seller opts for the auction, agent signs a broker participation agreement;

* Seller chooses the marketing plan for property and pays these costs (typically 1.25 to 1.5 percent of selling price);

* Marketing typically lasts 30 days, during which the auction company holds several auction previews, the equivalent of an open house;

* Auction day; and

* A 20- to 30-day escrow period ensues.

* Note: Seller does not pay a commission; instead, the auction company pays the listing agent a referral fee for bringing a buyer or property to auction. This fee, says Mike Hynes, regional sales director with Pacific Auction Exchange, is “competitive,” typically between 2 percent and 3 percent of the selling price.

Brokerage Rolls Out Foreclosure Caravans

What’s a real estate agent to do when 24 percent of the single-family listings in his market are foreclosures, another 44 percent of listings are short sales, and the median price has declined more than 30 percent from peak? In the case of Pismo Beach-based The Keenan Carter Group, that’s when the tires hit the road. Bus tires.

In October 2007, this real estate group decided to hire a bus and create a series of “Foreclosure Tours.” The passenger list included investors, would-be buyers, press, and a lender to answer questions.

Initially, consumers were “a little cautious,” says broker Dick Keenan, but interest has increased steadily. The first tour had 12 passengers, the next one 23, the third had 16. The buses hold 41 passengers, and the fourth tour had 49 passengers signed up. “We didn’t know what to do with them … they want[ed] to follow the bus,” Keenan says. According to Keenan, passengers are driven to the “best deals” on the local MLS. The tours have resulted in three sales on properties ranging in price from $240,000 to $595,000 and two listed for-sale properties. At press time, Keenan reports the firm has completed its seventh tour, opting for a 25-passenger bus to keep the tours personal and more manageable.

The cost to passengers is $20, which includes an information packet, previous sales price for each home, price the bank paid, current asking price, and a spreadsheet with a series of mortgage payment scenarios, as well as an approximation of rent for prospective buyers.

Keenan, who has been an agent since 1985, recalled that foreclosure tours were used in 1991 by some of the state’s agents. He decided to try it. “This is definitely part of our lead generation tools,” says Keenan. –P.H.

www.CentralCoastForeclosureTours.com.

Is Your Business REO-Ready?

While no one is happy to hear sad stories about homeowners who’ve lost their home in foreclosure, the hard truth is that foreclosures can be an excellent business for real estate salespeople who have the expertise, cash flow, and professional demeanor to sell bank-owned properties.

The incidence of foreclosure has soared so quickly that many lenders are overwhelmed by the number of “real estate-owned” or “REO” properties they have on their books, according to Vicki Carpenter, director of training at Coldwell Banker ABR in Menifee.

“Banks have a very high inventory” of REOs and “the floodgates have just started to open,” Carpenter says.

Carpenter is in a prime position to know since she’s a 17-year real estate veteran who has turned contacts she made during the last housing downturn into a steady stream of REO listings. She currently receives “at least one and sometimes up to five” such listings per week from REO companies, she says. Market-rate commissions make REO listings a good—albeit far from easy—business for Carpenter and others who’ve mastered this specialization. –M.G.

• Integrated Asset Services: www.iasreo.com

• Premier Asset Services/Wells Fargo

            Bank: www.pasreo.com/pasreo/public/content.do?pageID=2000576

• REO.com: www.reo.com

• REO Trans: www.reotrans.com/index.cfm

• REO Network: www.reonetwork.com

• Universal REO: www.universalreo.com

• ActiveRain blog network REO

            Group: activerain.com/groups/reo

• REOMAC trade association: www.reomac.com.

Note: C.A.R. does not endorse any of the above companies or services provided by these companies.

REALTOR® Rescue Squad

REALTORS® who want to learn more about short sales might take a few tips from Doug Fowler, a manager at Coldwell Banker Brokers of the Valley in Napa.

A dozen sales agents in three of the firm’s four offices attended Fowler’s internal training sessions on short sales, and seven or eight of the participants later banded together in an informal group that aims to help homeowners explore alternatives to foreclosure.

“We trained pretty much everybody [in our offices],” Fowler recalls. “Some people yearned for more and wanted to have a support network and exchange of ideas, so that was the genesis of putting together what we called the ‘rescue squad.’”

The squad members have shared information about how to negotiate short-pays, present information to lenders, and find helpful contacts at loan companies, among other topics. They met weekly as a group for four months in 2007 and still share information among themselves to this day.

“When we get a call from a client asking for help, I will look to one of the members who have really focused on this problem,” Fowler says. “We have had hundreds of meetings with sellers who are going to be late on a payment, have been late on a payment, or are in foreclosure.”

The company hasn’t tracked how many transactions have closed as a result of the rescue squad’s efforts, but several agents have successfully counseled and assisted homeowners who faced very trying situations, according to Fowler. One agent negotiated a short sale for a homeowner who had a terminal illness, while another analyzed work-out options for a property owner who was overburdened by multiple mortgages.

“I give some credit to the seller,” Fowler says of the latter case, “but I also give a lot of credit to the agent, who spent an incredible amount of time and energy to follow up and put it all together.”

The rescue squad is intended to be more altruistic than profit-motivated; Fowler says the company has “a moral responsibility to reach out and help some folks who are really hurting.” –M.G.

• C.A.R.’s New Distressed Property Kit  (www.store.car.org/) includes appropriate C.A.R. forms needed when representing a buyer or seller with a distressed property. Also, includes tips and Q&A’s on short sales. 

• Clarus™ MarketMetrics (www.clarusresource.com/) is a Web-based tool that can generate a comprehensive set of market dynamics and pricing analysis reports that can be used to support a short sale package by giving lenders a better understanding of local market conditions.

• C.A.R.’s Comprehensive Guide on Short Sales (www.store.car.org/) offers information and guidelines for finding, processing, and successfully closing short sales.

• WinForms Today article about C.A.R. Short Sale Listing Addendum form, www.car.org/library/media/papers/pdf/August2007.pdf.

• California Real Estate magazine article, “Short Sale Basics,” www.car.org/index.php?id=Mzc2MDU=.

Marcie Geffner is a freelance real estate reporter in Los Angeles; Paula Hess is senior editor for California Real Estate magazine.