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Trying to negotiate with multiple prospects.
Many lenders may be surprised by the interest they receive after foreclosing on a property. After receiving numerous calls from prospects many make the mistake of taking the time to try and negotiate with each one. Each prospect knows the asset manager has foreclosed and needs to sell so they take advantage of the situation and usually make low offers. By going to auction and advertising the property you take the time and aggravation of negotiating away and you take the issue of foreclosure out of the picture. An auction creates the venue where buyers compete and drive the value up. In thirty days you will have your no-contingencies contract signed, without revision, and 10% non refundable earnest money deposit. Prospects don't want you to go to auction because they know they will end up paying more.
Lowering the listing price.
Brokers are trained to get listings and keep listings and it is typical for them to request list price reductions to try and move a property that is not selling. Unless the listed property is well out of market range, lowering sends the signal there is no interest and the seller is getting desperate. After a ninety day listing instead of lowering the list price start an auction program with SAGE. SAGE will flood the market with advertising creating interest and urgency for action. The auction will drive the price up on auction day, not down!
Listing too long.
When a property goes through the foreclosure process there is a cycle of interest from the market. Some interest comes prior to foreclosure by neighbors or others who have been interested in the property to try and buy prior to foreclosure. The second cycle is right after foreclosure as the market becomes more aware of the opportunity and the third is when the property is listed and a FOR SALE sign goes up. After the second or third week of being listed the level of interest fades. If a broker cannot deliver an acceptable contract after ninety days it is likely he has exhausted his contacts and he is relying on the sign and his website listing where prospects will have to search for your property. During this time the broker is asking you to lower the list price. Long listings are perceived as troubled properties. It is better to revive the market and start auction marketing after ninety days and let prospects drive the value up on auction day.
Not including an "Auction Cancel" clause in all listings.
It is a good idea to have a clause in any listing that gives you the right to cancel the listing and go to auction after ninety days. This will motivate the broker who knows he can loose the listing and it is necessary if your goals change and an accelerated marketing program is required for a definite sale and close date.
Not using Auctions for special use properties.
Properties that are designed around the function of a business are valued according to the revenue generated from the business. If one of these properties (hotel, c-store, gas station, car wash, etc.) closes it is not uncommon for half the value to be lost due to startup cost to re-open and develop a customer base again. Additionally, marketing for these properties is very easy and effective because it is so focused in capturing the market on auction day.
Not winterizing or turning water off.
How many times have you received a call from the police or fire department to let you know water was pouring out the front door of one of your properties so they turned the water off in the building? It is absolutely necessary to turn the water off (this does not include sprinkler systems). Be sure this is part of your check list when you take title at foreclosure. Water damage is very expensive and if not addressed it can lead to mold and destroy a property. This is part of SAGE's free property management services.
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