Online Real Estate Auctions In Austraila?

You may or may not be aware that in Australia the majority of real estate is sold via the auction method.

When I first found that out about 7 years ago, I figured they would soon embrace doing them online.  Well, that hasn't really happened yet, but that could be changing soon.

I just came across this article about a house that recently sold Lilyfield Australia for $1.6 million all online.  It ran for 3 days and attracted 22 bids.

It is certainly requires less to coordinate and extends the reach of your buyer audience.  It only makes sense to take them online and will be fun to see that trend continue.

Here is a link to the full article in case you are interested.

Have you been involved in HUD sealed bid auctions?

Last month, I sold my first house as buyer agent for a buyer of a HUD property in my area of St. Louis, MO

HUD homes in St. Louis are sold through an online "sealed bid" process and in case you're not familiar with it or it's different in your area, I thought I'd share some observations of the process.

1. There are no pre-qualifications for bidding, but only HUD registered agents can place bids for their buyers. Before you place a bid, you need to make sure your buyer can close.

2. Owner-Occupants have the first opportunity to buy these homes and if not sold within 30 days they open it up to investors. I primarily work with investors and seeing the condition of some of these homes, I don't understand why they make the "Owner-Occupant" period so long. Many of these can only be purchased with cash and even if they have the cash very few "Owner-Occupants" want to take on such a huge project.

3. Once the initial bidding period is over (usually 10 days) bids are reviewed daily. However, there is very little feedback, you simply get an email that it was rejected or accepted.

4. Sometimes, several days (or weeks) after a bid has been placed HUD sends an email to let you know their "minimum bid" that they will accept. This is the only part of the process I thought was helpful, and it doesn't happen for every property. It seems they only use this when they start getting motivated.

5. If your bid is accepted, you have 2 business days to sign all the paperwork (lots of it) and get it to the out of state office handling the closing. If you don't get the paperwork on time or you don't fill it out correctly, they cancel the bid and it goes back on the market. We had this happen and it's not fun. We had to submit the bid again, fill out all the paperwork again and pay to FED-EX again (won't make this mistake twice). HUD is not at all flexible with their process, make sure you read everything at least twice and review all the places needed for signature several times so you don't miss anything.

6. It took the entire 45 days that they gave us to close. My buyer was a cash buyer and could have closed in a week or less. I'm use to working on regular REO's and we've closed them in as little as 10 days after having an accepted contract. This was frustrating to have to wait until the very last day to close it. And, oh yeah, it takes a week to get your commission check after it closes.

After going through this process, I still prefer the "open bid" process where everyone knows the current high bid. However, we did build the "sealed bid" functionality into the online real estate auction system we designed so our customers have that option. We only have a couple customers using it and so it will be a while before I can determine the difference in success rates, but I'll be watching.

If you're interested in seeing how real estate agents & auctioneers are using online bidding for their own listings, join our next webinar on October 20th at 2 pm EST

An Online Auction Creates 3 Opporunities to Sell

Today I wanted to share a strategy I use that creates 3 opportunities to get a property under contract during an online auction process.

Here they are...

1st opportunity (Pre-bidding): Instead of letting people bid on the property as soon as it goes online, you can advertise it in a "preview" mode before bidding opens. By having it in "preview" mode for 7-10 days before opening the bidding, you create the urgency for buyers to submit a written offer and get it under contract so they don't have to compete. The seller can accept a pre-bidding offer and cancel the auction before online bidding even opens.

This actually happens about 20% of the time. I had an auction once where we got a written offer the first day I put the auction sign out. It turned out the buyer had seen the home when it was previously listed and finally got motivated to do something when he saw it go to auction. In this example, the seller agreed upon a price and we canceled the auction. By far, this was the easiest sale I've ever had.

2nd opportunity (Online bidding): This is the most obvious. At the end of the online auction, the high bidder puts the property under contract per the terms of the auction.

