Category Archives: Kansas City Real Estate

In the past few months I have had the opportunity to interact with a couple of the larger auction companies here in Kansas City. And my question is, are auctions a great way to add to your real estate investment portfolio?

So I thought I would ask the experts. Today we are going to hear from Robert Mayo of Mayo Auction & Realty as well as Greg Duncan of Cates Auction & Realty. I want to thank both for taking the time to answer the following questions while not knowing how the other would answer. I hope you, the reader, will benefit.

Thanks for visiting guys. Why auctions?

M: Auctions are an effective vehicle to buy and sell real estate. The primary reason is that the seller knows when the property will sell, and the buyer has the opportunity to eliminate negotiating and buy at market value.

C: Simply stated, auctions let sellers sell on their terms and let buyers buy at their price. Auctions are the most efficient method available for buying and selling homes, land, and commercial property. They are simple, quick, and transparent.

What do you think the biggest misconception of an auction house is?

C: Whatever a person’s misconception might be, somewhere there is an auction company that will match that expectation. Since we are a professional firm that specializes exclusively in real estate, some people are surprised that we don’t operate a gallery or accept consignments of personal property. Some are surprised that we are selling millions of dollars of real estate each year. Others are surprised that most of our properties are not “in distress” and that many of them are first time to market. Some people are still surprised to find that we aren’t sporting huge belt buckles and cowboy hats!

M: The biggest misconception of a real estate auction is that the buyer is unable to obtain financing. Although most auction transactions are conducted without contingency, including but not limited to financing, most professional auction companies will allow a 30 day window for closing. This provides ample opportunity for the buyer to utilize financing.

Is a real estate investor likely to be the high bidder at an auction or the prospective home owner?

M: This really depends on the property and the terms of the auction. In many cases there are both investors and owner occupants participating at real estate auctions. At the end of the day it is very similar to the traditional transaction in that every property has a potential pool of buyers. Our goal is to get that pool of buyers involved in the auction. In regards to who the high bidder is, it just depends on who wants it more.

C: Yes. Real estate auctions are attractive to investors who are selling as well as those who are buying. We regularly work with both. Sellers appreciate the speed of the transaction, the ability to plan around the sale, minimizing carrying costs once they have decided to sell, selling “as is”, and avoiding the complications of contingent offers. Buyers like working with motivated sellers and many follow auctions watching for certain types of properties to come up or looking for certain price ranges.

How involved are real estate investors in the auctions you hold?

C: Very. Many investors are on our email and mailing lists. Many are regulars at our open houses and our Auction Showcase events (where multiple properties are sold gallery style).

M: Real estate investors are involved in most of the auctions we conduct.

What piece of advice would you give to an experienced real estate investor looking to utilize auctions as a source for either acquiring or liquidating an income property?

M: In regards to buying, my advice would be to use the same tools that you currently use to evaluate an income producing property. I would also recommend that they do all of their due diligence prior to the auction and come prepared to bid what the property is worth to them.
In regards to selling, it is important for the property owner to choose a method that will meet their specific needs. It is also important to evaluate the reputation of the company that they will be choosing and to make sure that they have a clear understanding of the auction marketing plan from beginning to end.

C: Understand the market in which you want to operate. Auctions are an excellent way to buy and sell real estate, but they don’t ignore basic market realities. Examine your goals. For every potential deal, be sure you know what matters most to you and what matters least. Ask questions of the auction company. Be certain they are experienced in the kind of real estate transaction you are considering and that they have a full professional staff to support the process.

C: Yes. We work closely with other brokerages and offer commission sharing to both referring agents as well as buyers’ agents. Partnering with other agents is an important part of how we do business.

M: Absolutely! We Love to pay both co-op commissions and referral fees to agents who either bring a buyer to the auction or refer a seller for the consideration of an auction. Our philosophy is that “It doesn’t matter how we split the pie, as long as we have a pie to split.” First and foremost it is our mission to put our clients needs first, and that includes offering the property to the broadest audience available, and paying other professionals for helping put the deal together.

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There was actually another question about reserve vs. absolute auctions. But in the interest of space I’ve decided not to print the answers here. But feel free to call either company to get the definition. I’m sure they’d love to speak with you.

