1. Recommended Print Media Display Advertising.  Based on the geographic appeal of assets to purchasers on both sides of the Great Lakes, display advertising exposure would be recommended in the following list of publications.  This wide exposure brings new opinions of value into play which would support a significantly higher price.  We will be more specific as to all media outlets once we start on the program.
   
2. Public Relations Exposure.  The public relations program for your asset will be important.  We would work with public relations professionals to write a detailed news story outlining the auction offering and the "possible" wholesale buying opportunity offered.  We know, on a first name basis, the Real Estate and Business Writers at many of the newspapers.  Two important components that would be stressed in our public relations effort would be: (1) Presenting the property and its potential in the best possible light, and (2) Maintaining "the illusion of a bargain" throughout the marketing cycle.
   
3. Property Information Packages for the Property.  The visual presentation of properties to prospective qualified purchasers is important to stimulate actual action for a sale of this type.  Moving a prospect from a newspaper display ad or a media story; to requesting a bidder's package; to requesting an inspection of the property all must happen in an orderly manner.  The bidder's package is a key piece of marketing to turn a qualified prospect from idle curiosity to a party desiring to inspect and possibly purchase.  The thoroughness of these packages creates an assurance in the minds of serious prospects that they should participate in the program or lose the opportunity to buy.
   
4. Handling Specific Property Inquiries.  Speaking with qualified parties inquiring about the property would be handled by specific company associates in our office who would be familiar with the asset.   There is a real benefit in having a group who knows the property and who can talk intelligently when others are out of the office.  We will be constantly qualifying parties who call for information.  In addition, we work aggressively with other third party brokers in the geographic area of the property who may have well capitalized prospective purchasers.  Frequently, the initial contact about real estate offered in an auction setting is the most important.  Once the right "spin" has been placed on the opportunity to purchase, further questions can be handled by any member of the combined marketing team.
   
5. Property Inspections.  Property inspections would be by scheduled open house.  Associates of the Dutton Group would be used at on-site inspections that would begin on a weekly basis about four weeks prior to the actual sale.  The opens are an important part of the marketing process as it allows us to meet face to face with prospects and evaluate the level of interest of all parties.
   
6. Auction Strategies.  There are 3 types of Open Outcry Auction Strategies that we can consider:

   A. Auction With Reserve.  This program offers the property subject to the seller accepting or rejecting the high bid placed at auction.  This form of offering is not a very strong calling card where the purchaser is likely to be a very experienced acquirer of real estate.  This technique works for governmental agencies and financial institutions as the supposition of prospective bidders is that an institutional seller definitely means to sell the asset.  Where the property is a smaller asset of the level of analysis and due diligence is minimal, a reserve offering can be effective.
   
   B. Auction Without Reserve Subject to a Stated Minimum Bid.  The use of this strategy requires some careful analysis and knowledge of buyer psychology.  A number should be used that clearly demonstrates the opportunity for an excellent purchase by a bidder.  The minimum bid needs to be at a level at which the seller would prefer to not sell the asset, but at which many serious bidders perceive substantial additional value, and would bid up to and beyond that value in a competitive bidding environment.  An experienced real estate broker can be anticipated.  The ability to analyze the response to this type of program during the pendency of the marketing campaign on a daily and weekly basis can lead to amending the program should bidder interest be less than projected.
   
   C. Auction Without Reserve and No Minimum Bid.  This strategy is frequently used when a larger number of fairly homogeneous parcels are being offered such as land parcels, houses, small office properties, home lots, etc.  It can be used effectively with a single asset with good depth of market and even with assets of larger market valuation.  The illusion of a bargain is a definite component of this absolute bidding program.  With a property of substantial appeal it can be the best marketing vehicle.

Keep in mind that the type of offering selected does not affect the value of the property but it does affect how aggressively prospects pursue the property.

