Friday, June 08, 2007

Auction business appeals to family

Auction business appeals to family
Dad, daughter, sons will sell just about everything

Claire Bush
Special for The Arizona Republic
Jun. 7, 2007 12:00 AM
Things have changed since auctions began in ancient Babylon around 500 B.C.

Then, the hottest items on the block were women of marriageable age, and the merchandise was sold "as is." Today, people are no longer considered marketable goods, but just about everything else, from RVs to ranch land, have been on the block at a sale held by Cunningham & Associates, Arizona's oldest family-owned auction house.

The third-generation business began with a single farm auction in rural Black Oak, Ark., in 1947. Items up for bid included used linoleum, a John Deere tractor and eight geese.

Business grew over the next several decades, and by the 1970s, Bob Cunningham had relocated his family to Arizona. Today, sons George and Carl and daughter Audrey work alongside him to vend everything from heavy equipment and land parcels to jewelry and aircraft.

The company specializes in liquidation auctions, handling more than 90 percent of the bankruptcy and secured creditor sales in Arizona. In 2006, the company held 97 auctions.

According to George, the chief auctioneer and appraiser, bankruptcy filings in the state are leveling off after a spike the past several years. However, he sees an upward trend for real estate, both commercial and residential, that will hit the auction block through bankruptcy within the next five years.

Cunningham's auctions are "no reserve," meaning there's no set price for an opening bid. The method guarantees a sale, although the price an item fetches can raise eyebrows.

"Most of the people who come to us really don't know what their assets are worth," George says. "Especially with real estate, a property is going to be worth as much as a buyer will pay for it.

"You don't put a parcel on the market for $1 million and have a buyer offer you $2.5 million, but at a no reserve auction, the bidding prices can surprise you," he adds. "We recently sold a 32-acre landfill outside of Glendale for $4.7 million, which was substantially more than what the seller anticipated."

Carl Cunningham, the firm's real estate broker, joined 10 years ago after a brief detour into medical school at Texas A&M. "My dad was selling a couple of HMOs at the time," he says. "That made me reconsider."

Carl has no regrets about his career move. "Each day is different. Besides real estate, we sell everything from phone systems to supersonic jets, so I've developed a broad range of knowledge, and a broad range of buyers as well."

The growth of Internet auction sites such as eBay has been "a tremendous help for our business," according to George. "EBay has brought the auction method of marketing to the world. People are now familiar with the whole process. It's increased the comfort level for buyers."

Cunningham's Web site, along with word of mouth, provides the majority of advertising for the company. "We get about 30,000 hits a day and have 17,000 subscribers to our site," George says. "Right now, about 70 percent of the people at our auctions learned about us online."

For the past sixteen years, commercial real estate investor Joe DiBazar has been a regular visitor to Cunningham's weekly auctions, held at its south Phoenix warehouse. DiBazar, owner of AAA Full Transportation, manages a fleet of about 800 medical transportation vehicles throughout the state. "I'm a businessman myself, and I appreciate their honesty," he says. "They don't have gimmicks."

Dibazar, who views the auctions as "a hobby," recently purchased a ranch and 627-acre farmland in Winslow, which he will develop as a working cattle farm.

He usually shows up to bid every few weeks "just to see what's new," he says. "I like to see what's available, and decide from there what my next project is going to be."

Dennis Alonso of Phoenix has been a regular for the past two years. "I've bought and sold real estate in Arizona for 15 years," he says. "There were more novices (at the auctions) a year ago, when everybody wanted to buy real estate and get rich. The number of actual bidders didn't go up, though."

Alonso has a system for his bids. "You stay rational and keep emotion out of it, and you'll be all right," he says. "There's a reason the auctioneers talk fast; it's to get you excited, but emotion should not rule over logic when you're making a financial decision."

Alonso has purchased property for prices ranging from $2,000 to $400,000. "It's a treasure hunt; you can't be too picky," he says. "I buy commercial and residential properties. I like the no-reserve policy, because at the end, somebody's going to go home with the items.

"With eBay, where many items are removed if they don't meet the reserve price, you don't have the same feeling of a true auction. At the Cunningham's, what they promise you is that by noon on Saturday, your property will be sold.

"It's like playing Monopoly, only for real."

Although Carl Cunningham spends his days behind the auction block, he doesn't survey the items for sale with an eye to purchase. "People ask us all the time if we get good deals on things," Carl says. "Our code of ethics doesn't allow us to bid on the items we sell. "Personally, with a 2-year-old at home, I'm on eBay a lot hunting down baby furniture. That's the extent of my personal bidding experience."

Bush is a freelance writer in Phoenix.