What is Revenue-Plus Auctioneering? (Download this presentation as a powerpoint)

It is a type of auction
It levels the playing field for potential buyers
It typically generates more revenue than any other type of property sale

Let's take a look at a real-life example of a typical 45 acre property which can be subdivided into five parcels.

Parcel #5 is primarily scrub brush. Parcel #1 once had a house on it, so even thoughb the structure is no longer there, the basic utility hookups are. If you wanted to sell this property, you have two basic options:

Conventional Sale or
Auction

If you sell it conventionally, you'd have to decide whether to offer it as a whole, or subdivided. Then, you would choose either to sell it yourself ("for sale by owner") or to list it with a realtor. Either way, you'll have to come up with an "asking price."

Let's say the property has been appriaised for $225,000. If you are listing it yourself, you might offer it for $225,000. If you are listing it with a realtor, you might offer it for $250,000 to cover additional expenses, including realtor commissions.

From this point forward, price negotiations are generally downward

$225,000
$215,000
$207,000
or less...

The property may sell quickly or not, and there may be contingencies delaying its eventual closing.

1 month...
2 months...
4 months...
6 months...

You are saddled with negotiations, even if you list the property conventionally. Your other option to sell your property is to utilize the auction method. Auctions create a degree of urgency. Once the gavel falls, your property is sold. With an auction you can normally have your moeny within 60 days from the signing of the contract. Once the auction begins, all price negotions are upward.

Or more...
$235,000
$220,000
$200,000

And, the property may be offered both as a whole and in lots simultaneously to see which will generate a higher selling price. Once we've finished the preliminary auction of each individual parcel, you might have a scenario like the one shown here:

Together, these lots will generate $167,000, or $3,711.11/acre.
The next step in a conventional auction is to offer the property as a whole, to see if it will generate more revenue. The minimum bid has to be at least $168,000.

Now this lady, perhaps a speculator, is now in control of the property at $168,000 or $3,733/acre. Every other bidder has been eliminated over an extra $1,000, because in a conventional auction the gavel now falls and we say goodbye to all the individuals who attended the auction; except the high bidder.

This is the point where Revenue-Plus Auctioneering begins

Revenue-Plus Auctioneering knows that individuals:

always have more money to invest, and
usually have more money collectively than any one individual bidder

The Revenue-Plus Auctioneering system enables all registered bidders to stay in the auction for the entire length of the auction.

This family had their heart set on Parcel #1. With Revenue-Plus Auctioneering, they now have the option of increasing their previous bid of $40,000 which had been eliminated by the speculator.

All bids must be a minimum of $1,000 over a tie bid. In order to regain control of the parcel, figuring on a per acre basis, their new bid must be $42,000. A bid of $41,000 would have been a tie.

Now that the family has raised their bid, together these lots total $169,000 which exceeds the speculator's bid of $168,000 and places the previous bidders back in control of the other parcels at their original prices.

This is where the fun begins. All registered bidders are back in the game, even if they had not initially placed a bid.

Remember: It is typical at auctions for people to hang back for a while, get the "lay of the land", and only join in once they see where the bidding is leveling off. Revenue-Plus Auctioneering allows such people to join in at any point.

A new bidder might bid on a combination of parcels. For instance a farmer might decide that he wants two of the parcels; one to live on and the other to farm. He bids $64,000 for Parcels #1 and #5. The farmer's bid gives him control of Parcels #1 and #5 while the other bidders retain control of their parcels.

A totally different bidder, perhaps a developer, may jump in now and try to control the board by bidding $200,000 for the whole property. The new bidder now controls all the parcels at $200,000 or $4,444/acre.

Now anything could happen. A young amish fellow solicits the assistance of his brother and they decide to team up and bid on Parcels #3, #4, and #5. In order to gain control of these parcels, figuring on a per acre basis, their bid must be $121,000, or $3457/acre.

Incidentally, all of these calculations - minimum bids needed, combinations, etc - are created electronically on the spot and in real time by sophisticated software packages we use during all of our Revenur-Plus auctions. These calculations are displayed for all attendees to see. It is not uncommon for a potential bidder to ask a question like, "What would I need to bid to control a particular parcel or combination of parcels?"

With the Amish brothers' bid, the family that had their heart set on Parcel #1 is now back in control of it again, and they did not have to raise their bid any further.

And the bidding continues until everyone has had a chance to secure a parcel or parcels of their choice. In reality, we had a Revenue-Plus auction of a property just like the one we've used as an example. At the 20 minute mark, the bidding looked like this, for a total of $167,000 or $3,711.11/acre.

At the 40 minute mark, we were at $250,000 or $5,555.55/acre from a bidder who wanted the entire property. One hour and fifty-two minutes into the auction the gavel fell. The final selling price was $319,500 or $7,100/acre. Incidentally, the original bidder of Parcel #1 at $40,000 was the last bidder of the sale, and purchased the parcel for $52,000.

Revenue-Plus Auctioneering allows potential bidders to stay in the auction, even after someone has stepped forward to purchase the entire property at a higher price. Competitive bidding creates a fair market value, and individuals collectively can usually generate a higher sale price than one person buying the property as a whole. In a conventional auction, the property might have sold for $168,000. Revenue-Plus Auctioneering enabled the property to generate $319,500 or an additional $151,000.

This is the power of Revenue-Plus Auctioneering. Let Scott Auction's professional team help you earn the highest revenue for the sale of your property.