President and Chief Auctioneer of Elite Auctions
This week Bruce is joined again by Randy and Mike Grigg. Randy is the President of Elite Auctions. Mike is Randy’s son, who gradually got involved in the auction business. Mike has won awards for “Best Auctioneer”. He is very involved in real estate and charity auctions.
Randy began his career as an auctioneer because he had bough enough properties for long term investment, and he wanted to do something different. He tried buying and selling using Bruce’s and Mike Cantu’s strategies, but he discovered that their methods weren’t as easy as he expected. He began using auctions to escape some of the escrow difficulties that came with selling properties, and he experienced much more success using the auction method.
Mike Grigg began working in the auction business in 2002.
Bruce has always been intrigued by the auction business, and he tried to run his own auction once, but managed to fail during the boom period.
From 2002 to 2006, most people would not have thought of an auction, because it was easy to sell. However, people who used auctions during this time period experienced a good amount of success. Mike believes that auctions work best when the market is booming because the bidders are ferocious. Many times the price goes higher than a traditional sale.
75% of being a successful auctioneer is being able to comfortably speak in front of groups of people. Mike uses humor a lot during his auctions. His auction school was a week long course with 8 to 9 hour days of public speaking. Auctioning live stock is much faster than real estate. Also, there are many more frequent, professional bidders that attend live stock auctions. In a typical real estate auction, 50% of the bidders have never been to an auction before, and many of them are very nervous.
Bruce attended a live stock auction once, and he could not understand a word being said. Mike says that cattle auctioneers are not typically good candidates for real estate auctions, and vice versa.
There is a large difference between auctioning a property between 2005 and 2010. In 2005, the crowds were huge. Mike would sometimes have hundreds of people standing on someone’s front lawn. Two months ago it was hard to get bidders to come. This month it was a lot easier to get bidders to come. Next month could be a completely different story. Mike believes that buyers have a false sense that the market is coming back, which is encouraging many people to buy owner occupants.
The auction method requires 30 days of intense marketing. Mike’s company takes many calls from people who don’t know how an auction works. Sometimes people ask what a property will sell for, and Mike doesn’t want to do this, because everyone’s number is different.
Mike’s advertising campaign has become 50 to 75% less expensive over time. Most of Mike’s advertising is done over the internet. The newspaper has become very expensive, and it is not as effective.
Absolute auctions tend to get the biggest response, but Mike has not seen this kind of real estate auction take place in California over the past 5 years.
When Mike performs his advertising campaign, his goal is to get them to call, so that he can get them excited about the auction. After he talks to them over the phone, he tries to get them to come to an open house, and then hopefully they will come to the auction. Mike only holds 1 or 2 open houses for each house. Getting multiple bidders to come to the same open house shows the potential buyer that the house is popular and that Mike is running a legitimate company. Approximately 1 out of 3 people who come to the open house with come to the auction.
Mike’s most surprising auction involved a 6-plex apartment building. It was in a rent controlled zone in which they could not rebuild the property if it burned down. The property sold for $550,000, but it was appraised by 3 separate companies for only $350,000. Bruce has also been surprised by Mike’s auction results. Mike once auctioned a crummy, main street house for Bruce. Bruce was hoping that it would at least sell for $100,000, but did not have much hope. At the end of the auction, Mike informed Bruce that the home had sold for over $200,000.
Auctions work best for Bruce when he has owned a property for a long time and wants to get rid of it in a quick and low-hassle manner.
Mike got involved in charity auctions three years ago. His first charity auction was for Make A Wish. He is still performing this charity auction, and it has been more successful each year. These charities involved donated items, puppies, and trips. Mike is doing 10 charity auctions in the next month and a half. Mike makes money from charity auctions by offering a flat fee or a percentage of the earnings.
One of the ways Mike tries to break the ice in a charity auction is to have an opening center piece auction. During the center piece auction, one person from each table stands up and auctions their table’s center piece to the highest bidder at the table. The highest bidder of all the tables wins a small prize, such as a bottle of wine. Many of these auctions raise equal to or more than live auctions. Most of these charity auctions have 300 to 500 attendees. They are typically big events, in ballroom settings, with dinner and bands. Most of these charities occur annually.
Mike’s website for charity auctions is www.mikegriggauctions.com
Online auctions are very frowned upon by auctioneers. It can be hard to trust an online auctioneer, because you don’t know who they really are. However, if everything is disclosed properly and the investor gets the number he was approximately expecting, then there shouldn’t be a problem.
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