Executive Conversations is a HousingWire web series that profiles powerful people in the financial industry, highlighting the operations and the people that make this sector tick. In the latest installment, we sit down with two executives from Chronos Solutions — Matt Slonaker, executive vice president, and Kristina Krutchik, director of auction services —to discuss the company’s strategy on hard-to-sell assets.
HousingWire: What are some of the strategies Chronos Solutions uses when it comes to hard-to-sell assets?
Matt Slonaker: What’s left in most of these portfolios are very distressed assets — a lot of the cream of the inventory has been sold. These assets take a lot more hand-holding, and one of the keys to our success is that we have so many different components — asset management and valuations — to leverage different channels.
One of the first things we determine after we receive the portfolio or the assignment is who are the likely buyers for this property or portfolio? Once we have the right profile of the buyer, we use valuation tools, such as BPOs, and talk to the vendors we use for value reconciliation to determine the right value. There may be a curative issue, but if the property is in a nice or expensive owner-occupied neighborhood, our valuation needs to take that into consideration.
After we know the buyers and the value, we have three or four primary channels we can use to sell the property.
The first option is a retail strategy, putting the property on the MLS, but also making sure that we have trained agents to do the open houses and advertise the property. This is a key requirement: we want the agents to be out in the neighborhood and inspecting the property every other week or so. This is really key to the intelligence we get about the property.
The second channel is our RealtyBid online platform, which has seen more than 65,000 investors buying online in the nearly 20 years it’s been around. RealtyBid saw a 142% increase in sessions in October, and actual visits have increased almost 200% year-over-year. This shows the ability of this team to capture additional clients and draw more traffic to the properties.
The third option is our disposition channel, which is an offshoot of RealtyBid, but happens offline with institutional buyers. Our director will go out there and work with companies like Colony American Finance, Invitation Homes, Goldman Sachs — institutional buyers at that level — to draw them into mini bulk sales. In one case, one of our bank clients sold 65 properties offline to an institutional buyer that was a regional investor, which saved the bank $2 million to $3 million in holding costs.
The last option is donation, which we use only as a last-ditch effort for properties that are extremely hard to sell, to sweeten the pot for other buyers.
HW: How does RealtyBid’s experience with online auctions give Chronos clients an advantage in this area?
Kristina Krutchik: RealtyBid was the first online auction company out there in our space, so they had time to grow and learn throughout the process. Many of our team members have been here for most of that time — 10 or15 years. What we consistently hear from our customers is how we differ in customer service. We give everybody a unique buying experience, you are not a number when you call in. It’s a very personalized process, even for our institutional buyers, it’s very customized. Our Director of Client Engagement works with them to determine what they are looking for and give them exactly what they want.
Slonaker: The other piece is we are able to win some of these opportunities by creating additional value in our pricing structures. If we were purely an auction company like other companies in our space, we would have to stick to 5% of gross sales price, whereas we can differentiate that pricing structure.
HW: What sets Chronos apart in the increasingly crowded auction space?
Slonaker: If you are looking purely at the technology of delivering properties online, there are a lot of similarities between auction houses. Where we add value is providing as much intel as possible about the property — title information and valuation information. Then you add in our customer service, where we have VIP desks and we are creating a VIP experience. If there are curative-related issues, we take the onus of getting those fixed, versus getting the buyer to fix it.
The biggest differentiator for us is the fact that we’re not a pure vendor in the auction space, we have asset management, title and settlement, etc., and bundling the entire process under one vendor is very important as volumes are decreasing. Why have five or six vendors when you can have one?
Krutchik: On the flip side, we deliver incredible customer service for all our clients, not just the buyer, but the seller, too. We have this range of products, but we don’t use them in the same way for every client, we tailor them to the client’s pain points. We work very closely to develop strong relationships so they can come to us even for a one-off.
By working with Chronos, clients get one vendor who is overseeing and managing the entire process. It eliminates the finger pointing: if something goes wrong, it’s on us to fix it.
HW. How does Chronos customize its asset liquidation services?
Slonaker: One of the things we are rolling out is a dual-path process, where we market a property both through a broker and the MLS and online via auction. The dual path is meant to give added disposition exposure for a property, so we still go retail with the current asset manager, but when offers come in, they also show up as a bid on that property. With the auction, we will reach our additional 65,000 investor buyer base, making sure that the retail offer is truly the best offer.
By bringing every offer to the online marketplace we can assure that there is no agent or buyer collusion, and test the market before we accept an offer. We can get that asset manager at least two times the amount of buyers and visits, which leads to better execution and higher returns.