Two firms pitch services for future foreclosure auction

A “purchase proposal program” was an option presented by one auction services company that sparked discussion at a committee meeting on Tuesday. The common council heard presentations from two firms: Collar City Auctions, and (a partnership between Haroff Auction and Realty and Absolute Auctions and Realty). Council members say they want to enter into an agreement with an auction services company before the end of the year, in order to make sure that the city is prepared to go ahead with auctioning off its foreclosed properties sometime in the spring of 2016.

Randy Passonno of Collar City Auctions explained how the purchase proposal program differed from a traditional auction.

“If you choose to use that program, you can award property not based on the high bid price, but based on the criteria that we established. It may be owner occupancy, it may be who is going to put the most money back into renovating the property. Because that proposal form contains a proposed renovation schedule, and the bidder is also required to submit proof of funds, that they actually are qualified, have the money, or are pre-qualified for a loan in order to purchase and or rehab that property,” said Passonno.

Passonno said his company last worked with the City of Amsterdam approximately 11 or 12 years ago. In regards to the purchase proposal program, he added, “That worked very well when it was utilized in the city before.”

According to Passonno, his company would compile a summary of the proposals for the common council to consider, and then provide details as needed.

“We do offer the traditional auction too,” added Passonno. “You might get to the point and have a certain number of properties that you say, we just want to auction this block, and this block we’d like to do through proposal process. We can do it whichever way you so choose,” explained Passonno.

Both companies said they would be willing to show the properties to prospective buyers before the auction, and would also incorporate “reverter clauses” into the purchase contracts that would give buyers a certain amount of time to bring properties up to code, otherwise the property would revert back to city ownership. Both companies also said that their services would be paid for by buyer’s fees, so that there would be no cost to the city.

Frank Pietrzak, representing, stressed that his company’s ability to market the auction to area buyers is what set it apart from others. Pietrzak cited his company’s analysis of competitor’s fees, which he said were sometimes lower, but didn’t always result in the greatest revenue for a given municipality.

“The buyer’s premium that was saved in the particular auction that I was at analyzing, they saved $18,000 from the buyer. However, on the other side, the municipality lost $200,000 in revenue because of a number of things. One, the marketing that was done for that auction was not as broad, was not as widespread. And they didn’t have the underlying…database of buyers, that fortunately we’ve been able to cultivate from doing this over 25 years.”

Pietrzak said his company maintains a list of approximately 20,000 buyers who have opted in to their regular email notifications.

“That’s a very valuable asset that we have been able to accumulate over time, which then helps promote your properties to people who are really interested in buying real estate,” added Pietrzak.

Pietrzak also said his company would draw attention to the city’s community events, stores, and economic development resources on its web site.

“We are the only company that is beginning to market properties…where the emphasis is ‘ join this community and take advantage of the good things happening here’…really trying to promote positively why someone would want to join the City of Amsterdam,” said Pietrzak.

“It’s important to have that kind of marketing, we feel, because then you have buyers that really want to stay here and be part of that,” added Pietrzak.

Later, the council discussed the information presented by the two companies.

In regards to Collar City’s presentation, Alderwoman Diane Hatzenbuhler said, “I liked their idea for the proposal form.”

“One of the biggest problems we’ve had…are people bidding on properties that are not qualified financially. [Collar City] will check for proof of funds, they’ll check to see if they’re pre-qualified. That takes a big load off the city. And [] doesn’t offer that,” said Hatzenbuhler.

Alderman Ron Barone vouched for Haroff Auction and Realty, one of the partners in citing his experience with the firm for a number of years during his time serving as Montgomery County supervisor. “I’ve never dealt with Collar City,” he said.

Later on in the meeting, council members thought of additional questions for each of the companies about their process of qualifying buyers and processing payments.

“I’m not going to make a decision and stick it to another council or [Mayor Elect Michael Villa], without knowing every parameter that is out there, to make sure we have every question answered,” said Barone.

At the close of the meeting, Alderman Ed Russo said he would collect further questions from the council members and call each of the companies along with Controller Matt Agresta, and relay their answers back for further discussion.

Tim Becker

Tim Becker is the owner of Anthem Websites Inc. which publishes The Compass. He serves as both editor and a writer.