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.