Last week, in part 1 of this article, I gave an overview of the steps to conduct a round robin auction to sell an investment property (particularly beautifully rehabbed homes) quickly. In part 2, I will give you some specific advertising ideas and also answer a possible question/concern you may have: What happens if my highest bid is for less than I owe on the home?
Round Robin Auctions: Advertising Methods
A week prior to the auction, you have a few different advertising methods that you can and should focus on:
- Set up a quick free WordPress website specifically for your 2-Day Auction that provides the date of the auction and opening bid price, a couple photos of the home, a detailed written description of the home’s features, an FAQ about the auction process, your contact information, and an “About Us” and link to your company website if you have one. A quick word about photos…don’t provide too many! Just one or two nice photos that will draw people in. Make them come to your home to see the rest of your beauty!
- Post a free Craiglist classified ad each day – make sure you mention a few key points in your ad: Your starting bid price (that’s a huge draw because of how low the amount will be), the address of the home, the dates the auction, and a link to the WordPress site you put together. If you have an inexpensive local paper, you can do a small classified ad in there as well, but don’t expect it to generate a ton of interest. For a small cost, it can certainly be worth it though.
- Postcard mailing to 500-1000 people who live in single family homes surrounding the home. Use Click2Mail.com to print and mail the postcards to keep it simple. You can buy the mailing list from a source like ListSource.com or Melissa Data. Make sure to get this set up in plenty of time such that the postcards arrive to the homes 2-3 days before the auction. This is actually the most expensive item out of all the things you would do to advertise, but its great for getting the neighbor’s attention and having them be mouthpieces to people they know.
On the days of the auction, there are also a couple advertising methods that can be highly impactful.
- Bandit Signs work in great to get people interested. People are driving by quickly so it can only really give a few key points. Private Home Auction – TODAY!, starting bid price, the times of the auction, and an address. That’s it! Keep in mind your city ordinances when putting up bandit signs. For me personally, the city that I had my auction in does NOT tolerate bandit signs even on the weekends!
- Having people hold large directional signs that promoted the auction to those driving by was a big winner for us. We paid a few guys by the hour to stand out on the side of the road at the closest street with good traffic and probably a third of the people who came to the auction were a result of seeing those signs.
Finally, to cover yourself in an event that the bids simply aren’t high enough for you to break even or profit, its really important for you to understand (and share with your bidders) that you are not locked in to your bids and neither are the bidders. Have your attorney review the language, but you can say something like this in your auction FAQ:
Are my bids legally binding?
No, absolutely not. The most important thing to understand about your bid is that it is not binding. You can back out of your bid until you sign an actual contract. Equally important is that you understand bids can be cancelled by the Seller at any time without cause or reason as well. The contract will be signed on the Monday following the private auction.
There are several other ways of wording this, but you get the idea. The bids are essentially the equivalent of a verbal offer. It’s vitally important that you have the auction rules on a paper that everyone receives when they walk into your house and make sure they review it prior to writing down a bid. This way you have fully disclosed the rules and also provide potential bidders with an opportunity to ask you questions or choose not to bid if for some reason they don’t like the rules (which did happen with a couple of my potential bidders).
If for some reason, you don’t get the results you needed with the auction the first time — but you got lots of traffic — you may want to strongly consider waiting a couple weeks and then doing it again and making a few tweaks in your advertising.
I hope this helps!
P.S. I have a bonus random tip that didn’t really fit anywhere else, but wanted to share it.
On the days of the auction, take yellow Post-It Notes and write great features/info on them and place them in strategic areas of the home. For example, on the appliances, on storm-impact windows (big in Florida!), on the cabinet that opens up to have a trash can inside, basically on anything that is special but may not be obvious to a casual observer. This was really helpful for us! You don’t have a chance to be standing next to everyone and talking to them while they are viewing the home, and these post it notes deliver your message in an easy and impactful way!