No question about it. There is a lot of confusion over what exactly your real estate agent should be doing for you when you are purchasing or selling property. So if I may…

Regular House Agent’s Role

A regular house agent’s role is different than an investment property agent’s role. Today we will talk about the “regular” house agent. And before we get started you need to know that all real estate agents are independent contractors. They have a lot of freedom (within their brokerage’s framework) in how they run their businesses. So while these are my guidelines that I think you should consider, you may find an agent who works differently.

What a buyer’s agent does do:

• sift through homes for you that meet your needs.
• preview homes for you to save your time.
• help you to narrow the field to two or three homes.
• learn as much as she can regarding seller’s motivation.
• advise as to negotiation tactics and offer opinions.
• keep lines of communication open at all times during negotiations.
• recommend quality inspectors and title company.
• keep you on track to satisfy contract demands.
• follow up with seller’s agent to make sure seller is following contract demands.
• review Settlement Statement for compliance and/or errors.
• give you the keys to the house.

What a seller’s agent does do:

• show you accurate comps to your home.
• help you set a price that will sell.
• properly stage the home to maximize appeal.
• market your home using today’s technologies.
• remember that agent has a fiduciary duty to you and not throw you under the bus to “double side” the deal.
• help you to understand and evaluate feedback.
• help you to understand and evaluate offers.
• advise as to how to respond to offers.
• keep lines of communication open during entire process.
• coordinate inspections with buyer’s agent and set stage for renegotiations.
• work through inevitable renegotiations.
• make sure buyer’s agent is keeping buyer on track for closing.
• communicate with buyer’s loan officer at least once to make sure buyer is on track for closing.
• review Settlement Statement for compliance and/or errors.
• congratulate you on the next step of your life.

These lists are not all encompassing and many of the points should have several sub-points. There could also be a long list of what an agent does not do. Let me know if you think I should include something else.

Whether you are looking to sell a home in Olathe, Kansas or buy a home in Kansas City, Missouri you are probably asking yourself about the current real estate market.

With every group of people I meet the question is “How’s the market?” People want to know.

And so do I. Yesterday, I saw a couple of agents while I was out and about showing homes. When I asked them how the market was I got one “Great!” that seemed rehearsed and another “Well, I’m making a living. But that’s about it.”

IT’S NOT ALL ROSES OUT THERE but it’s not all thorns, either. A little history is in order here. During the great price run ups of the early 2000’s people got used to being able to sell their houses rather easily. Here in the Kansas City area we didn’t get the 20% appreciation rates they got out west and east. But we did get to the point where you could sell every year for 5%-10% more than last year. And sell it withing 60 days.

Today’s market is a bit different. It’s a “normal” market. Yes, despite what CNN and FoxNews tells you there is still appreciation here in Greater Kansas City. Yes, there are a few zip codes that have gone backwards. But not in a free fall fashion like parts of Cleveland. And yes, there are zip codes that have had significant increases, but not like Denver or Tulsa.

The key to selling your home today is proper pricing. Study the comparables carefully. Judge the condition of your house brutally and compare that to the SOLD houses. Where do you stand. Be honest, it will be the difference in whether you sell your house in 60 days, or not.

Don’t think that is possible? It is. Want proof? I can email it to you. Take a gamble and leave “negotiating room” and you will likely slip into that 4-7 month sales time range. Go ahead, argue with me. See how it goes.

Of course, buyers are loving life right now. Even if they sell their $150,000 house at a 5% discount they can pick up their new $235,000 house at a 5%-10% discount. See how they still benefited?

And selection, ah, the selection.

Real estate sales is an inexact science, at best. Take the house pictured at right. We started it off as a two bedroom. After a few months of barely any buyer views we converted the home back to a three bedroom, though one bedroom was pretty small.

Again, barely any buyer views. Then one day 10-12 days back I had 4 different agents show it in a 24 hour period and we accepted an offer.

Before that offer, over the course of 6 months I probably had 2 sign calls inquiring about the house. Since we’ve accepted the offer I’ve probably had about 10 calls inquiring about this Kansas City, Kansas home for sale.

I can’t explain it. I really can’t. I market all my homes for sale very aggressively and use nearly the same formula for all of them. Some sell quicker than others. And some generate more interest than others. But that’s twice this year, so far, that as soon as I get a house under contract I get quite a bit of interest.

I may never figure this business out in that regard.