Why online auctions make sense for Realtors

In a "normal" market, the conventional method of using comparative market analysis to establish a listing price works reasonably well, despite the fact that everyone involved knows that the eventual selling price is typically somewhat less. Getting a property priced right can be a challenge, and how close the Realtor gets it to prospect's "opinion of value" is critical to how long it takes to actually get a sale. No matter how good the Realtor's guess is, it's still a guess. Even a formal, written appraisal is defined as an "opinion of value," a phrase that simply means a guess.

Consider the textbook definition of "market value." In simplified form, it is the highest price that a buyer is willing to pay in an open market. What does that remind you of? Of course, an auction. At auction, you don't need to guess at a listing price. You don't need to wonder if you got it too high or too low. The market will determine the eventual selling price, and competitive bidding drives that price upward to "fair market value."

Mankind has never developed a better method for setting "fair market value" than competitive bidding.

The key concept of any auction is "Sellers set the terms, buyers set the price."

Another key concept easy to overlook is the "time value of money." In other words, an accurate CMA assumes the likely "days-on-market" to achieve that anticipated selling price. Is it reasonable to assume that the selling price should be less if there was a way to sell it right away? Sure it is. It costs the Seller money to hold the property.

When's the best time to sell in any market, no matter whether it's trending up or down? As soon as possible after the Seller decides to sell!

Contributed by John Bickel

The impact of the Internet on real estate sales

This post written by a member of our team John Bickel - Auctioneer.

Not long ago, Realtors wondered why they would want to own and operate an Internet web site. A combination of demanding buyers and forward-thinking Realtors soon changed the way properties were advertised and described. As technology improved, from high-speed Internet access in the home to a host of hardware and software upgrades, real estate listings could be brought to life in a manner that print advertising never achieved, with multiple still photos and streaming video "walk-through" displays.

Both the Internet and the technologies that take advantage of it continue to evolve to the benefit of both real estate prospects and the agencies that serve them. Just as the Multi-List system revolutionized the way properties were listed and sold back in the '70's, the concept of online interactive bidding will soon become commonplace.

Those agencies who are first to offer online bidding will have a distinct marketing advantage, both for listing presentations, and for increased sales of their own listings, as prospects recognize the value of their use of the latest interactive technology.

We believe online bidding will be an integral feature of every real estate agency's web presence in the very near future. Your existing website can be much more than a glorified advertisement - it can actually SELL property.

One thing that hasn't changed is the concept of "Location - Location - Location" Real estate is a local activity - best handled by local Realtors. Although the properties are local, buyers could be anywhere on the planet.

The Internet is the backbone of global commerce - ignore it at your own risk. Everything else is selling online - As soon as Realtors pick up this tool and use it, so will real estate. List - List - List locally, but sell globally!

Statistics show that most prospects begin their search for a new home on the Internet. Online bidding helps to capture those prospects and turn them into buyers.

Imagine your existing print ads showing something like a little "gold star" in the corner of each property photo. Somewhere else on the page, there's a note that explains that every photo with a gold star is available right now for online bidding. Can you see how this minor addition would add immediate interest and action to the ads you are already paying for?

Real Estate Online Auctions - Part 3 of 3

This is part 3 of 3, but just in case you missed part 1 & 2 here is a little background ... After 14 years of working in the computer industry, I got involved in real estate. I was drawn to the concept of online real estate auctions and I've spent the last 3 years using them. Here are some more answers to common questions about them.

Q) How do auctions give you 3 opportunites to sell?

A) By holding an auction it's not uncommon for someone to bring a written offer when the auction is announced to try and get it without competing with others. The second opportunity is when the auction ends with a winning bidder. The third opportunity is from follow-up with all interested buyers if it doesn't bring a winning bid.

Q) What about non-U.S. buyers?

A) An online auction makes a property open to a worldwide audience. I was surprised the first time I saw a buyer from France win an auction. It demonstrated to me that online bidding is an effective way to get a property in front of a worldwide audience.

Q) Will an online auction work in my market?

A) It depends. If you are in an area where most people have high speed Internet access, than it will work. If you're in an rural area where most people use dial-up and therefore aren't on the Internet much, it will be much harder.

Q) Do I need a special contract or process to sell through an online auction?

