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Bankers, Lawyers & Trustees are Increasingly Employing Auctioneers January 3, 2008

Posted by AlynnROCK Group in Auction News, Real Estate News.
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When a bank has property to sell, or an attorney has a client’s assets to dispose of, or a bankruptcy judge or trustee needs quick action on a newly-acquired proerty, more of these professionals are turning to experienced Auctioneers for a timely and professional sale of property.

Today many Auctioneers are highly-trained in all aspects of property sale, including the applicable laws, standards of practice and valuation procedures. Auctioneers know they must be a “one-stop service center,” ready to quickly take over all aspects desired by a trustee, banker or lawyer.

One fast job an Auctioneer does is providing prompt but informal valuation service. At the beginning of a new case a bankruptcy trustee knows very little about the debtor’s assets and usually has not seen the assets. The Auctioneer is the trustee’s eyes and ears. He finds out the condition of the property, how it has been maintained, determines if it can be sold in “As Is” condition; and what its approximate value is.

If the property has enough value to warrant and auction by the bankruptcy trustee, the trustee will then formally hire the Auctioneer and negotiate payment arrangements, all of which must be approved by the bankruptcy court.

As a case example, a bankruptcy trustee can be appointed the Chapter 7 trustee to liquidate a local hardware store. The store’s assets include the inventory, a store lease, a trade name and some equipment and supplies. The trustee’s first job is to take posession of the store, change the locks and provide necessary security measures. Most trustees expect their Auctioneer to provide these security measures, and to do so within a few hours of being called by the trustee.

A trustee recently described this by saying “When I am assigned a new case I want the Auctioneer to be able to immediately go to the debtor’s business location, arrange for any necessary security (changing the locks, etc) and make sure the property is protected from damage. In the case of real property, I want the Auctioneer to see if the property is heated and to recommend and implement steps like draining water, providing heat or making sure alarm services are working.”

Professionals look for reliability, honesty, integrity and responsiveness in their Auctioneers. They may also want the Auctioneer to prepare a detailed inventory and also needs to determine what is owned and what is leased. While a trustee will order records of liens and security interestes, the Auctioneer must provide practical help. If the hardware store is leased, for example, and the trustee continues to occupy the store the trustee is liable for rent and utilities.

Bankers, lawyers and other business professionals also expect the Auctioneer to provide same day service in situations where the property is at risk. Auctioneers know this, and they will also remove any personal property to a secure warehouse or other location, if needed. Auctioneers do much more than call bids on auction day.

The Auctioneer is the trustee’s eyes and ears.

This article was in the Spring 2007 newsletter entitled “Auction Advantage” which is distributed quarterly by the National Auctioneers Association.

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