7. Property Financing.  Third party acquisition financing for certain real assets may be available to qualified purchasers.  While many purchasers can obtain their own financing, if required, our experience is that the availability of vendor take-back financing in advance of the bidding process can frequently add 14% to 18% to the level of obtainable prices.  Short term interim seller financing can spur greater competition at the auction, and force cash buyers to bid more aggressively.  In those instances in which interim seller financing is offered, in excess of 70% of bidders close for cash without seller financing, however, a higher valuation has already been achieved.
   
8. Auction Day.  We could consider having the auction in or around the nearest city epicenter.  Generally a hotel ballroom setting is the most effective for sales of this type.  It is important to have a location where investors from a wide geographic area can drive or fly to the site of the actual sale.
   
9. Earnest Money Requirements.  Earnest money funds in the form of Cashier's Check, Certified Check, or Previously wired funds deposited in the designated escrow account would be required to bid on each asset at the sale.  The total earnest money is increased to 8% to 10% of the total purchase price by the purchaser within five days after the auction.
   
10. Telephone Bidding.  While it is rare that a serious bidder would not attend the sale, we are equipped to enfranchise a prospect who cannot attend through the mechanism of telephone bidding.  The requirements to bid via telephone are:

A. Wire transfer the required earnest money deposit to the escrow agent
 prior to the auction.

B. Sign the approved real estate contract in blank prior to the auction event.

C. Sign a separate authorization allowing us to take their bid via the telephone and insert the high bid number into the real estate contract in the event they are the successful high bidder.

11. Signing of The Contract.  The real estate purchase agreement is signed immediately upon the conclusion of the bidding.  Each bidder will have already signed a Bidder's Affidavit at the time of registration stating that they (1) have received the Property Information Packet; (2) have read the Real Estate Contract; (3) have the financing ability to purchase the property; (4) have reviewed the terms of the sale; (5) and will sign the required Real Estate Contract at the conclusion of the bidding.  The sale at the fall of the gavel is binding.  The signing of the Real Estate Contract is just a formality.  The agreement will have been previously reviewed by the bidder's attorney prior to the sale.
    
12. Closing of The Real Estate Sale.  The closing or registration of the deed is aggressively monitored up to the very time the transaction closes.  We are in regular contact with buyer and vendor, and their solicitor/attorney.  A closing date within 30 to 50 days after the auction event can be accomplished.

COSTS OF SALE FOR A REAL ESTATE AUCTION
COMMISSION, BUYER'S PREMIUM AND MARKETING BUDGET

1. Real Estate Commission.  The real estate auction environment allows us to structure sales in which some commissions and fees are not paid by the seller.  The type of program outlined in paragraph 2 below allows the selling entity to net a higher percentage
   of sale dollars.
   

2. Buyer's Premium.  A Buyer's Premium of a particular percentage of the high bid or offer price is added to the high bid or offer price made before, at, or after the auction to determine the total purchase price.  The Buyer's Premium is divided in a predetermined ratio between seller and broker/auctioneer.  We find that our sellers recover substantially all of the marketing costs of the program through this method and effectively reduce their cost of sale.  Third party brokers are also compensated through this method and effectively reduce their cost of sale.  Third party brokers are also compensated through this method for registering their prospect who is the prevailing bidder at auction.
   

3. Marketing Budget for a Multi-Parcel Real Estate Auction Property.  We find that the specific marketing costs for most real assets range from 1% to 3% of the value of the asset.  Appealing to a wide range of purchasers in a greater geographic area insures new opinions of value and maximization of price.  A complete itemized ad budget will be given to you for your review and approval prior to any placement.  The marketing costs are reimbursed to the seller thru the buyers premium as noted in #2 above.

I know these types of programs can produce excellent results.  Our marketing represents a well-conceived real estate sales and asset disposition strategy, designed to have maximum impact throughout the region.  Our experience is that there is  no other practical method for capturing the true depth of market for this type of property in a time sensitive manner.  We are able to focus the attention of the marketplace on your property while other properties are still languishing on the market.  Thank you again for taking time to review this information.

Looking forward to discussing this program with you at greater length, we are:

DUTTON AUCTION AND REALTY CO.

Joel Dutton, President
Real Estate Broker & Auctioneer