Former Inland Execs Start Auction Firm

"One of the reasons is that sellers find themselves in this down market searching for buyers at a reasonable price," DeMato tells GlobeSt.com. "The auction process focuses attention on their properties, bringing together interested parties and creating competition to purchase these properties. What the auction process will do is help developers cut their load and their carrying costs to get them over this hump in the market."

DeMato says the limited number of buyers in today's market has made the auction more enticing to sellers than conventional brokerage. "It's a quick process, that can help determine value by creating competition and a market for their property," he says. "Conventional brokerage is infinite and may take a six or twelve month listing. With an auction, you have a finite marketing period of a few weeks, the auction and then closing ten to 30 days after."

Of additional appeal to developers looking to unload property is that auctions be a fast track to creating liquidity. "We all know the market is pretty bad, but it's going to come back; the question is when," DeMato says.

He adds,"We don't think it's going to come back for a year or so, and during that time developers need to find a way to cover carrying costs, help pay banks off and have an exit strategy to hold them over until the market comes back. That's what the auction process can do - generate some liquidity and help bring the crisis to an end by making sales, determining value and getting the ball rolling again on sales and banks involved in the process again."

Global Real Estate's first auction will aim to sell 11 townhomes and one cottage, which offer three bedrooms and three baths. The properties for sale are located in the Diamond Point development in New Buffalo, MI. Zaffarano says Global's staff is more hands on in the auction process than many other firms.

"I have contact with every person who calls in on a property being auctioned off, and that creates a rapport with potential buyers so they're at ease with the auction process," Zaffarano says. "An auction can be a nerve-racking process for participants because you have to make a decision in a short time period so it's very important the buyer develops a rapport with whoever the auctioneer is. The positive thing we do here is that I'm the auctioneer at everyone one of the auctions, and make sure buyers are clear on what property is being auctioned off, what the auction price is and where the increment is at."

DeMato says once the firm's national presence is established, he has plans for the company to expand globally, as its name indicates, with hopes for an initial foray into Europe. "We wanted to start the company where we could promote our own philosophy and take the company in the direction we wanted," DeMato says. "Our company is based on old world values of honesty, integrity and loyalty to clients and new world solutions, bringing them to elevated market valuation and competitive bidding."