Land Auctions Need to Get a Lot Better in Order to Help Us Get Out of the Recession
|The importance of land auctions can not be more important than they are right now to the real estate market in general and more specifically to the recovery of the US economy. Since investment banks and the federal government can’t determine the ‘true bottom’ of what land is worth, than significant, well orchestrated land auctions over the next several months can yield a benchmark indicator based on consistent sales results of true valuation. From there, economist can prepare their charts and can reasonably predict our climb out of the cellar and get going again. To do this, the auction process itself must become more credible and distinguished to earn the right as a benchmark indicator. Here’s why, followed by what needs to be done:|
Typically, when the general public hears or sees anything about land auctions today, the word foreclosure is close behind. Television infomercials advertise bank owned properties available at low ball bids and portray previous owners as losers that left lenders holding the bag. Although often true, this perception of mistrust permeates throughout the industry and leaves the impression of a depressing atmosphere to buy and sell property.
The frightful image of an auction event set up in a mediocre hotel ballroom hosted by a cigar chopping auctioneer in suspenders, flanked by two fold up projection screens showing aerial photographs of one property after another must be supplanted with a dignified process that aspires to the highest level of what an auction can be.
Instead, auction houses should use property sales as an opportunity to celebrate. The notion that the seller somehow failed and that the auction house will manage the process of buyers expecting a feeding frenzy based on low bids must be dispelled. Simply portraying individual properties as "a once in a lifetime chance to buy" is not the answer either.
Get the results of the auction published in a national business magazine. Three or four portfolios of important properties owned by credible land development companies or owners make news versus a typical auction of many small individual properties that have been cobbled together.
Auction properties must be of high quality, significant scale and recognizable to the general public based on name and location. This is important in order to draw the attention of the purveyors of the US economy and make a meaningful statement of land value.
The auction event itself should be unique and adopt a new format. The process should be slowed down to a cozy, casual and comfortable pace, by eliminating pressure and allowing a chance to get a deeper understanding of the significance of the sale. Therefore, don’t rush it – savor it for as long as possible. Make the auction event business friendly and engage not only the bidders, but also invite curious real estate industry leaders to watch and even participate in the process with informed opinions and knowledge.
One example would be to change the graphic format altogether. Instead, allocate a portion of the auction marketing plan budget to engage land planners to draw simple site plans or sketches for each property to show a vision of what is reasonably and physically possible, supported by market conditions and may return the highest values. A picture paints a thousand words.
Another example would be to create an overall theme and brand for important auctions. Words like ‘Worldwide’ or ‘Florida’s Biggest’ miss the point. By engaging the services of graphic designers that specialize in branding and not relying on the auction house’s in house staff that is use to template, each auction becomes unique with properties sharing a common, positive identity. By adding a level of emotion and vision, it may be easier to attract other sellers and buyers to participate that share the same values.
Last, when auction houses use related professional services to change the marketing and event atmosphere two important results occur. First, the quality of the event itself will become relevant to the general public and allows the auction house focus on what they do best, which is the technical nuances of property disposition. Second, the circle of opportunity widens for the auction house in the future – more informed industry people become advocates of the auction process and talk about the success, more leads are generated and depending on the caliber of the professionals engaged, more investment banks and government regulators are interested in the results.
Online Land Planning, LLC