Spotlight on: Richard Kruse, President, Gryphon USA

November 13th, 2013 by melissa

Spotlight on . . .Richard

We recently had the opportunity to talk with Richard Kruse, President of Gryphon USA. Recently appointed to the Ohio Auctioneers Commission by Governor John R. Kasich, Richard has vast experience with both live and online auctions, and has recently expanded his company to include Specializing in asset management and liquidation, Richard continues to be a strong leader in this sector of the field. Topics discussed include the recent uptick in real estate sales and their impact on the auction industry, online auctions, and the property auction forecast for 2014.

PA: Tell us about your company Gryphon USA and why you decided to launch this specialized organization.
RK: Gryphon USA, Ltd. is a multi-faceted asset management and liquidation firm focusing on the operations and dissolution of single assets through and including entire companies. Gryphon maintains a receivership and asset management group, commercial auction practice, art, antique and pottery auction group and real property management group. Real estate transactions are managed through Borror Properties Real Estate.

Back in 1997 I got myself involved as a real estate broker in a foreclosure of an 8-unit apartment building. It was facing foreclosure and I spent a good deal of time with the attorneys trying to come to resolution. Eventually the property went to auction and I became friends with the auctioneer. He hired me to focus on booking auction deals through networking in the legal and banking community. Six years later I wanted to open my own business and, after working in the niche for so long, it was just a natural progression.

PA: Congratulations on your appointment to the Ohio Auctioneers Commission! Please describe your role and responsibilities in this prestigious post.
RK: The commission oversees the budget for the auctioneers’ program, approves educational sessions in the state, reviews and approves applications for accreditation as an approved auction school for Ohio licenses and advises the Department of Commerce on issues impacting the profession. In the next year we hope to review multiple positions on the licensure of online-only auctions/auctioneers doing business in the state. There is currently no licensure, so it should be an interesting debate.

PA: With your company’s focus being on distressed asset management and liquidation, how has the real estate market over the past 5 years affected your business?
RK: There has definitely been an uptick in the amount of distressed projects and the people in the niche. When we opened the business in 2003, we managed about 12-15 files at a time. In 2008 to 2010, it was closer to 50-60 files at a time. Some files would contain one large property and others would have 80 to 100 rental houses. The files were getting bigger but the lending was getting tighter, which made assets harder to sell. We are back down to 15-20 files at any given time now, which actually makes me feel like things are slow.

PA: How do you think the recent surge in real estate sales is affecting commercial property auctions – positively or negatively? How is the uptick affecting the state of Ohio overall?
RK: Auctions have been around since 500 B.C., but I think in the past 5-10 years, people have become more comfortable with the process. It’s almost impossible to find someone that hasn’t bought something off eBay. I think that auctions are now mainstream, which is continuing to make them a popular sales vehicle. If you look at how much property is being sold by auction, the percentages rise versus general brokerage every year. People understand auctions better and are more comfortable buying and selling this way. In my opinion, the popularity of real estate auctions has less to do with economic factors than it does with consumers’ comfort zone.

PA: What type of buyer pool is frequenting your auctions? (ex. foreign investors? large companies? local business owners?)?
RK: It really depends on what we are selling, though for the larger properties in particular, I have seen an uptick in Canadian bidders.

PA: In July, Gryphon USA announced an expansion with OnlineAuctionUSA. How has this online-only format impacted your organization?
RK: It’s been great. More bidders than live auctions, easier sales reconciliation and we are seeing buyers from all over the country. It is not uncommon for a buyer to be 5 states away and drive in to pick up their product. You won’t get that competition in a live sale.

PA: Does social media play an active role in your marketing plan?
RK: It does, but I am still figuring it out.

PA: What do you think is the most effective vehicle of advertising for an online auction versus a live auction?
RK: I’m not sure that I would do anything different between the two. That said, marketing has changed over the past 5 + years. Today most of our response comes from electronic media. I’ll still send postcards to a targeted list, but my newspaper advertising is almost non-existent.

PA: What are your predictions for the real estate auction industry in 2014?
RK: I’m optimistic but a little concerned at the same time. I think we have hit the bottom and rebounded, but lending remains tighter and there is more “lender influenced” property out there than people see on the surface.

PA: Lastly, what would your three top tips be for buyers and your three top tips for sellers?
RK: For sellers, read the contracts and understand the terms of the deal or auction. Many people still just sign things without reading them. Second, work with a specialist. Someone who knows not only the asset class you’re dealing with, but also the process. Buying or selling at auction is different than a general brokerage transaction. Receiver sale is different than bankruptcy and a short sale is different than bank REO. Last tip for the seller is to offer your property at a market price. You will eventually lose more carrying the property for an extended period, then reducing price and having a shop-worn property than you will offering at a market price and staying firm.

For buyers, lead off with a realistic offer. A lot of sellers these days, especially trustees and bank officers, will not counter low ball offers. They just say no and don’t answer the phone the next time you call.

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