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Congratulations to Justin Wilcox at Bothell Countdown for selling his beautiful Washington home after launching a truly creative FSBO marketing campaign!

From the site at BothellCountdown.com:

The idea is simple and starts as soon as you decide a fair price for the house. If you think the current price is too high, wait a week and I’ll lower it by as much as $10,000. Each week, I’ll continue to lower the price until you, or someone else, thinks it’s fair and submit an offer.

Well, after starting on May 28th, at an initial asking price of $500,000, he proceeded to honor his end of the bargain and faithfully lowered the price each week until finally, on August 30th, he received a contract. On October 16, Justin wrote that after some additional negotiations they had closed with a final closing price of $409,500.

Really, as unusual as this appears to be, the concept is ancient. Technically speaking, this is called a Dutch Auction, with the distinguishing characteristic being that the auctioneer sets an initially offer price and keeps dropping the price until…….BOOM!, a bidder snaps it up. Regardless, it’s one more example of how when properly done, auctions really do set the fair market value for real estate.

If all real estate were sold this way, we would avoid another overvalued housing market like the one created by the mortgage industry over the last decade that’s led to our current economic crisis.

If you’re a FSBO looking for a newsworthy way to sell your house, consider emulating the Bothell Countdown. Incidentally, he offered a cooperating commission of 3% to a broker who brought a buyer.

This is another excellent example of outside-the-box thinking that gets real estate sold!

Did you ever notice how one innovates while others emulate? What I mean is that if one entrepreneur, company or artist creates something new, they will find many followers right on their heals. This applies to large core industries like automobiles and real estate as well.

I’ve often thought that if people would look outside their own industry for inspiration they could distinguish themselves as leaders - as innovators within their industry, without having to actually create new methods from scratch.

What the Car Business Could Learn from Real Estate Professionals

For example, if auto retailers would look at what real estate marketing pros are doing, and then adapt some of their successful ideas for themselves, they could be ahead of the curve, instead of just copying what other successful auto dealers are already doing. (Did you ever notice how one car dealer will launch a series of annoying commercials only to see other dealers airing similarly annoying commercials a month or two later?)

If car dealers would treat their sales staff as sales professionals - as agents of the dealership - and give them the freedom to market their cars the way a real estate agent can freely market client’s properties, while giving them the tools to do it, they would see serious results.

An example here would be if individual salesmen would use a listing syndication service like Postlets, vFlyer or ClassifiedFlyerAds, and then post individual vehicles on the prime online marketplaces in their area, they would be more effective at finding serious prospects than just waiting on the lot for the next “up” to appear. As a bonus, they would be compiling a prospect list that they would own instead of simply managing leads belonging to the dealership.

The dealer would benefit from a having a legion of sales agents pushing their brand name out in a way that would increase exposure without requiring any out-of-pocket investment from ownership. It’s a win-win approach that can work, but requires thinking about the role of salesmen differently.

Ask any sales manager and they will tell you that most salesmen are relatively lazy and will not take the initiative necessary to successfully implement an approach like this. Ask any salesman and he will tell you that most sales managers micromanage don’t want salesmen to have any freedom to sell “their way” and that ownership is too greedy to let them own their leads. These are big hurdles for an industry that is still doing business in the 20th century.

What a Real Estate Agent can Learn from the Car Business

However, from the perspective of a real estate professional, there is much value in observing how the car business traditionally works - not so much from a marketing standpoint, but rather from a sales standpoint. If real estate pros actually learned how to sell, their effectiveness would increase significantly, and many of the headaches they often find themselves encountering later on in a deal wouldn’t crop up as often. What I mean by this is that real estate people are usually not sales people.

They may be people persons, customer service pros, agents or advocates for their clients……but they usually aren’t sales people.

The thing that distinguishes a great salesperson is the way they “qualify” their prospects and then archive that information for when the time comes to “close” the deal. I’m not talking about closing the real estate transaction, I’m talking about a sales “close” where you get the customer to commit to purchasing.

Unfortunately, many real estate agents waste gas, paper and time chasing properties for clients who aren’t really buyers. Had they been qualified properly the agent could have saved themselves a lot of grief, or been able to work on more productive business. In a listing presentation failing to qualify a seller means you have failed to determine how serious they are about selling. If you’re seller isn’t serious about selling, they won’t - despite your efforts.

I don’t agree with the philosophy many Realtors have that the secret to success is having as many active listings as possible. If you have the courage to be selective about what you list, and even turn down a potential listing, you will ultimately do far better, because you will come to be known as someone who actually gets their listings sold. Especially in times like these!

Furthermore, you can refer the listings you don’t want to other agents and still benefit if they do sell. But you won’t have the headaches to deal with along the way! Most agents will disagree with this approach, but there it is! The old Pareto principle is at work once again since only 20% of the agents a doing 80% of the business.

The key to this method of listing properties is contingent upon developing good sales skills, and potentially emulating some of the good techniques from the car business. Sadly, most agents who are struggling are waiting for their broker to tell them what to do, or provide them with the latest and greatest technology tools to find buyers or listings, while most car salesmen are standing out in front of their car dealership wondering if they’re going to hit their “quota” for the month and wishing that management would “advertise better”, “get better inventory”, “increase commissions”, or some other lame excuse.

The bottom line:

History proves time and time again that nobody ever achieves great success by following others. Sure we can learn from others successes and failures, but our own success is contingent upon our own innovation. Therefore, be an innovator, not an emulator!

This article continues the series demonstrating to sellers, real estate professionals and auctioneers creative ways to use technology to market real estate effectively. For the most part this post is an excerpt originally included in my soon to be rereleased eBook, “Real” 21st Century Real Estate Marketing.

Why Auction My Home?