A) No. An auction is simply getting you to agreement on price and terms with a buyer. The standard contract takes over from there, just like any other purchase agreement.

Thanks for Reading! I hope you learned something.

Real Estate Online Auctions - Part 2 of 3

This is part 2 of 3, but just in case you missed part 1 here is a little background ... After 14 years of working in the computer industry, I was naturally drawn to the concept of online auctions when I got involved in real estate. I've spent the last 3 years using online real estate auctions and here are some more answers to common questions about them.

Q) Aren't auctions just for properties that need a lot of work?

A) No, not anymore. I'm starting to see auctions for brand new properties from builders and banks who just need to get rid of them. Owners of any type of property, who are motivated, are turning to auctions for a solution.

Q) How long does an online real estate auction last?

A) Typically about 3 weeks. It depends on your marketing campaign and how many open houses you plan to do.

Q) Do I need a special license to do an online auction?

A) In every state, you need to be a licensed real estate agent. However, there is no requirement that I've come across that requires a special license.

Q) Aren't online auctions just a fad that will go away when the market gets better?

A) I don't think so. I think there are more auctions today than ever before because of the current market. However, I also think they provide a solution that is needed in any market, and sellers will find they are an excellent option for a property in high demand too. There are lots of examples on Ebay of a unique item selling for some crazy amount. What owner or real estate agent wouldn't want to watch hungry buyers fight it out online?

Thanks for Reading! In the next few days, I'll share part 3

Real Estate Online Auctions - Part 1 of 3

After 14 years of working in the computer industry, I was naturally drawn to the concept of online auctions when I got involved in real estate. I've spent the last 3 years using online real estate auctions and have learned a lot.

I've found there is a lot of confusion on how they work or how to make them work. I will share answers to the most common questions in this 3 part blog.

Q) Will an auction force me to sell too low?

A) No, not if you structure it correctly. There are 3 main types of online auctions. If you use a Reserve Auction, you can set a hidden reserve price on the system and the auction will not be considered successful unless the reserve is met. If you use a Minimum Bid Auction, you don't set a system reserve but you can state in your terms that the winning bid is subject to seller approval. The third type is an Absolute Auction, and this is the only type that could force you to sell it too low. Using this type of auction is not suggested, unless you are prepared to sell at a loss.

Q) Are online bids legally binding?

A) Yes, if the terms indicate they are and the online auction system has a trail to show the bid was made by the person. There are pages of legal information I can point you to on this, but I want to keep it short.

Q) What if the high bidder backs out?

A) There is no difference than having a signed sales contract on a property. You decide how much of an effort you want to take to pursue the person legally.

Q) How many properties have been sold through online auctions?

A) No one really knows. I know of many that I've sold personally, I've also know of many others that have been successful as well. The main thing to realize is the auction method of selling works well. The success, whether live or online all depends on how well the method is executed.

Q) What's the secret to being successful with an online auction?

A) Good information and Advertising. The online listing needs to contain thorough information about the property, terms that are easy to understand, pictures and a virtual tour, if possible. If the listing is put together well, the other key is to get the word out so people know about it. There are several good Internet advertising sites Free and paid that help along with yard signs, fliers, ads in local publications, etc.

In the next few days, I share part 2. Thanks for reading!

Auctions, by any other name

In general, it seems real estate auctions are viewed as "fire sales" on foreclosed bank owned properties that need a lot of work. While auctions are definitely used for those type of properties, that is not always the case.

If fact, auctions are now becoming common for builders with brand new properties as well as home owners with high end properties. An online auction is a valuable strategy, useful in selling any type of property.

However, in order to get away from the negative connotation of the word auction, the term "online bidding" is becoming more common. If a seller is not sure about doing an "auction", it can be helpful to talk to them in the terms of "online bidding" instead.

Real Estate Internet Auctions - Take hold

As technology gets better and better, the excitment of buying at auction is moving online.

Countdown timers, screen updates with new bids, help keep buyers excited and involved in the bidding process.

Not to take away from the skill involved in holding a "live" auction, an Internet auction is sure easier and less expensive to coordinate.

The opportunity is now, the tools are available now. It's time to make online bidding a part of your marketing and sales strategies.