Mike Russo, who auctioned off the homes of NBA legend Michael Jordan and former NFL star Kurt Warner, is expanding SparkOffer, the proptech solution designed to help sellers get the best price for their homes.
SparkOffer debuted last year, and in December is opening up its platform to all — an unprecedented move prompted by market demand and Russo’s own experience. Sellers can log in to SparkOffer and choose to put their home up for auction, choose their own reserve price and allow bidders to publicly battle it out.
SparkOffer has its roots in two pivotal events in Russo’s life: a personal financial meltdown during the 2008 recession, and his subsequent rise to the top ranks of luxury home auctioneers.
“I had $1,000 to my name,” Russo said. “I had to short-sell my house. It was emotional, scary, tough. Banks suck. The whole thing was a very difficult process.”
Auctioning on SparkOffer is launching at a time when investors are preparing to cash in on a wave of foreclosures and distressed properties expected next year. The pandemic has prevented millions of Americans from earning a paycheck, and many have fallen behind on paying their mortgages.
As of two weeks ago, nearly 3 million U.S. homeowners were reportedly in forbearance programs, a sharp decrease from 4.76 million at the pandemic’s peak. But with a second wave rising across the nation, any economic recovery seems a long way off, and the number of people who default on their loans could go up.
Homeowners who find themselves forced to sell in this environment should recognize that without competition, the odds of getting a good price are slim, said Russo. A legion of data-driven investors armed with the latest data and AI models can easily sniff out vulnerable properties and strike the best deals. They also have time on their side, while unemployed or struggling homeowners do not.
Russo recognizes that homeowners, out of fear and frustration, often accept offers from lowballers if it means they can quickly get out of financial trouble.
“The best thing that can happen for a seller in this situation is to actually put their house up for auction,” Russo said. “When buyers compete, a seller wins. Often, the average person just turns to those people who advertise ‘We buy ugly homes’ or ‘We buy houses for cash.’ People really sell their houses to those people because it’s easy. But it doesn’t mean it’s best. If you pit five of those companies and local investors against each other, you stand to make more money.”
For people facing a short sale, the DIY nature of SparkOffer affords total control over the home-selling process, allowing them to manage offers without having to speak to buyers or brokers.
“My platform is open to sellers, developers and agents,” Russo said. “The goal is for it to be DIY. Whether you’re a real estate agent, a seller, if you want to put your property up for sale or auction, we have the platform to do it.”
Russo and his team began building the auction software in June. Since then, he said, the platform has licensed the software under a private label and handled over $600 million worth of bids and $50 million in real estate sales.
“With my history in the auction business,” Russo said, “there’s no doubt in my mind that people are going to look for auction as an outlet for home sales. We have the platform and more expertise than pretty much anyone.”
Russo’s expertise comes from his time spent as a partner at Concierge Auctions starting in 2010, not long after he was forced to sell his home. At Concierge, one of the country’s best-known auction houses, Russo clawed his way back to financial health, auctioning off $1 billion in homes during his seven years at the company. After leaving Concierge, Russo represented a buyer at auction for a Florida home, selling for a record-setting $45 million.
The irony of the situation wasn’t lost on Russo — selling grand estates and mansions after losing his own home, rubbing elbows with the fabulously rich despite not even qualifying for a credit card. Russo recalls once flying into Chicago late at night and trying to rent a car using a prepaid credit card, which the rental car company refused to accept. Luckily for Russo, a friend let him borrow one of his cars at 11 p.m.
Of that period, Russo said, “It was very, very humbling.”
Adversity has made Russo empathetic to the plight of homeowners struggling to sell. His advice to them is to speak with a lawyer, and to try and stay patient.
“Don’t rush. Let’s take the proper steps through the process to best put your house for sale,” Russo said. “Let’s get competitive offers so you can make the right choice. And remember, life goes on. Remember, if your kids have something to eat and a roof over their heads and nobody is sick or dying, you’re having a good day. It may not feel like it, but you are.”
For more details or to get on the December waiting list email [email protected].