Founder tests bidding service in Arizona
Founder tests bidding service in Arizona
Hey, eBay fans out there: What if you could buy trustee-sale homes through the same kind of online auction format that you purchase Captain America comic books, black velvet paintings and Cloisonne vases?
Wouldn't that be amazing? Because, let's face it, running around town to courthouse steps or some attorney's office in the suburbs to bid on a foreclosed property is pretty darn annoying. Sure, you may get that $400,000 house for $200,000, but it takes a lot of horsepower, not to mention intense of knowledge of the arcane, trustee-sale process imposed differently by every state.
Dan Mayes has a better idea and he's now test-running it in Arizona.
While the name, Dan Mayes, may not be familiar to many, back in the day when he was a senior vice president for high-tech incubator Walker Digital LLC, it spun off into the market a company called Priceline.com. In fact, Mayes was responsible for creating the financial settlement technology that forms the Priceline.com hotel service.
Mayes is still cranking out companies, and in his spare time investing in busted Arizona real estate. After a few forays into the trustee-sale scrum, he decided there had to be a better way, so he created azbidder.com, the state's only live, online bidding website for trustee sales.
After testing it in Arizona, Mayes plans to take it national. "Our short-term objective is to get all of the counties up and running in Arizona, then go to Nevada and California, Florida and then the remainder of the nonjudicial foreclosure states," he says.
Think of it: You no longer have to physically be present for the trustee sale, but can bid in real time from your home or office with all the data you need to make an educated decision -- and with full transparency.
The last factor is a key feature because whether you won or lost in a trustee sale, the whole business was so opaque you never quite could figure out what exactly happened. Did others bid? How intense was the bidding? Where did the bidding start?
"When I first started getting involved in trustee sales in Arizona," Mayes tell me, "I always wondered, 'Why do I have to come down here in 120-degree weather.' It was very eye-opening how it operates. Also, (it was) so intimidating to most people that about 90 percent of them walked away."
Potential investors have this view of a classical auction where you are sitting in a nice, cozy room and there's someone at the podium with a gavel, Mayes laughs. "In a trustee sale, it's nothing like that. You have four or five people sitting at picnic tables spread across the front of the courthouse, quietly reading either bids or postponements.
"Sometimes, you miss the property entirely because they have a tendency to call them in cryptic form. Most of the time a sale gets postponed or canceled. If you were interested in a particular property, it could almost end up being a career because you had to be down there every other day chasing this property down."
Mayes participated in that environment for quite a while before the proverbial light bulb went off and he decided to form a company that would build the tools and technology so anyone could participate in trustee sales as easy as they would an eBay auction or other online trading environment.
A lot of the data for azbidder.com comes from The Information Market LLC, a company formed by Tom Ruff back in 1982. Besides maintaining the most current real estate data available for Maricopa County (home to Phoenix, Mesa, Scottsdale, Tempe and Chandler), The Information Market also compiles and tracks all real estate sales and foreclosure activity.
"We made some special concessions within this product to where we have been able to analyze the type of sales transactions employed in the past, so when someone is doing comps on a particular property they can see if the previous sales were either bank-owned, distressed, short sales, etc.," Ruff explains.
The azbidder.com site went online with its first trade at the start of the year, and by the beginning of March close to 100 properties were acquired through the site. "We thought we would have a small test, but quite a few large users have been using the system," says Mayes.
One of the active buyers is Marty Boardman, a principal in Rising Sun Capital Group in Gilbert, Ariz.
"The way I would do a trustee sale before was use a bidding service," Boardman explains. "The service would email me a spreadsheet every day with all the properties that were going to sale. I would have to go through the whole list to find those that met my criteria, then email back my picks, along with a maximum bid," he says.
Vacant homes attracting squatters
What's Your Home Worth?