The eBay Cure

How do you sell a mostly vacant, bankrupt hospital? Real estate pro Andrea Cavgalar decided to try eBay to save the listing.

March 1, 2009

Location: Halstead, Kansas
Square footage: 264,739
Lot size: 6 acres
Beds: 177
Year built: 1973
Extras: The nearby Hospital Inn Motel was thrown in as a bonus.

THE CHALLENGE: The Halstead Hospital and Hertzler Clinic had seen better days when Andrea Cavgalar got the listing in November 2005. Once the heart and soul of a quaint Kansas town, the medical facility had fallen on hard times and poor management had led to bankruptcy and massive job losses.

With the 177 beds and medical equipment sold off by the previous owners, the hospital sat empty—except for of the Hertzler Clinic, a drug-rehabilitation center added to the hospital in 1978 that was now run by the new owners.

The new owners were struggling to keep up with the utility bills, which topped $700,000 annually, and were desperate to sell the hospital and clinic, even once considering to sell it for as little as $1.

Cavgalar, a sales associate with Prudential Dinning Beard REALTORS® in Wichita, Kan., knew finding a new buyer wasn’t going to be easy for this monster-sized paperweight.

“Newton, about 30 miles away, had a brand new hospital and you can’t compete with that,” she says. “This couldn’t be a hospital anymore and it was a massive building. I really didn’t think I could market and sell it."

So what approach did you take to overcome the challenge?

CAVGALAR: With a new hospital only 30 miles away, I was pretty positive this building was not going to sell locally as a hospital. So I listed it on eBay to reach a broader audience. That’s what did it. All three of the prospective buyers came from eBay.

To sweeten the pot, the seller agreed to throw in the Hospital Inn Motel, a 50-unit hotel across the street that was not part of the original deal.

It wasn’t easy. I did a lot of worrying. I was up many nights sending e-mails and going over information and posting photos. I also went to a lot of meetings with the mayor, the bank, and the buyers. But I just hung in there. I was determined to get this done.

What made you decide to list the hospital on eBay?

CAVGALAR: I decided to put it on eBay because I had seen another property listed there that was unique and a difficult sell as well. I wanted to reach as broad an audience as I could.

How did you present the property on eBay?

CAVGALAR: On eBay you don't have to have a real estate auction. You can have a general listing and set the price, which is what I did. The sellers didn’t want to do an online auction. So I had help from a friend in designing the layout, and I took the pictures myself for the general listing.

What type of interest did the eBay listing generate?

CAVGALAR: The property was listed on eBay for two months and resulted in three bids.

Tell me about the bidders?

CAVGALAR: The first two contracts were for the full price: $1.9 million. The first buyer, an investor from Florida, agreed to purchase the property within the first week of the listing. He sent a check, flew in, but took one look at the hospital and said "It’s too big." That was Nov. 23, 2005.

The next buyer, an Illinois businessman, came along just days later and wanted to turn the hospital into a psych unit. However, the mayor of Halstead hated the psych unit idea and even went so far as to rezone the property to prevent it. This would also have made it impossible for the clinic to be used as a drug treatment facility, so the mayor eventually changed the zoning back. But the buyer showed up at closing and once he saw it said, "Forget it."

What about the eventual buyer?

CAVGALAR: After the first two deals fell through, a New York businessman, who initially expressed an interest in the property, flew into town with some of his associates to check out the property. The seller agreed to also include the nearby motel into the sale. The businessman went forward with the purchase but at a reduction from $1.9 to $1.5 million.

Do you know what he plans to do with it?

CAVGALAR: The new owner plans to open up a drug-treatment clinic and a head injury trauma center.

How long did the sale take?

CAVGALAR: I got the listing Nov. 23, 2005, and we closed Sept. 19, 2006, so almost a year.

How did you get the listing?

CAVGALAR: I had some friends/clients who were into alternative medicine and had looked at developing a business in the clinic portion of the hospital in August 2005. The hospital wasn’t officially up for sale at that point, but we had heard rumors that the owners might want to sell. So that's how I initially met the owners.

However, we discovered it was going to be very expensive to sever the clinic from the hospital, and this was a problem for my clients.

Showing this place was interesting. We had what we called the nickel tour, which took two to three hours. So I walked many a mile in that place before I eventually got the listing. In November 2005, when the owners were ready to sell, they asked me to list it for them.

How much did you spend marketing the hospital?

CAVGALAR: It was probably under $400. I didn’t put it in the local papers and there were no signs. It was mainly online marketing ads and using eBay.

Overall, what do you attribute to closing the deal?

CAVGALAR: Being involved. I devote a lot of time to each client. And I don’t think anyone with too many listings could have done the hospital sale because it was very time consuming.

What lessons did you learn from this transaction?

CAVGALAR: It was a lot of work but a lot of fun too. I mainly learned that if you believe that you can do something—even if you’re initially afraid—and give it all you got, you can do anything, even sell a vacant hospital.

Do you have a "How I Sold It" story of how you used savvy marketing and sales techniques to sell a challenging property? To be considered for a future column, send an e-mail to REALTOR® Magazine Online. You must be able to supply a photo of the property.

In this online exclusive series, practitioners reveal their savvy marketing and sales secrets in getting a challenging or less-than-perfect listing sold.

Andrea Cavgalar
Prudential Dinning Beard REALTORS®

Wichita, Kan.