Let’s look ahead and imagine you have just negotiated a wholesale purchase. You are excited. You bought the property at a big discount. Now comes the fun part. How do you get the property repaired and sold quickly? How do you avoid having your house sit on the market for 6-12 months? (That could happen if there is too much other inventory on the market) How do you avoid having your profit waste away over time? Selling your home is going to be the biggest challenge for investors in this next cycle. As Alexis always says “it’s either easy to buy or easy to sell, but never both at the same time!” Instead of selling the traditional way through a realtor or as a FSBO, using an auction company can help a seller net more money and avoid mounting carrying costs.
I remember a rehab project I was involved in back in 2003 in Sacramento. We purchased the house for $80,000 and had a rehab budget of $35,000 and an estimated completion time of two months. Because of some contractor challenges, our rehab budget jumped from $30,000 to $45,000 and our completion time jumped to 5 months. Then the long escrows began. In the first escrow we had the house sold at $180,000.
I don’t recall the reason right now but 25 days in we found out that they weren’t able to close. On the next escrow, the buyers’ inspector found something new and after we repaired the challenge they decided to back out. There is a silver lining to this story. We were in an appreciating market. 
The third time we put the house back on the market we sold the house for $210,000.
We were lucky. If we had been selling in 1997-1999 we would have lost money because of depreciation and carrying costs.
In this next cool market cycle an investor will need to be very efficient, both in their rehab as well as in their sale. Time on market will need to be reduced, because the longer that an investor has their property sit, the more profit they will lose.
I once heard someone refer to the profit in a deal as the “dura-flame theory”. That if you light both sides of a dura-flame log then they will both burn until there is nothing left in the middle. He said imagine that what’s in the middle on a dura-flame log is your profit and on each end you have what’s dwindling your profits, carrying costs and depreciation.
As an investor, your goal is to keep the most amount of the middle part of the log as possible (your profit) by selling it as soon as possible. In this now slowing real estate market, the longer you hold onto the log the more of your profit will go up in smoke.
My firm, M.J. Recore Auctions of the Northern California and the Bay Area is here to help you. We are a member of the National Auctioneers Association (NAA) and have received the prestigious Accredited Auctioneer of Real Estate (AARE) educational curriculum from the NAA.
With just a small amount of marketing money up front and selling costs just a little more than a full service agent, you will be able to have your property included in our marketing campaign for an upcoming auction. When you call us, our teams will spring into action to get pictures, title reports, and information on your property ready for advertising. We will aim to have a marketing time of 30 days for your property and our staff will field the calls on your property and drive your buyers to our Open House Previews. From the previews, we’ll get a good idea for the interest in your property on auction day. We’ll be having the auction at a central location with a professional staff and auctioneer. A buyer will also be able listen in live and bid from the comfort of their home over the Internet. Whatever that final bid on auction day is, it will be subject to seller confirmation of acceptance.
We are now out of our “hot real estate market” and entering a “cool market”. Alexis is right when she teaches that you make your money when you buy. How much money you make will be influenced by how soon you can sell. Using a professional auction company, with the proper marketing campaign, you can keep the houses you have bought moving out of your inventory so you can purchase your next wholesale deal.
