PropertyAuction.com Interview with David Gilmore
This month we’re putting our Spotlight on David E. Gilmore, national auctioneer, managing director and Chief Operations Officer for Sperry Van Ness Accelerated Marketing Company/Gilmore Auction & Realty Company. With over 25 years of experience in the industry, David’s background covers all facets of real estate. We recently spoke to David on several topics including the current market, bank-owned properties, and online auctions.
PA: Describe your company and your affiliation with Sperry Van Ness (specialties, longevity, experience, etc.).
DG: I started Gilmore Auction & Realty just after graduating from college in 1983 here in New Orleans just when the 80′s downturn had started. My first auction was a single condo and no one showed up, which was devastating but I managed to recover. Later, our firm put together large multi-property, multi-seller auctions of REO properties for several years, then sold for the RTC and FDIC. While we have sold almost everything except livestock in the beginning years, for the last 15-20 years it has only been real estate: homes, lots, acreage, office, apartments, industrial, retail, etc.
In 2003, I stopped at the Sperry Van Ness booth at the National Auctioneers Association Convention to see why they were there. It took about 8 months, but I was finally convinced that an SVN franchise as an auction firm would help me expand beyond a regional auction company.
PA: Have you seen a pattern in auction cycles over the years, and in light of the tumultuous market now, how do you think the past few years have been different in the auction business?
DG: Yes, the pattern in the past has been that when REO inventories were high in downturns, the auction industry was usually instrumental in moving these properties back into the market. This allowed the market to absorb the excess inventory and return to stability.
In anticipation of this current market crash, many investors, funds, real estate firms and auction companies ramped up for the huge inventories. Everyone was determined to take advantage of the next RTC or FDIC situation. Unfortunately, the anticipated wholesale liquidations have not materialized. The administration’s policies concerning loss share agreements and the sale of REO have prevented the large scale auctions that happened in the 80′s and 90′s. Consequently, many auctions have not produced the pricing necessary to satisfy the seller’s demands resulting in few sales and unhappy bidders. The average auction bidder today is much more prepared and educated than in the past. In the 80′s, a government auction would draw hundreds, sometimes thousands of bidders. In today’s market, if properties are not sold absolute, many bidders will not attend. If there is no opportunity for a bargain, bidders will not waste their time.
PA: You have vast experience in properties owned by financial institutions and continue to handle a lot of work within that sector. How would you say the current economy and real estate market have affected your business in this area?
DG: Both in the past and currently, we work on a large scale with community, regional and national financial institutions to assist them in the valuation and disposition of their REO assets. Many of our banking clients have taken a proactive approach in their special assets departments by referring borrowers to us and cooperating with “auction short sales” or negotiated transactions.
With offices in Louisiana, Georgia, Florida and Kentucky plus SVN franchises in 130 other U.S. markets, we have been affected in several ways by the economy and real estate market. Some markets have high REO inventories and a continuously falling market while others have less REO and a fair market.
PA: How is real estate in the Mid- and Southwest region in comparison to the rest of the country? What properties seem to be hot right now in that area and why do you think they are selling?
DG: In my home state of Louisiana, we have an additional market factor to deal with and it is the aftermath of Hurricane Katrina. After Katrina, the Federal Government and the State of Louisiana created the Road Home program to assist homeowners in the recovery process. Consequently, the state bought over 10,000 homes from Katrina flooded residents. Our firm was fortunate to be selected as the auction company to assist in the liquidation of some of these assets. We have sold more than 900 properties in 19 parishes throughout Louisiana in the last two years. This has been a hot market for us as the average price point is relatively affordable and all properties are sold absolute to the highest bidder.
PA: How does online bidding compare to live auctions in terms of success rate?
DG: I think that all auction companies believe that we bring some “magic” to a live auction making it more successful, but we have had some good success with online auctions also. For the past 18 months, we have had an online component to almost all of our live auctions. Generally, we utilize simultaneous online bidding during the live event. As our bidders have become accustomed to the online bidding, the rate of online sell-through has increased. This past weekend, we sold 110 properties with 41 properties – or 37% – sold to online bidders.
PA: How do you determine to auction a property online as opposed to on-site? Is it based on geography, property type, etc?
DG: For “online only” auctions, we look at both geography and property type to make the decision. In many cases, the properties are low end and scattered throughout one or more states and it makes sense to sell it online as it is much more cost-effective for the seller and auction company.
PA: Do you often have broker participation at your auctions and if so, does this make the auction more successful?
DG: Yes, we have brokers register clients at most of our auctions. We actively market to the brokerage community. I am part of the brokerage community as a broker in five states and a CCIM member, but I don’t do traditional listings. The broker is able to validate the buyer’s bid with their local knowledge of the market. I believe that broker participation helps to produce a successful sale.
PA: What criteria do you look for in a property to make it a good candidate for auction?
DG: I have always used the seller’s situation as the criteria, not necessarily the property or the type of property. For instance, is the seller really motivated? Will they or can they sell it for today’s market value? These are some of the factors we take into consideration on whether or not it’s a good candidate for auction.
PA: What are your thoughts or projections for the auction industry in 2012?
DG: I think that more REO will be sold at auction this year as more banks wind down their loss share agreements or become confident that they can sell their assets for current market value. Many investors are moving back into the market with confidence and cash to buy before the market turns.
PA: What are your top 2 or 3 tips for buyers? For sellers?
DG: For buyers, know and understand the auction terms because all auctions are not the same. Do your homework. Inspect the property. Do not bid without seeing the property. Set a realistic value range and don’t exceed it. For sellers, try to think like a buyer when selling. Be realistic in pricing. Know everything about your neighborhood. Thoroughly check out your chosen auction company. Do they have the resources, mail list, e-mail list, local market knowledge and experience with your property type? These are all things you need to consider when thinking of auctioning your property.