3rd opportunity (Post auction): If for some reason, the bidding doesn't meet the seller's reserve price, the auction process will have produced a list of buyer leads interested in the property. You can contact all of them, let them know the situation and give them the chance to submit their highest and best offer.

From my experience, using these 3 opportunities as part of your online auction strategy will help increase your success rate.

If you'd like to learn more about using online real estate auctions join us September 8th at 2 pm EST

Still using slow dutch auctions to sell your listings?

Currently, the most common way to sell real estate in the U.S. is by listing it in MLS and then continuing to drop the price until a buyer makes an acceptable offer (see above).

Most real estate agents don't realize this is an auction, a dutch auction - just done very slowly.

By definition in Wikipedia, a Dutch auction is a type of auction where the auctioneer begins with a high asking price which is lowered until some participant is willing to accept the auctioneer's price.

Since you're already doing a type of auction, why not try a traditional auction where you open bidding to a group of interested buyers and let them determine the market value. It can be done much faster and is a much more exciting way to sell real estate.

The traditional auction puts you in control. You determine when the property is open for viewing, you control when the bidding will end and the seller decides whether they will accept the highest bid.

With the glut of inventory available in many markets, auctions are gaining momentum and by using the internet, you don't need to coordinate a "live" event, all bidding is done online.

Not sure how? Join us on our next upcoming online auction training session.

Do buyers overpay at auctions?

Last week, I took a buyer to a local "Williams & Williams" auction where they were selling 4 properties. The auction was done live on the front lawn of one of the properties and buyers could also participate online.

If you haven't seen Williams & Williams auctions, check out their Auction Network site which shows all the current auctions they are running. I think they do a nice job.

We were both surprised at the prices each of these properties received. My buyer is a well seasoned investor and we did our research to know the right price to pay and still be able to make a profit in this market.

In every case, the property went for at least $10,000 more than we thought it should. One of them went for close to the list price in the MLS (crazy when you consider the buyer could have bought the property months ago before it was taken to auction).

This was the 4th Williams & Williams auction I've attended locally and once again it proved to me that when the auction is marketed correctly and done right, there isn't a better way to sell.

I hope you're seeing the same success in your market.

Are the banks getting more motivated?

Last week, I took a buyer into a couple of bank owned "REO" properties that just came on the market. In the past, these type of properties were initially listed too high so we would wait until a property sat a while and had several price reductions.

Now it seems, that some banks have changed their strategy and are being much more aggressive with their initial listing price.

In the couple we looked at, they were priced very fair and close to "wholesale/investor" pricing. I wasn't surprised to find out they received multiple offers and I'm sure they will get over list price.

As a real estate broker/auctioneer, I have to ask why the banks are not turning more to online auctions to sell these? Why deal with multiple offers when there is an easy and efficient way to have the buyers bid it out online? The banks already have very specific terms and contract addendum they force buyers to use, making their listings ideal for the auction process.

At some point, the asset managers need to take advantage of the best and most efficient process to sell these assets? But, when?

What are the banks thinking?

Last week, I took a buyer into a bank owned "REO" property where the bank decided to have a company come in and rehab the inside (paint, carpet, new appliances and flooring bathrooms and kitchen). You can tell they took the lowest bid for the work because the work is okay but very little attention to detail.

The property was priced right and I was sure it would go fast. My buyer is an investor so he was only interested at a price where he could "finish" the details and really make it shine (about 30% off their list price).

So, we submitted an offer at his price and they countered only $900 off their listing price. Neither of us was surprised so we didn't think much of it.

However a couple of days later, I get a call from the listing agent wanting to know if we wanted to counter again. I told her we were so far away we didn't want to waste their time. She convinced us to counter so he did only a couple thousand higher.

To our shock an amazement the bank re-countered dropping their price drastically very close to my buyers counter and he agreed to come up another thousand and now it's under contract.

I don't know the reasoning behind the banks decision, but I do know, in this case, the listing agent didn't help the bank get the most they could.

This listing agent usually has around 200 REO listings at anytime. She has a large staff, but the attention to detail gets lost in the shuffle.

