Pacific Auction Exchange (pax) Blazes The Trail As Realtors, Buyers, Sellers Rapidly Embrace Home Auctions

With the National Association of Realtors estimating one in every three residential properties sold will be sold by the auction method by the year 2010, a progressive West Coast-based company is cornering the market as the first and only real estate auction-specific franchise company in the nation and leading the way to mainstream acceptance of home auctions.

With 50+ Pacific Auction Exchange (PAX) franchises operating in California and Nevada, projections of 150 units up and running by August 2008, and a recent announcement of aggressive national expansion plans as well as a powerful online component, PAX is a major player in a fast growing real estate trend: According to the National Auctioneers Association (NAA), residential real estate auctions grew 12.6 percent in 2006, generating $16 billion in that year alone.

"Buyers, sellers, realtors, bankers, and the public in general are increasingly realizing that auctions are the ideal way to move property efficiently. It's a win-win for everyone involved in the transaction," said Michael Hynes, Regional Sales Director for PAX. "Sellers especially like the idea of a one-day event where qualified buyers crowd in front of their property with cash in hand, rather than months of showings, investing in home stagers and the pressure of keeping their house pristine clean for months on end." By being the first to franchise the concept and establish a structured, branded process for auctioning, PAX is helping to break down stereotypes that associate auctions with distressed properties. Hynes points out a series of "non-distressed" situations where auctions are becoming more common, such as inheriting a house from a will, new construction that's selling slowly by conventional methods, or people who are stuck between two houses. "With the deluge of homes on the market, weakened prices and other economic factors, auctions are the ideal solution in many different situations where a home sale is involved. We're seeing it as a first choice of sale rather than a last resort," he said.

The energy and excitement surrounding a PAX auction site paints a clear picture of the process. Typically, a crowd of potential buyers, along with realtors, family members, and PAX franchise employees, gather in front the home. Potential buyers register with cashier's checks they brought on-site the day of the auction. A professionally trained auctioneer opens the bidding, and often within minutes, the word "SOLD" bellows across the lawn, followed by the loud cheers of the winning bidder and the happy seller.

"The increase in auctions is not a fad, it's a real market shift," Hynes said. "Realtors are realizing that auctions are not competition or threatening to their profession, but rather a valuable tool to add to their business portfolio, while at the same time property owners are increasingly attracted to the expediency and financial benefits of the auction method." Proof of realtors' acceptance of auctions can be seen in the number of realtors buying PAX franchises, or working directly with PAX to supplement their income during the housing slump. PAX benefits realtors in several ways; it generates a list of interested and highly qualified buyers; assures that property will be sold at true market value in a relatively short period of time; and it results in referrals of new clients and return business from the people who attended the auction.

The PAX auction method also benefit sellers by attracting buyers who are qualified, liquid and prepared to buy, by reducing carry costs and by bringing true market value at the time of sale. One additional benefit for both sellers and realtors is a maximum of two, two-hour "previews" of the home before the auction, eliminating the need for lengthy open houses, lock boxes, as well as last-minute calls for realtors to show the property. Buyers benefit because it allows them to determine purchase price, eliminate long negotiations and establish exact closing and purchasing dates.

Here's how it works. First PAX evaluates the property to determine if it is an auction candidate. Next, the property is listed using a proprietary, Department of Real Estate approved auction listing agreement and the seller selects the auction date, while the real estate auctioneer develops a marketing plan to attract potential buyers. When auction day arrives, qualified bidders register with their certified funds and are issued a bidder's number and card. The purchase agreement is executed the day of the sale, and a 5-10 percent down payment is collected from the buyer. The sale will close within 30 days using a pre-determined escrow company.

The PAX Story PAX was established in 1999, after founder Chuck MacAtee learned that the auction method, popular in his hometown of Paducah, KY, was virtually non-existent in California. PAX began real estate auction operations in January 2001, with ground-breaking franchise operations in November 2002. Today, PAX is the fastest-growing real estate auction company in the country, uniquely positioned on the cutting edge of a rapidly expanding change in the way real estate is bought and sold. It is the only home auction company to have its own proprietary contract approved by the California Department of Real Estate.

PAX offers an affordable franchise opportunity ideal for real estate industry-minded professionals. The franchise fee is $25,000 and the initial investment range to open a PAX is between $15,000 to $20,000. Potential franchisees must have a real estate license, a broker of record and a C-Corp or S-Corp approved by the Department of Real Estate.

About Pacific Auctions Exchange Pacific Auction Exchange, Inc. (PAX), with corporate offices in Bakersfield, CA and Pleasant Hill, CA, is the only real estate franchise company in the United States specializing in the auction method marketing. PAX was established in 1999 and began franchise operations in November 2001. Taking a strategic approach to growth, PAX plans to have 150 locations in operation by second quarter 2008.

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