[1]What was once an extremely acrimonious relationship is getting better all the time. According to a panel of experts at the REO lab at the 2015 Five Star Conference and Expo Friday [2], real estate agents and real estate auction companies are learning that a harmonious collaboration is the best solution for all parties involved.
The lab co-directors were Brandon Kirkham, SVP of Business Expansion with VRM Mortgage Services, and Jinja Martin, Business Controls and Reporting & Analytics Executive with Bank of America. A panel moderated by SVP at Bank of America Renee Johnson and featuring Auction.com EVP Rick Sharga, Altisource Chief Revenue Officer John Vella, Genesis Capital President Rayman Mathoda, and EVP of Default Services with Williams & Williams Real Estate Auctions Elsa Lewis discussed such topics as the agents' involvement in auctions and whether there is a need for an agent in the process.
"Agents and auction companies have a common interest, which is to get the best results for their clients," Sharga said. "What we have found in both the commercial and residential space is we get the best results for buyers and sellers when we can combine the global marketing power and the efficient online transaction capability of an auction company with the local market expertise of a real estate professional. It's a win-win if everybody cooperates and they're out to get the same objective."
That is a huge "if," however, because the agents do not always have the same goal in mind as the auction companies and some agents are still not willing to collaborate. In many cases, Sharga said when the auction companies first entered the real estate space, they were "forced" on the agents in many cases, which caused resistance because sellers were reducing the amount of commission the agents were paid.
"Our best results are almost invariably when an agent cooperates with us and we work together," he said. "Our worst results are when the agent tries to deliberately sabotage the process to try to make the auction company look ineffective. Forward-thinking agents will embrace technology and partner with companies like ours to grow their business. Sadly, there are some agents who will cling to old, outmoded business models, and may go the way of the dinosaur—munching contentedly on their ferns when the meteor hits."
"I think when you can start giving specific examples of how you're already doing it and how it's successful for the seller, the buyer, and the agent involved, it starts to prove the point."
In a market where all distressed volume, including REO, is currently at a fraction of what it was five years ago at the height of the crisis, the shift toward online auctions has taken place.
"In real estate, everyone sees REO as a declining market. Defaults are down, delinquencies are down, foreclosure starts are down, foreclosure inventory is down, but there is still a real estate market that needs to be managed," said panelist John Vella from Altisource. "We're seeing now where more of the buyer and seller activity is taking place online. The auctions have been very successful. The ballroom auctions have given way to the online auctions and servicers and investors have gravitated toward that model because you're getting maximum eyeballs on the product and getting multiple buyers negotiating and bidding on properties, which ultimately is best for the investor as far as driving the price up. We're also finding ways to work with real estate agents through this process, because real estate agents are still part of the process. We want the real estate community to engage and work as part of the process."
According to panelist Elsa Lewis, who is both an agent and an executive with an auction company (Williams &Williams), the local expertise the agents provide is invaluable to the process.
"The important part to remember is that the agents are the local experts and we are the auction experts," she said. "By combining their knowledge of the property and our expertise in auction, we provide the seller the best opportunity to achieve the highest results possible. The agents bring the ‘rest of the story’, as Paul Harvey used to say. If you don’t get that, the result is only a flat number on a screen. We market to the individual property, not just a platform, and bring life to the property. The agent helps us do that. "
Lewis talked about their standing partnerships with real estate broker networks such as Long & Foster and JLL, both of which are very successful for the individual agents in helping get properties sold through auction and bringing successful sales results to their sellers in 30 days. "We are looking for good partnerships with real estate brokers nationwide," Lewis added.
Sharga said he believes that the auction companies participating in the Five Star Conference presented the message that agents needed to hear, which was that the auction companies are actively looking to partner with them.
"I think when you can start giving specific examples of how you're already doing it and how it's successful for the seller, the buyer, and the agent involved, it starts to prove the point," Sharga said. "There is still a lot of skepticism. I think a lot of agents are looking for ways to keep their business viable as the market for distressed assets compresses, and for us to be going outreach and saying, 'Hey, work with us and we'll grow this together' is probably the tonic that they're looking for."