The Multi-Par System
Using the multi-par system to sell multiple parcels of real estate has proven to be extremely effective. By utilizing this system, an auctioneer can maximize the amount that a parcel will bring while ensuring that all buyers have an opportunity to bid on the tract they want. Previous methods tended to favor buyers who had deeper pockets and often times left single-tract buyers at a big disadvantage. The multi-par system puts everyone on an even playing field regardless of how many tracts a buyer intends to purchase.
EXAMPLE
Selling 11 tracts as follows:
1) 1.5 acres
2) 1.75 acres
3) 2 acres
4) 2.3 acres
5) 2.4 acres
6) 5 acres
7) 5 acres
8) 5.5 acres
9) 5.7 acres
10) 6 acres
11) 42 acres
In this situation, tracts 1-5 will be offered first, tracts 6-10 will be offered second, and tract 11 will be offered last. Smaller tracts like 1-10 will generally be offered by the dollar amount, while larger tracts like 11 will be offered by the acre. It is simpler and less confusing to sell comparably sized tracts together, allowing bidders who are interested in similarly sized tracts to compete with one another.
The bidding starts on tracts 1-5, with the auctioneer taking bids just like a regular auction. Bidder 500 has the winning bid of $50,000. Bidder 500 now has his choice of tracts 1-5 at the winning bid price of $50,000 per tract. Bidder 500 chooses tracts 1 and 2. The auctioneer now reopens the bidding on the remaining tracts, 3,4, & 5. Bidder 510 is the next winning bidder at $45,000. He now chooses from tracts 3, 4, & 5 at the price of $45,000 per tract. If bidder 510 does not take all three remaining tracts, then the bidding will once again reopen. This process will continue until all tracts have a bid price and bid number. LOOK BELOW to see the multi-par board.
Once tracts 1-5 have a bidder and bid number on the board, the auctioneer will open the bidding on tracts 6-10. Again, since these five tracts are similar in size, they are being offered choice, by the dollar amount. So, the bidding is opened and bidder 520 is the winning bidder with $100,000. He may choose from tracts 6-10, any or all tracts, at $100,000 per tract. Bidder 530 takes only one tract, #8. The bidding is now reopened on the remaining tracts 6,7, 9, &10. The next winning bidder is 540 with a bid of $90,000. He decides to take all the remaining tracts at that bid price. LOOK BELOW to see the multi-par board.
At this point every tract except #11 has a bidder and bid price on the board. The auctioneer now opens the bidding on tract 11. Since it is a large acreage tract, it is offered by the acre. Bidder 580 is the winning bidder with a per acre bid of $7,500. The per acre bid price is multiplied by the number of acres and the total bid price for tract 11 is entered onto the board. Click HERE to see the multi-par board.
Round One of the multi-par system is now complete. Every tract has a bid number and bid price on the multi-par board. At this point, round two begins. Any bidder who is not already on the board from round one and would like to enter during round two MUST BID ON TWO OR MORE TRACTS by raising the bid price $500 per tract. So, it is advisable to a bidder who only wishes to buy one tract to be the high bidder in round one on the tract that they wish to purchase. This ensures that the bidder will be able to continue bidding on their one tract throughout the auction should another bidder come along and group several tracts together. It has been our experience that persons who wish to buy several tracts or the entire property will wait until the second round before bidding. This gives them the opportunity to see how well the land is selling and how many people are bidding. Once again, if you are only interested in one tract I strongly recommend that you make an effort to get your number on that tract in the first round. Even if another buyer groups your tract with another, you have the advantage of re-raising just the one tract that you are interested in.
At this stage the auctioneer is no longer calling bids like a conventional auction. Bidding is still done either directly to the auctioneer or to one the ground men, however, anyone wishing to bid in round two simply names which tracts they would like to raise. With each raise the auctioneer will announce which tracts are being raised and the bidder’s number is placed on the board along with the adjusted bid price.
Let’s now say that bidder 600 would like to enter the bidding. He wants the entire property so he tells one of the ground men to raise every tract to him. The auctioneer announces that buyer 600 has raised every tract, and the board is adjusted accordingly. LOOK BELOW to see the board.
All bidders previously on the board are now out. However, since they were already on the board in round one, they have the option of re-raising one or more of their original tracts. So, if bidder 530, who was in on only tract 8 wishes to re-raise his tract, he may do so. If bidder 600 re-raises again, then bidder 530 may continue to raise the bid on tract 8. This continues until one of the bidders backs off and ceases to bid on the tract.
If you are interested in two or more tracts you may enter the bidding at any point during the second round. Keep in mind, however, that if you bid on two tracts and are outbid on one of them, you are still the winning bidder on your remaining tract.
Initially there will be several bidders raising various tracts and jockeying for a piece of the action. However, as the bidding progresses and the prices rise, fewer and fewer bidders will compete. The bidding will start to slow and eventually cease completely, at which time the auctioneer will announce the property SOLD as it appears on the board. LOOK BELOW to see an example of how the board may look when finished.
Notice that several new bidders entered the mix, and some of the original bidders were able to successfully defend one or more of their tracts. Also notice that bidder 600, who raised all the tracts early on, was outbid on all but tract 11 and would still be the purchaser of this tract.
The process may seem confusing at first but becomes very natural once the auction begins. The multi-par system both maximizes the seller’s proceeds and allows individuals who are interested in only a small portion of a property to compete with bidders who are trying to buy the entire parcel. As with an auction of any type, a bidder is competing against other interested bidders. The price that you will pay for real estate sold at auction is heavily based on the number of interested parties on the day of the sale. The multi-par system gives all of the bidders an opportunity to compete, instead of limiting the action to a few bidders with very large bankrolls.
