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.