Wednesday, April 29, 2009

Online Real Estate Auctions - More FAQ's

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 4 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 and must sell quickly, are turning to auctions for a solution.

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

A) Typically about 3-4 weeks. It depends on how well you plan your marketing campaign and how many open house "previews" 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 to sell any property other than your own. Each state has different rules. New Hampshire is the only state that I've heard that requires you to have an auctioneer's license to hold an online auction.

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?

The other thing to realize is that the Internet is not going away. The younger generation is more affluent with it than ever. They will begin to expect more real estate transactions to move online. Online bidding for real estate will be a big part of that.

Thanks for Reading! In the next few days, I'll share some more FAQ's

Wednesday, April 15, 2009

Real Estate Online Auctions - FAQ's

I've spent the last 4 years using online auctions to market and sell real estate.

During that time, I've encountered a lot of confusion from both buyers and sellers. Here are some answers to some frequently asked questions.

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

A) No, not if you set it up 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 (This type is commonly used for short-sales and bank owned property). The third type is an Absolute Auction, and this is the only type that could force you to sell it too low. When yo sell "Absolute" you are telling buyers that the high bidder is the winner regardless of how high bidding gets.

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. If you're interested in more details about this, here is a link to an article published on this subject in the March 2008 Auctioneer magazine.

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. Many Online auction systems now provide tools such as credit card capture so a penalty can be charged to the high bidder that doesn't perform.

Q) Are there any liens on the property?

A) Many buyers seem to think that an online auction is subject to the same terms of a foreclosure auction done at the courthouse where there could be other liens on a property. That is not the case. The property sold through an online auction goes through the same closing process that any "traditional" sale would go through. The title passes free and clear of all previous liens.

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

A) A quality auction listing and good advertising. The online listing needs to contain thorough information about the property, terms that are easy to understand, many good pictures and a virtual tour, if possible.

You also need to have a good advertising plan. Auctions naturally attract attention but people need to know about it. Yard signs, open house "previews", fliers, local ads, Internet/e-mail marketing, post cards, etc. The more you let people know about it, the better the chance for success.

Hope this was helpful, I'll share some more next week.

Thursday, April 2, 2009

Online Auction "Jolts" the Hamptons

Two weeks ago a couple of brokers in New York had great success running an online auction for properties in the Hamptons.

Here are some highlights from an article published after the auctions ended. A link to the full article is at the end....

A Prudential Douglas Elliman-sponsored online auction, run by brokers Vince Horcasitas and Enzo Morabitohas has helped bring buyers back to the market.

“We jolted the market,” Mr. Morabito said. “We jolted the brokers, we jolted the sellers, we jolted the buyers. We bred a little action. Our open houses yesterday were swamped.”

During the eight days that online bidding was going on, the activity surrounding the houses was significantly improved over what it had been and what other, non-highlighted properties, saw. In three days of open houses, Mr. Morabito and Mr. Horcasitas and their associates showed the 17 properties more than 100 times.

“It was a huge success for a couple of different reasons. We basically sold two properties, and we brought a tremendous amount of exposure to all the properties,” Mr. Horcasitas said. “We created a frenzy on a couple of properties. We had 25 people go through the [Bridgehampton] house on Sunday. They had 20 go through the one on North Main in Southampton [Village].”

In all, 50 bids were entered over the eight days the auction was live by a total of 14 different bidders. Most of the bids came on Sunday, the last day of bidding.

To read the entire article click here