Online Bidding : Consider the efficiencies!

Take a moment to ponder the efficiencies that online bidding can bring to your daily life as an active real estate agent, and ask yourself a few questions.

How many active listings do you have?

Suppose you got simultaneous calls with prospects wanting to see all of them, right now. How do you do that?

Suppose they wanted to make offers on all of them, right now. Again, how do you do that?

If a prospect wants to make an offer on one of your listings at 2AM, do you want to take the call?

Have you ever talked yourself into, and then right out of a sale?

Wouldn't it be better if a prospect could make an offer as soon as they were ready?

Are you trying to figure out how to cut down on your gasoline consumption, especially if it goes to $5/gallon or more?

Do you have attractive second-home, upscale vacation, or investor-type listings?

Would you believe that such properties can sell sight unseen?

Suppose you could eliminate the drudgery of writing up an offer, and a counteroffer, and the phone calls and visits that go with them?

Do you think you could get more listings if you could offer listing prospects online bidding?

Could you use another tool to help compete with individual Internet-savvy FSBO's, as well as For-Sale-By-Owner agencies?

Could you use an automatic "lead generation" system that attracted worldwide attention to your local listing farm?

What will you tell Sellers who expect you to offer online bidding if you don't have it available?

Do you think your Sellers might be more impressed with your work if they could monitor the bidding on their property themselves, without calling you?

If you could spend more time and effort on marketing, and less on busy work, do you think your commissions would increase?

Would you like to increase your number of in-house sales with no commission splits to buyer agents?

How to protect sellers with a "Reserve" price

One of the most important terms is to determine whether the auction will be "absolute" or "with reserve." Absolute means that the property sells to the highest bidder regardless of price. Obviously, this method is extremely risky, and is best left to the professional auctioneers.

We recommend that all online real estate auctions be held "with reserve," meaning that the property does not sell unless the reserve price is met or exceeded. Wait a minute - does that mean we are back to guessing at a price in advance? Not necessarily, although both you and your client will likely have at least some idea of a reasonable price range that the property should bring.

You can, if you choose, set a reserve price when entering your auction listing into the Auction System. If you do, the display that bidders see will show "Reserve not met" until the reserve price is met or exceeded. At that point, the display changes to "Reserve met" and bidders know from that point forward that the high bidder is going to buy the property. Your listing agreement with the Seller should indicate that the Seller is obligated to sell if the reserve is met or exceeded.

However, it is not necessary to establish a reserve price. Your terms can say "subject to confirmation by Seller." This is simply another form of auction with reserve, but avoids having to guess a reserve price in advance. After the online auction closes, both you and the Seller examine the "bid history" and the high bid to decide whether "fair market value" has been achieved.

This method of protecting Sellers is the most common form of real estate auctions across the country today. It is used by most professional real estate auctioneers and is accepted by bidders as a necessary protection for Sellers. You will discover that very often Sellers will agree to a sale price that is less than the lowest price they may have previously insisted on.

The difference between online bidding and "live" auctions

As a licensed Realtor, you can hold successful online auctions. "Live" auctions, however, are strictly the province of the professional auctioneer. It's easy to underestimate the preparation and expense an auctioneer has gone through to get to the point where he can stand in front of a crowd and sell a property in a few minutes. Don't even think about it trying it yourself. Many Realtors, as well as ambitious FSBO's have failed in the attempt, despite spending significant sums on print advertising. Even a pro auctioneer may fail to sell a property at live auction. That alone should be enough to tell you not to attempt it.

The alternative you CAN successfully use is the online equivalent. The only real difference is that you won't be bid-calling in front of a live crowd. It all happens online over the Internet.

Some might argue that the online version lacks the excitement and intensity of a live auction. We beg to differ. Try bidding for something on eBay that you really want and watch the clock tick down toward zero as the auction nears closing time. See if your pulse rate and breathing go up in the last few minutes while you hope you don't get "sniped" in the last few seconds. When you win, do you feel the adrenaline rush?

There's no limit to the number of bidders you may have watching and bidding on your online auction.

They don't have to remember to show up on auction day. You'd be surprised at how many calls auctioneers get from bidders who wanted to attend an auction, but forgot the time and date.

In fact, they don't even have to watch the close of the auction on the Internet. The system allows them to place a "maximum bid" at any time before the auction closes. In other words, if a bidder decides in advance the highest price he is willing to pay, the system will record that amount, but not display it, and "auto-bid" on behalf of that bidder as other bids come in, always keeping him one bid increment higher than the next highest bid, until his maximum is reached.

Bidders don't have to drive to the auction site, nor do they have to stand in line to register.

They can remain anonymous because the system doesn't display their true identity to other bidders.

They can bid from anywhere in the world, even from a data-capable cell phone.

They can place bids anytime, day or night, at their convenience.

They will get an immediate email from the system if they are outbid.

Take a moment to consider how online bidding solves scheduling conflicts. Most buyers are working the same hours you are - weekdays. How do you effectively communicate and coordinate with them? Online bidding lets buyers act on their own schedule, whenever it suits them, with no need to call you. You should, however, schedule a "preview" of the property and show the time and date on the auction listing. Two hours on a Saturday, say from 10 - 12, is plenty. At least one agent should be on hand to conduct the showing. All prospects see the property at the same time, demonstrating interest, and stimulating bidding. Two agents is even better. One to show, one to explain the bidding process.

Contributed by John Bickel