On August 23 the Sarasota Herald-Tribune published a story about SKY Sotheby’s International Realty.  As company president, I felt the need to respond. 
 

I think most will agree that today’s weakened economy has fostered a rocky environment for businesses in general – especially those related to the real estate industry.    As a result, many organizations are faced with operational challenges and tough decisions.  Our firm is no exception; and recently, we’ve experienced our fair share.
 

However, unlike what this article implies, I believe the future of SKY Sotheby’s International Realty is bright – not “dimming.”  We continue to perform despite today’s difficult market.  In fact, since our start in 2004, our sales have increased each year and our closed sales have increased 50% from 2006 to 2007.  In addition, listings and sales in 2008 have increased 20% over last year.
 

Most importantly, we continue to focus on our clients – an integral part of our company mission.  We spend more than two times the industry average on marketing for the clients that we represent.  This commitment to marketing and selling properties in a dynamically changing environment calls for us to constantly evaluate our marketing strategies. 
 

Our firm was recently faced with a choice:  continue to maintain our current level of spending on behalf of our clients or to reduce this level, thereby compromising our service offerings.    We decided to stay the course and maintain the current level of spending on behalf of our sellers. 
 

To make this possible, along with reinvesting in our firm’s future growth, our entire management team took pay cuts.  In addition, we asked our sales associates – who also have an ownership stake in our firm – to take reductions to their compensation.  The majority of our sales associates agreed with this decision, pleased to contribute to the company’s overall success.
 
We work hard to actively align ourselves with sales associates who want to be partners in our firm and are proud of their professionalism, expertise and individual talents.  It was disappointing that a few of our sales associates decided to leave.   Regardless, I do respect their decision and our entire team wishes them the best in their future endeavors. 
 

Moving forward, I believe we will continue to see a gradual recovery of the Sarasota market and I am confident that there are many great things in store for our community, our clients and our firm.   Now, more than ever, it is important for local businesses and community leaders to support each other. By working together, we can promote a positive environment for area businesses to grow and succeed. 
 

Absolute sales.  Reserve bids.  Hidden reserves.  Vendor bidders.

A recent article in the Sarasota Herald Tribune commented on the use of such arcane terminology in the auction process, and how unethical real estate firms have employed them to keep the rules of engagement hidden from buyers.  The article summed it up by saying, “buyer beware.”

The shenanigans of some unscrupulous realtors that were reported in that article so upset me that I needed to respond unequivocally:  every one of us at SKY Sotheby’s is disgusted by such practices.

Someone once said:  “If you have integrity, nothing else matters.  If you don’t have integrity, nothing else matters.”  That succinctly sums up our philosophy.

Integrity - honesty in all our dealings with our clients - is the foundation of our business.  And these aren’t just words:  it is how we conduct ourselves every day.

To ensure we hire only people of character, we have standards of performance that all job applicants must pass before we offer them a position at our firm.  Criteria they must meet include:

• Work as a full-time realtor:  When the real estate market was hot, many individuals jumped in; when the market cooled, many left for greener pastures.

We work only with individuals who are completely committed to our profession.  This shows they are serious about the business of real estate.

• Top performers:  All applicants must have been in the top 10% of realtors for the past 12 months at their previous agency.  It is extraordinarily difficult to be a successful realtor and to engage in unethical practices for a prolonged period.  Word of mouth cuts both ways, shadowing the dishonest and helping the honest.

• Significant transactions:  The average transaction for each applicant must be $750K or greater.  This shows us that they understand the nuances of the luxury real estate market.

Most important - and most difficult to quantify - we hire only people who share our values.  That means that every one of the 72 realtors at SKY Sotheby’s adheres to the highest ethical standards.

To sum it up succinctly, all of us pattern ourselves after Google’s motto:  “Do No Evil.”

As for auctions, we believe that they are an appropriate tool for select clients - in particular, ones who want an accelerated method to sell their homes in a predetermined time, and are willing to let bidders drive prices.  Demanding times like these demand innovative strategies, and we make use of different tactics in order to meet our clients’ unique needs.

Should I ever have the privilege to represent your property at an auction, you have my word that the process will be ethical and transparent.  And that’s a promise you can bank on.

A risky strategy or a timely tactic?

Buyers and sellers have no shortage of strong opinions about auctions.  Lost in all the hyperbole is the truth about their role and value.

Real estate auctions go back to at least the times of ancient Greece, and have been a fixture of the American real estate market since the 1600’s, according to auctioneers.org.  The same source noted that $264 billion worth of real estate was auctioned in 2006.

We at SKY Sotheby’s have a balanced perspective towards auctions:  they are valid - and powerful - marketing tools when used appropriately.

Auctions are suitable for clients who want an accelerated method to sell their homes in in a predetermined time - and are willing to let bidders drive prices.  As for concrete examples, our Fall 2007 Sarasota luxury real estate auction produced the following results:

• The auction drew more than 400 registered bidders from 18 states and four countries.
• Half the properties auctioned were sold.
• Properties sold for approximately 75% of their lowest list price and 106% of their assessed market value.

As for traditional approaches, homes priced at $1.5 million or more sold through the multiple listing service (MLS) during the same period brought 86% of the list price and were on the market for an average of 295 days.

Comparing these two vehicles, properties sold at our Fall Acution had comparable sales prices to those sold through the MLS - and were on the market for a far shorter time.

So what is the takeaway?

Auctions are effective when used judiciously.  They identify buyers.  They create a sense of urgency.  They generate publicity for featured properties.  They shorten the sales cycle.

In fact, our Fall Auction was so successful that we are planning one for luxury homes in April 11, 2008.  We already have registered 800 prospective bidders, 25% of whom are from outside the United States with a significant percentage from Canada, England, Germany and Russia.

Auctions are not appropriate for every situation.  They are just one tool in a realtor’s toolbox.  They obviously benefit select buyers and sellers.

And they certainly have their place in this uncertain market where buyers and sellers are tyring to find a mutually acceptable outcome.

Click here to view the presentation.

Click here to view the presentation.