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Oren Klein: Pot Luck

Oren Klein, photo courtesy of Victor Chu, victorchuphoto.com

Oren Klein is a managing partner and cofounder of AuctionAdvisors in Montclair, New Jersey. With more than 16 years of auction experience, he is responsible for auction sales and client management throughout the United States. Before entering the traditional auction business, Klein was a partner at a real estate investment brokerage company, where he concentrated on the acquisition and disposition of commercial properties.

Klein holds a bachelor’s degree from Rutgers University and is a graduate of The World Champion College of Auctioneering. He is a licensed real estate broker in New York, New Jersey, and Connecticut; a licensed auctioneer in Pennsylvania; and a court appointed receiver in New York State. He is Vice President - Programs for the TMA New Jersey Chapter and a member of the chapter’s board of directors.

Q: What might people who only know you professionally be most surprised to learn about you?

KLEIN: The first TMA regional event that I went to was the 2010 Mid-Atlantic Regional Symposium at the Borgata in Atlantic City. At the time, I had a BlackBerry, and I would play poker on it. I had never played live poker, any kind of poker. Back then, the TMA Mid-Atlantic event would end Friday at about 10 a.m.

The Borgata Summer Poker Open, which is a World Series of Poker event, was starting that day, and a couple of guys from TMA were going to play in the event. So I called my wife and told her I was going to play in the event. She said, “How long do you think it’s going to take. You’ve got to deal with the kid.” I said, “Oh, it’ll probably be about two hours.”

So I sat down and 12 hours later, at 11 p.m., I had 50 percent of all the chips in play. I’m winning the tournament. I was like, “This is a career change!” It was getting late, and my wife was texting me, saying, “You’re kidding! You’ve got to come home! What are you doing?”

I don’t know if I got distracted or what, but I ended up losing around that point. But I did place 31st out of 508 players. When you cash in a World Series of Poker event, you get ranked nationally. So if you Google “Oren Klein poker,” you’ll see I cashed in a professional poker event. I won $414.

So, of course, after that I thought, “Wait a second. I’m really good at this.” I was not good. That was where luck met opportunity. You either get the cards or you don’t.

Q: So you decided not to quit your day job. How had you gravitated into turnaround work?

KLEIN: I was a high-stress rental broker in New York City in the mid ‘90s in the West Village. The market was going gangbusters at the time. Then I started working commercial real estate, working on investment property sales. Every once in a while there’d be a bankruptcy case that I’d get involved in, and I found it to be very interesting. I learned a lot from all the lawyers, accountants, appraisers, trustees, and judges—all the professionals in a case. I realized the sale of the asset was one of the most important aspects of the case.

Then in the early 2000s, I jumped on the dot-com startup train, and I started an online auction platform for real estate. 

Q: How was that received initially? Did people warm to online auctions right away?

KLEIN: They actually never warmed to the idea at that time. It was well-received in that we got tons of eyeballs to the website, and we were in the newspapers a lot. We had listed some large buildings, but it ultimately just wasn’t there yet. That venture eventually failed, but it was a good run and that’s what got me into auctions.

Online auctions at the time didn’t take off, but I still discovered all of the benefits of the auction process, of getting people to bid against each other instead of against the seller in a traditionally negotiated transaction. That’s when I found the love of auctions. Then I started working for a traditional real estate auction firm, and I’ve been doing auctions ever since. In the last couple of years, we added another component to the business, which is business liquidations and personal property auctions, so we do the whole gamut of auctions. I do both sales for trustees and Chapter 7s, a lot of assignments for the benefit of creditors (ABCs), and, of course, 363 sales in Chapter 11.

Q: Are most of your auctions now online or live?

KLEIN: It depends. There are a lot of factors that go into deciding whether an auction lends itself to a live auction or whether it will be more successful as an online auction. It depends on the type of assets, where they’re located, and the type of buyers I’m looking for.

Last month, I did an auction involving a refrigeration company in New Jersey. There were about 50 refrigeration-type vans. With those types of things, people from the West Coast are not going to buy them. It’s not worth having them shipped to another part of the country. That’s more of a regional purchase. In that case, it lends itself to a live auction.

Earlier this year, I liquidated the assets of a biodiesel recycling firm. Some of the equipment is very specialized, could be used by people around the country, and could be shipped. That lends itself to an online auction, and we were successful in liquidating that online.

There are many factors that go into it. We think a lot about it before deciding which method we’re going to use. You can’t stick to one process or strategy; you have to be real nimble in this business.

Q: So you were a bit ahead of your time back in the early 2000s, but the market has grown to accept online auctions.

KLEIN: Definitely, but I’m glad I did what I did and learned live auctions and worked for live auction firms. Eight years ago, I broke off on my own with one partner to form Auction Advisors, which does both live and online auctions. Right now, I have a live one coming up. I also have an online auction of more than 100 vehicles in a bankruptcy. The vehicles are located in Santa Fe Springs, California; Newark, New Jersey; Orlando; Dallas; and San Francisco. That’s where the online auction comes in. 

It’s not any easier to execute an online auction versus a live auction, and it’s not any cheaper either. If you’re doing the job correctly, you’re doing everything you’d do for a live auction, from the display advertising, the signage, the direct mail, the press, the email, and the internet. It just happens to be that the actual event takes place online rather than on-site, but the delivery of the assets and everything else is the same. There’s really no difference in the way that one should prepare.

Q: If you could start your career over at this point, would you do anything differently?

KLEIN: I started in the real estate auction business. I got into the business liquidations and personal property auctions just a few years ago. Maybe I would have gotten into that a little bit earlier than I did. 

