It's no surprise that online auctions are quickly becoming the most powerful way to sell real estate in any market. The problem is that most people don't understand the process and the strategies to make them successful.
Hopefully, I can help clarify the use of online auctions and share some basic strategies.
The general philosophy of an auction is that the terms are the same for all buyers and the competition between buyers determines the price. This is different than the traditional MLS listing where terms are usually negotiated with price.
One big misconception about auctions is that the seller has to sell his property at the highest bid regardless of what that is. The fact is, that most online auctions are done "subject to seller confirmation". In other words, the seller has the right to accept, reject or further negotiate the highest bid. The online auction is a process to get the highest offer possible to present to the seller.
Here are some basic online auction strategies...
Opening Bid - This amount is usually around 50-60% of the target price. However, when the marketing is done well, you can be just as successful starting the bid at $1. The strategy can be different based on the property.
Access to property - If you expect to get top dollar for a property, people have to be able to get in and see it. Have at least 3 well planned and marketed open house previews. The smaller the window (2 hours is good), the better chance of having multiple buyers in at the same time stimulating competition. Bonus: List in the MLS 5 days prior to first showing and don't let anyone in before the first scheduled preview.
Pictures & Video Tours - A huge difference on getting people interested in visiting the property and placing a bid.
Marketing - Makes all the difference. The benefit to an online auction is you are doing heavy marketing for a limited pre-defined time. This helps manage the costs. Bonus: Get a mortgage broker to pay you a fee to be at your open house previews. They get leads and you can help cover marketing costs.
These are just some of the many strategies that come into play while using online auctions. I'm sure as you start using this process and start thinking "outside" the traditional sale process, you'll come up with even more.
Wednesday, August 26, 2009
Wednesday, August 19, 2009
The ideal selling situation is whenever you can have multiple buyers competing for your listing all at the same time.
Here are some ideas that will help you create this "auction" environment.
- Price - The price has to be as good as or better than anything comparable in the area.
- Condition - The house should show very well, even be professionally staged if possible
- Quality Listing - Put quality photos, a video tour (if possible), and a well written property description in the MLS listing.
- Limit Access - Ideally you put the quality listing in the MLS on a Sunday night with no showings until the following Friday. In addition, the first showings on Friday are limited to a 2 hour window. This gets all interested buyers and agents in the property at the same time creating competition.
- Require 48 hour offer response time - Let all agents submitting offers know you will need 48 hours to respond.
The one drawback is that in the multiple offer situation, buyers don't typically know where they stand. They are often told to submit their "highest & best".
This is where technology can help. With a couple more steps you can do the same thing but accept all bid/offers online in an open format with a defined deadline. This systematically allows buyers to compete with others and gets you and your seller the best price without all the added paperwork (i.e. offer/counter-offer/counter-counter, etc)
To see how this process is being successfully used today, join us Thursday at 1 pm CST
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Wednesday, August 5, 2009
The market is starting to turn, there’s talk of the “bottom” being reached and buyers are not such a rare commodity anymore. Now we are hearing about multiple offers and the start of bidding wars.
It’s all great news, but there’s still a lot of inventory out there. How can you get your listings noticed? How can you negotiate with multiple buyers to achieve the highest offer for your sellers?
One growing strategy is to create urgency and stimulate demand by using an online auction. An online auction provides open competitive bidding to achieve the highest possible offer for your listing.
There are still a lot of misconceptions about online auctions, so here are a few things you should know.
- Auctions are NOT only for distressed properties - While distressed properties are sold by auction, they are not the majority of auction sales today. More luxury and brand new homes are being sold by auction than ever before.
- Auctions don't force the seller to take the high bid - Auctions advertised as "absolute" force a seller to take the high bid. However, the majority of real estate auctions are done "subject to" seller confirmation.
- An auction does help capture the best sales price – Just like multiple offers on a typical MLS listing, an auction can yield the best price by creating competition.
- An auction does give you 3 chances to sell - Auctions create urgency and get buyers to act either before bidding opens, during the open bidding period or after bidding ends (if the high bid isn’t accepted by the seller).