Auction Method of Marketing in Government

10/7/2015
The Auction Method
of Marketing
“Convert Assets into Cash”
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Silver Dollar
Worth more than face value or just $1?
Worth what someone is willing to pay!!
FACTORS THAT AFFECT VALUE
• Date - When it was produced?
• Mintage - How many were produced?
• Mint Mark - Where it was produced?
cc = Carson City (most valuable) - $60 - $300 any condition
p = Philadelphia & s = San Francisco are both less valuable
• Condition - Discretion of the purchaser
• Scrap value – Silver’s current market is around $16/oz.
Silver Dollar weighs 1 oz.
Personal need or desire to own it! (eBay $45-$200)
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Today’s Objective
Provide basic understanding of the
Auction Method of Marketing and how
to use to benefit your public entity.
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10/7/2015
THE ECONOMIC ENGINE
OWNER
Earns and Saves Cash
ADVISORS
BANKERS
Assists you in Converting
Assets into Cash.
LAWYERS
Assists you in Investing
Cash into Assets.
ACCOUNTANTS
OWNER
Enjoy Assets
and/or Grow Assets
EXPLORE ALL OF THE KI KO OPTI ONS!
KIKO Realtors, Auctioneers, & Business Professionals 800 533 5456 www.kikocompany.com
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The Auction
Industry
A Look Back and Ahead
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Greece, 500 B.C. - The First Auctions
 Women Were Auctioned Off as Wives
Rome, 30 A.D
 Marcus Aurelius sold family furniture to satisfy debts.
 Roman Soldiers sold war plunder.
Auctions Come to America

Crops, Imports, Clapboard, Livestock,
Tools, Tobacco, Slaves, Farms
Civil War Era
 Colonels Auctioned Off the Spoils of War
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1900s
Auction Schools Open

“Competent instructors teaching
General merchandise, real estate and
Fine Stock auctioneering”
1950s
The sale of goods and real estate by the Auction
Method was booming.
 The modern day auction business was born.
Auctioneers began to work with Banks, Attorneys,
Accountants, the Court System and Government
Entities.

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Defining Principal in Marketing
Anything for Sale
The real value for something is absolutely
what someone is willing and able to pay
“The Auction Method of Marketing invites the public to
exercise their judgment of value and the seller will
transfer the property to the highest bidder.
That is true market value.”
- Richard T. Kiko Sr.
1945-2013
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Types of Auctions
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10/7/2015
Ohio Law – Only 2 Types
1. Absolute Auction: Property shall be sold
to the highest bidder without reserve, shall not
require a minimum bid, shall not require
competing bids of any type or permit bidding by
seller or an agent of seller, and that the property
cannot be withdrawn from the auction after the
auction is opened and there is a public solicitation
or calling for bids. Responsible party must be
identified to clear all liens and deliver clear title.
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Absolute Auction
The
ultimate marketing attraction to buyers.
No negotiating. A pure auction-highest bidder
wins.
Like
“Brain Surgery” – Better hire the best
surgeon as there are no second chances.
Method
used for Government Auctions
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2. Reserve Auction:
The seller or an agent
of the seller reserves the right to establish a
stated minimum bid, the right to reject or accept
any or all bids, or the right to withdraw the real or
personal property at any time prior to the
completion of the auction by the auctioneer.
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Reserve Auction
Listing
For Sale until open house and deadline for
offers : A Negotiated Sale
“Bait
and Switch” – Public assumes highest bidder
will get property
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ORC 721.01
Lease or Sale of Municipal Property
Municipal corporations have special power to
sell or lease real estate or to sell personal
property belonging to the municipal
corporation, when such real estate or personal
property is not needed for any municipal
purpose.
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Categories of Auctions
1. Real Property – ORC 721.03
2. Personal Property – ORC 721.15
Value over $1000
- Vehicles
- Equipment
- Machinery
3. Consignment
3. Short Sale – Lien holders release title to
highest bidder
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5. Court Ordered
• Guardianship
• Estate
• Bankruptcy
• Forced Division of Interests
- Divorce
- Partnerships, Corporations, LLC, other
6. Foreclosure
• Sheriff Sale
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Sheriff Sales

Historically, the common Sheriff Sale process has
an estimated 92% failure rate with only 8% of
properties offered selling to anyone other than
the foreclosing lender.

Ohio Revised Code Section 2335.021 provides
that a court may appoint an auctioneer to
conduct an auction of real property required in
lieu of the county Sheriff.

Auctioneer Selected by Plaintiff or Defendant.
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Types of Auctions

Live On-Site
Live auction creates excitement and competition. Statistics show that when selling
live and online over 70% of the items sell at the live.

