Entrepreneur Chad Roffers came into the world of real estate by following a somewhat unconventional path. He earned a degree in political science from the University of Colorado at Boulder, and worked on his MBA at the University of Denver while simultaneously serving as the director of business development at US WEST, a Bell telecommunications company. It was here that Roffers learned the ins and outs of high-stakes deal negotiations with many formidable companies, including AOL Time Warner and AT&T.
Roffers got his first taste of real estate as a broker with Michael Saunders & Company, a Florida-based luxury real estate brokerage, where he was named Rookie of the Year in 2002. Less than two years later, Roffers decided to merge his experience in closing high-value transactions and harnessing emerging technology by co-founding SKY Sotheby’s International Realty.
As the president of SKY, Roffers spearheaded the movement to bring residential real estate auctions into the mainstream. In 2008, he became Chairman at Concierge Auctions, which has quickly become the go-to firm for luxury real estate auctions, selling $1 billion in properties to date.
We chatted with Roffers about real estate tech and the business of auctioning.
BuzzBuzzNews: What drove you to real estate? How did you break into the industry?
Chad Roffers: I began my career in real estate in 2000 with the goal of incorporating what I had previously learned from working in Silicon Valley during the tech boom. I saw a void and a need for more efficiency and transparency in real estate transactions.
I wrote a business plan that included extensive use of technology and my first step was to dive into the industry by selling on the ground level as an agent before establishing a brokerage and finally joining Laura Brady at Concierge Auctions.
BBN: What did you learn about the industry as a broker that planted the seeds for Concierge Auctions to later take root?
CR: After learning the industry as an agent and then a broker/owner, I decided it was the right time to dust off my auction business plan in 2005. Macroeconomic indicators pointed towards a pending recession and the luxury real estate market was especially concerning, particularly in Southwest Florida, where I was working at the time. Inventory was rising and absorption was declining. I knew that auctions could help sellers who wanted to separate their properties from the competition and entice buyers to act.
The economic downturn of the early 2000s propelled the founding of Concierge Auctions, as many sellers needed to monetize their properties on an accelerated timeframe. However, I knew the time would come post-recovery when the firm would service non-distressed sellers, which is where we are now. Our clients have one-of-a-kind properties that are difficult to value and that have small buyer pools. The auction process aggregates all interest and identifies true value through competition.
BBN: What are some of the factors that you consider when evaluating whether a property is a good fit for the Concierge Auctions model?
CR: We curate our properties based on four criteria:
The quality of the property (price point, condition, amenities, etc.)
The location of the property (Is it an “A+” market? Is it a desirable location within that market?)
Seller expectations (Does the seller have a reasonable view of the market value of the property?)
Broker partner (Will the listing agent be a positive contributor to the auction process?)
BBN: There have been several highly publicized homes that didn't sell with Concierge Auctions. Given the selection process, why do you think some homes ultimately don't sell?
CR: Our sales team is highly skilled at curating the best inventory, but from time to time the buyer pool for a given property may be smaller than we had anticipated; the interested buyers may not be available to bid on auction day; and/or an outside circumstance might be affecting the market dynamics.
Ultimately, we work with our sellers. Prior to the start of any auction we equip our customers with information on relative demand. Occasionally sellers elect to withdraw their properties if the likely range of sale price is out of sync with their expectations.
BBN: Why auction? And what does the buying and selling process at Concierge Auctions look like?
CR: Auctions are ideal for selling one-of-a-kind, incomparable properties. Every market has a threshold above which homes are more difficult to monetize, and the typical tools of price reductions and prolonged advertising and PR exposure can hurt more than help the outcome of sale. Especially when it comes to $5 million, $10 million and $20-plus million homes, price often has no bearing on interest level, and price reductions are ineffective.
Typically, our properties are marketed for four weeks prior to the auction date. We deploy a dedicated project sales manager to work alongside the listing agent, educate potential bidders about the auction and facilitate registrations. The properties are typically available every day during this timeframe for potential bidders to preview and conduct inspections.
Our mobile bidding app allows buyers to participate in our auctions in real-time from anywhere in the world. On the auction day, bidders are able to watch bids live, and/or in conjunction with a phone or proxy representative.
BBN: What is it about Concierge Auctions' philosophy that sets it apart from the competition?
CR: Our award-winning team is recognized as a cutting-edge global force, having sold over $1 billion in high-end properties, with activity in 37 US states/territories and 15 countries. We host a database of over 420,000 global contacts and a Private Client List of HNW individuals who have raised their hands — and their paddles — at our auctions.
Concierge Auctions has been recognized by Inc. Magazine as one of the fastest-growing companies in America for the past three years; our marketing team has won 20 marketing awards from the National Auctioneers Association (NAA) and USA Today, and 15 Telly Awards for film production; and our President, Laura Brady, and I have been recognized as two of the Most Influential People in Real Estate by Inman News.
BBN: How has Concierge Auctions lived up to your initial hopes for the company's success?
CR: Our success at Concierge Auctions has been hugely gratifying; however, we’re only scratching the surface. The need for our platform is growing — we have more sellers and agents than ever asking if we can help them.
BBN: The most expensive foreclosure in NYC history is in process at One 57, the second high-price foreclosure in the building. Do you see the auction process becoming more mainstream in real estate, especially in the luxury market?
CR: The auction process is definitely becoming more popular in the luxury market. Our firm represents the majority of luxury property auctions and our sales have increased every year since 2008. Last year, we surpassed $1 billion in sales and we will reach our next $1 billion by the end of 2018.
BBN: In real estate we hear a lot about VR and parts of the sales process becoming digitized. How do you see technological advancements impacting the real estate industry further and possibly become a part of the Concierge experience?
CR: We utilize VR immersion experiences for our properties and we’ve certainly had some buyers purchase sight-unseen. However, most clients want to visit the properties first-hand, or at least send someone to visit on their behalf. We’ve had buyers send financial advisors, family members, friends, interior designers and even their pilots to view for them.
BBN: What ground do you see Concierge Auctions breaking next? What's next for the company and yourself?
CR: We continue to gain depth in our database — knowledge about the types of properties our buyers are looking for — and we are curating properties specifically for them. Currently, over one-third of our bidders come directly from our database for each sale and that percentage is growing.
It’s a powerful position to have such deep relationships with thousands of well-heeled clients from around the world and to help them transact with what are often their most significant financial investments.