Wednesday, April 28, 2010

I'm not selling to the highest bidder!

When it comes to online real estate auctions, there is still a lot of confusion among real estate agents on how they work. Here is another myth...

If I use an online auction, I MUST sell to the highest bidder.

Truth: Most online and even "live" auctions are done using a hidden reserve or “Subject To Confirmation”. In either case, the seller and agent are protected and not forced to sell if the bidding doesn’t get high enough. An "absolute" auction is the only auction type that requires the seller to sell at the high bid. So, unless, you see the word "Absolute" in the marketing of an auction, there is a reserve.

When an auction is marketed correctly, the process brings true market value for a property. Even in the case where that price isn't as high as the seller had hoped, you can use the online bidding process to help the seller see what buyers are willing to pay.

Right now, I'm seeing more and more online auctions used for short-sale situations because it's a quick way to get the highest and best offer to present to the lender. The competitive bidding also presents a good case that the highest bid is "true market value".

Thursday, April 22, 2010

Make an offer - site unseen?

Here is a common myth or misunderstanding about selling real estate through an online auction.

Myth: Buyers will place a bid at an online auction without ever visiting the property.

Truth: This is extremely unlikely. The success of an online auction depends on buyers having access to inspect the property before placing their bid online. Buyers need to touch a feel a property, imagine living in it before they are willing to place a bid. Access is usually given through scheduled open house “previews”, but can also be done by appointment.

Although it does happen, it's unrealistic for you or your seller to expect that if you use an online auction, someone from another state or country is going to start bidding without ever visiting the property.

An online real estate auction will be successful, when you understand and use online bidding as a way to create urgency and automate negotiation with the local buyers. Buyers who you've attracted through your marketing (MLS, open houses, yard signs, CraigsList, etc.).

And, yes, it does happen that non-local buyers sometimes get involved, but they either have someone locally they are working with or have another means to perform due diligence.