Live/Online Simulcast
Simulcast is a best-in-breed solution that allows buyers to attend a sale from
remote locations.

Online Only
Location, Circumstance, Sale not large enough for On-Site sale.
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Auction Myths

Last resort

Desperate Sellers

Only for Deceased or Financially-Laden

Bankruptcy or Foreclosures

Online Auctions are better and easier than live

All buys at Auction are a “deal”, well below market
value

Not used for quality homes, buildings or chattel

Works best for Antiques, Collectibles and Classic
Cars
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The Auction
Advantage
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Benefits of Auctions

Sale executed on a specific day and time.

Sellers receive the highest possible prices based on competitive
bidding of knowledgeable crowd.

Auction Staff prepare items and estimates their value.

Sale is professionally marketed throughout the city, county,
state, country, and world via all forms of media (i.e. internet).

Auction creates a competitive atmosphere and chant brings the
sale to life.

No up front costs for Auction, paid thru proceeds of the sale.
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Auction Services

Render Appraisals and/or Opinions of
Value

Calibrate sellers expectations vs. reality

Advertise the Sale

Prepare Items for Display

Keep a Financial Record of Items Sold

Clean Up After the Sale
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3 Exclusive Benefits of Auctions
1. Sellers Terms
Seller sets
the Time and Place of Sale.
the Terms of the Sale (As Is)
Buyers Premium can be used for RE or Chattel to offset sale
costs (i.e. commission, advertising, etc.)
Property is sold “as is” with no contingencies
Seller sets
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2. Parts vs. Whole –

When selling PARTS, offer them separate and then
together, whichever way brings the most $$.

Highest bidder gets to hold the bid on the “piece” they
want.

All piece bids are added together to create a total, then
a bidder willing to go higher can hold the bid on the
“whole”. The “piece” high bidders can raise their bids
to then create a collective competition with the highest
“whole” bidder.

The seller and the auctioneer can repeat to determine
which way it is worth the most, by the piece or the
whole?
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When selling MULTIPLES
of a similar item offer CHOICE



When selling MULTIPLES of a similar item, offer Choice
Chattel – Cars, Furniture, Tools, etc.
Real Estate – Parcels of land, Commercial RE etc.

Allows Seller to offer the item with another level of
competition – creates value to choose first.
“How much is first choice worth?”

Highest bidder gets to choose specific item and how many
they want to buy at that bid price.

“Take one or take them all.”
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3. Division of Interest
Estate,
Divorce, Partnership, corporations or any multiple
owner seller allows for “non-emotional” division of proceeds
to the beneficiaries
Owners/beneficiaries have ability to sell outright or to
purchase as a different owner at the true market price.
Nothing hidden – fair, open book, transparent for all
owners to observe.
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How Auctions can assist
a Government Entity

Convert Assets into Cash

Convert Cash into Assets

Financial planning and asset management

Court Ordered Foreclosure in lieu of Sherriff

Division of Interest/Transparency
- Divorce, Partnerships or Corporations
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Auction Services
Prepare
Property/Chattel for auction day
Develop
Marketing/Advertising campaign for Auction
sale
Execute
Close
Auction Day
transaction
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Estimated Time line –
90 days from Contract to Cash
Day
1
– Contract
Day
45
– Auction Day
(6 weeks minimum to prepare for auction day)
 Design promotional plan
 Market/Advertise 3 weeks prior to auction
 Title work completed in advance of auction
 Any restrictions, zoning, interests of record identified
Day
90
– Real Estate - Close Transaction
(45 days from sale day)
– Chattel Settlement
(20 days from day of sale)
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Schools - $27,000
County - $1,978,000
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10/7/2015
School Online Only $41,000
City - $62,000
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Questions
&
Answers
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Realtors • Auctioneers
Business Professionals
Richard T. Kiko, Jr. - CEO, Broker & Auctioneer
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10/7/2015
Richard T Kiko Jr.
• CEO of KIKO Auctioneers & Realtors
• Third generation Kiko Ohio Licensed Auctioneer and Real Estate Broker
• Specialty areas include selling land and commercial real estate
• Member of Stark County, Ohio, and National Association of Realtors, the Ohio and
National Auctioneers Association, and many area Chamber organizations
• Bachelor of Science degree with honors from the University of Dayton in Industrial
Engineering Technology.
• Advisory Board member to James Zehringer, Director Ohio Division of Natural
Resources
• Board of Directors, Consumers National Bank
• Business experience in sales, marketing, manufacturing, finance, and general
management.
• Experience in buying and selling businesses and brands.
• Married with four children and enjoys outdoor activities, coaching sports and golfing
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