As you may have noticed, real estate auctions are becoming more common every day. This trend actually began well before the current mortgage crisis, which is responsible for so many foreclosure auctions. Actually, real estate auction marketing has been growing in popularity as a viable alternative for a decade.

As a former member of the National Auctioneers Association, and Certified Real Estate Auctioneer, I’m going to discuss the differences between auction marketing and traditional real estate marketing.

Once I started selling on eBay in 1999, my focus gradually shifted from traditional auction marketing to online auction sales. After all, eBay is an auctioneer, albeit a virtual one.

In this post, I’ll discuss 10 reasons why traditional auction marketing can benefit a property seller.

1. It’s a Quick Sale - Since time is money, an auction affords property sellers the opportunity to dispose of property NOW, at today’s prices, rather than speculating about tomorrow. A lot of unforeseen circumstances can impact the value of a property positively and negatively over time, such as tax legislation, mortgage rates, unemployment, etc.

2. The Seller is in control of the sale - The seller sets the date and time of the sale, along with the terms and conditions. When a seller discloses up front any requirements pertaining to earnest money, date of closing, etc., they provide legitimate buyers with the necessary information they need to consummate a sale. The effectively rids oneself of the headaches associated with insincere buyers, contingency laden offers and other buyer slanted issues.

3. High Carrying Costs Are Avoided- As home sellers currently on the brink of foreclosure know, property that remains on the market for a long time can become a serious drain on the owner, while rapidly affecting an owners equity in a property. Holding costs like insurance, taxes, mortgage payments, maintenance, etc. can amount to hundreds or thousands of dollars each month.

4. Fair Market Value Can be Demonstrated…..FAST! - Instead of relying on an appraiser to determine the value of a property, the auction process demonstrates the true value of a given property on a given day. When an auctioneer effectively markets a real estate auction, the potential exists to realize a greater sales price than would have otherwise been possible using the traditional listing method.

5. Marketing Efforts are Isolated and Property Specific- When a property is marketed individually - over a compressed time frame - to a targeted audience, it is realistic to expect immediate results. This differs significantly from the traditional listing method, wherein, a property is often marketed with several other properties to a broad audience. Often these properties, though marketed together, have nothing in common and have individual features that appeal to very different buyers. This results in less penetration and is a waste of time and money.

6. Auctions Effectively FREEZE the Marketplace - Think about it….if you were looking at House A (which is listed with a Realtor for $100,000) and one block over, comparable House B will be going on the auction block soon, wouldn’t you wait to see what House B did at auction before presenting an offer on House A? Most local buyers will wait for two reasons: To determine fair market value for House A, and to possibly get a good deal on House B if it presents itself at the auction.

7. Sunday! Sunday!!! SUNDAY!!!! - Think about the monster truck event commercials. They do a great job of creating a sense of urgency to come out for the show which happens ONE DAY ONLY! This kind of marketing applies to your real estate auction too! You’re only going to have the auction on one day. If somebody comes the next day, they will be too late. This kind of urgency creates excitement which often translates into more bidding activity and higher prices.

8. Buyers are Pre-Qualified and Come Prepared to Buy - Most real estate auctions stipulate that by bidding, a bidder acknowledges that they have performed all due diligence necessary to close on the real estate. Additionally, most auctioneers require bidders to present certified funds to bid or at least upon winning the auction. This process weeds out flaky bidders pretty well. Lenders generally have no problem lending on auction properties, as long as a buyer is pre-approved. This results in a higher quality buyer than is commonly seen in the traditional listing method of selling real estate.

9. Commissions Can Be Paid by the Buyer - The beauty of the auction method is the ability to utilize what is called a Buyer’s Premium for the purpose of paying commissions. This is very motivating when compared to paying the standard 6%-7% brokers regularly command around the country. It also allows a seller to be more open minded when the final bid comes in, knowing that no other fees need be paid.

10. If it’s good enough for Van Gogh, it’s Good Enough for Me! - (Never mind the fact that Van Gogh was on the neurotic side.) It seems like every week you hear accounts of some collectible car, painting, musical instrument, or historic document bringing millions of dollars at auction. This is no fluke. Only the auction method of marketing can bring all the fundamental ingredients together to ensure these record prices. These same elements exist in your real estate auction event to make it a success:

• Uniqueness - There’s only one of your property

• Urgency - Your property is selling one day and one day only. You snooze you lose!

• Excitement - In the heat of the moment, bidders sometimes go above their “top price”. What a nice problem to have as a seller!

If you’d like to try to auction your property, of give your clients an auction marketing alternative, you have several options.

1. Go to your state auctioneers association website to find a qualified real estate auctioneer. Or, better yet, go to the National Auctioneers Association website and look for auctioneers that have either the AARE (Accredited Auctioneer Real Estate) or CREA (Certified Real Estate Auctioneer) designation, which demonstrates that they specialize in real estate auctions.
2. Consider using an online auction service like 123sold.com, Bid4Homes.com or even eBay. If you do this, you really need to keep in mind how important it is to market your auction. In other words, remember that the auction method is just a method…..but you need bidders to make it work. It’s imperative that you get bidders to you auction to get some activity happening.
3. If you’re a broker or agent, talk to your franchisor to find out if they have any in-house auctioneers they can refer you to. United Country Real Estate, has recently launched it’s own auction division recognizing the growth in this market segment. Others are following suit, and yours may be one of them. Also, don’t try to do it yourself. You’re better off referring the listing to an auctioneer for the referral fee, than to sabotage your client’s sale.

Auctions require a lot of time and preparation to pull off effectively, but can be very rewarding for all parties involved. Stay tuned for Part 2, when I discuss the negatives of real estate auction marketing and get into the components that lead to a successful sale instead of a miserable failure.