I’ve done every type of real estate—office, industrial, environmentally tainted, assisted living. I sold a Lender’s bagel factory. I sold a 25,000-square-foot home designed by McKin Mead & White. I’ve sold all sorts of crazy properties. But since getting into the personal property sector, I’ve done some interesting things. If you had told me five or six years ago I would be selling biodiesel recycling equipment or a custom speedboat for a trustee, I would not have believed you.

You learn so much about different types of assets and types of buyers and what they do. Also what’s important is the clients in the insolvency world really overlap with the real estate auction business that we had been successful with, so we were able to leverage the platform.

Q: What have been some of your favorite, most gratifying, or most important engagements?

KLEIN: The biodiesel recycling firm was really interesting. It involved inventory, equipment, and trucks. This was a state court liquidation proceeding. At one point during the process, we realized that even though the company had been closed for almost a year and all its clients had been pretty much poached by competitors, there were still people who were interested in obtaining the client list. 

We decided to auction off the client list, and to everybody’s surprise it brought close to six figures. A few firms that were in the business bid on it very strongly. We turned over the client list and turned something from nothing, where no one thought there was any value—it wasn’t even going to be offered. Something like that can turn the case around.

Late last year, we had a shopping plaza, Goshen Shopping Plaza, in Goshen, New York, a Chapter 11 case. When we went in, the plaza had very low occupancy and no anchor tenant. A supermarket had left several years ago. The only credit tenant was a CVS. The plaza was in disrepair. A receiver had been appointed, and the property had been listed for a number of years without success.

We were able to reposition the asset to reflect what the potential of the center could be by using renderings, getting the buzz out there in the community, and using video and all sorts of methods. That’s how we got people to bid on and get excited about this project, which was languishing. 

A developer came along and paid $8.2 million for it, and it completely turned the case around. Even the credit bidder who came to the auction expecting to credit bid and get the asset was totally surprised when he did not get the asset and was paid in full. All of the professionals were paid. Using creative marketing strategies to monetize assets was very successful. Those are the best moments.

Q: Who inspires you professionally or personally?

KLEIN: My partner Josh Olshin is a TMA member, but he’s also what I call a recovering attorney. He’s a former attorney, which I don’t hold against him because he brings a lot of creativity and valuable insight into how we handle our auctions—helping on structure, organizing the auction to get maximum value. He doesn’t practice law now, but having someone on a liquidation team with a legal perspective is very helpful

He wasn’t even a bankruptcy lawyer. He was a corporate lawyer in M&A and worked for Skadden. He eventually got into real estate, and we met in that field. I got into auctions first, and then he came along. We’d been working together at different firms and then eventually broke off on our own.

Another guy who’s been huge for me through TMA is Steven Mitnick. He’s the most experienced guy in the world of ABCs in the state of New Jersey. I think he’s been involved, he told me, in 300 or 400 ABCs, not just in New Jersey but in other states as well. I met him at a TMA event some years ago. He’s been a real mentor and gave us our first opportunity to work on a business liquidation. He helped guide me toward being successful with it. We’ve been doing great deals for other TMA members and insolvency professionals since then, so I would credit him as a success factor and influencer.

Q: Do you have any advice for someone who is new to the industry or is thinking about getting into it?

KLEIN: I think the most important thing is staying the course. You see a lot of people coming into the bankruptcy and insolvency world, which is very cyclical. It was down for many years, then it was up. It requires understanding where the industry is today and who the players are, and being open-minded. Things are changing. You see a lot of people come in and do a deal or two, and they disappear. They get involved in a couple of things, and they’re out of the business. But if you stay the course, you can be successful.

Q: What role has your TMA membership played in your career?

KLEIN: At this point, I’d say probably 75 percent of our business comes from some sort of relationship we built via our TMA membership. More recently I became the VP of programs at the TMA New Jersey Chapter. I got on the board. After a little bit of time, I became VP of programs. That’s made my existing relationships even stronger, and I’ve been able to build new relationships through other board members, and also connecting with board members at other chapters has helped out a lot. I’ve been on the planning committee for the TMA Mid-Atlantic Symposium in Atlantic City, and I just served this past year as co-chair of the event. Last year I was the head of sponsorship, and I raised close to $100,000 in sponsorships.

Taking a role like that, either being sponsorship chair or being on the committee, and being able to reach out to all these organizations regionally and nationally has really helped advance my business. I’ve made a lot of good relationships, and I’ve gotten involved in deals I normally would not have had I not been part of that. All of those things I can link directly to success in business.

Q: What are you passionate about outside the office?

KLEIN: My wife and I have two little girls. One is 3½, going on 16, and the other one is 6 and is our special needs daughter. It’s very challenging every day, but she’s given my wife and me the ability to view things in a different light. We have to do things differently than your typical family would—it’s our normal way of doing things—but we consider ourselves very lucky.

There is also auctioneering to raise money for charity. At TMA, I’ve done tons of events, probably three or four this year. They may have a silent auction, and then they have a live auction component for certain showcase things, like tickets to Trump National or a condo in Florida for a week—trophy items. I serve as live auctioneer in those charity events, and we raise money for the New Jersey Bankruptcy Lawyers Foundations, St. Peters Orphanage in Newark, Autism Speaks, and others.

I’ve also done auctions for other charities. I’ve done several auctions for WISE, Working in Support of Education. It’s an organization that helps people who need financial literacy skills. They have about 1,000 people show up for that in New York City. 

Q: What items are on your bucket list?

KLEIN: I would like to restore a home. My wife and I like this midcentury modern architecture. We’ve been looking around to find a project locally to restore, something that would accommodate my family.

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