For this particular listing, I mentioned the bank hired someone to update the property. After these updates were made and it was put back on the market, there were no new pictures. The listing still had the old ones that showed the distress. There was NO information in the remarks section about the updates, just the standard REO listing stuff.

Here's my point.

#1 - Why are the banks not spreading their listings over more agents that can provide better attention to detail and get them higher prices?

#2 - Why are the banks not turning their listings over to real estate agents capable of doing the best marketing available today ... online auctions? For some reason, they wait until a property has been sitting for a few months and then turn it over to large nationwide auction "clearing house" which can't pay attention to detail either (I've shared the lack of marketing and coordination from those companies in past emails).

Solution: - The banks need to get on board with the use of the best technology and marketing available today. They need to require their listing agents to use an online auction process from day 1 and sell these listings to the highest and best offer within 2 weeks or less. This would have a drastic effect on the bank inventory nationwide. It makes sense and it's simple and I'm sure it will happen at some point. Hopefully sooner than later.

Are you getting the best price for your REO listings?

At the end of January, I attended a Hudson & Marshall "live" auction in St. Louis with a buyer client of mine.

In case you haven't seen a Hudson & Marshall auction, they do a very nice job. You can check out their upcoming auctions at their website Hudson and Marshall

The auction was for 57 homes around the St. Louis area. The 2 properties he was interested in were at the end of the list so we observed for about an hour before he got to bid.

It started out with about 125 people but when we got to his 2 properties only about 30 people were left. As a result, he ended up getting an 8-year old home in a very nice area at an amazing price. He'll easily make $40K+ when he resells it in 3 months (required holding time by Fannie Mae).

During the auction, I kept track of the winning bid amounts and after it ended I went to Hudson & Marshall's site to see which properties actually sold (Bank has to agree to winning bid). As it turned out, only 20 of the 57 sold (35%).

In reflecting on this experience and the process, I thought I'd share some ideas that would have made this auction more successful.

1. Get the local listing agent involved - For whatever reason, the local listing agents in my area don't update the MLS listing with the auction information. Typically the REO agents have lots of properties so someone (i.e. Hudson & Marshall in this case) should be contacting them and making sure they update the MLS listing with the auction location, date & time.
2. Incorporate online bidding - The technology exists to allow online bidding during these "live" events. There is no reason they couldn't have reached at least 100+ more people online in addition to the 125 in the room. That creates more competition and will end in higher winning bids.
3. Reach out to buyers agents - Hudson & Marshall could put a marketing campaign together aimed at buyers' agents to bring their buyers. They are a fun way to buy and although the agent only gets a 2% commission, it's one of the easiest transactions I've ever done. Hudson & Marshall collected earnest money did all the contract work etc. I showed the house to my buyer, came to the auction and collected my check at closing. That's it!
4. Local advertising - I don't know where Hudson & Marshall advertised for this event, I never saw it. I found out because I frequent their site looking for deals for my buyers. However, there are great inexpensive venues such as local real estate investor meetings. They could have easily doubled their on site attendance with an email to these groups in my area.

These are just a few ideas, but the bottom line is that there is a "HUGE" pool of buyers looking for these bank deals and there is big missed opportunity by not marketing them properly.

It's mostly about the marketing

Last month, I shared some ideas on helping buyers be more comfortable bidding online.

Since then, I held a 7-day online auction for a property in St. Louis and thought you might be interested in the results.

First, despite the winter weather conditions, it was very successful getting buyers into the house. The house was a bank foreclosure so it had no heat and with temperatures in the 20's and 4 inches of snow, the house felt colder inside than it was out.

I held 3 open house previews Friday, Saturday & Sunday but only for 1 hour each (I didn't want to sit in a cold house longer than I had to). During those 3 days I had 65 people come through, which I felt was an amazing turnout considering the conditions. I used Craigslist and yard signs for most of my marketing.

Unfortunately the bidding didn't meet the sellers reserve, but we are still negotiating with the winning bidder and I'm hopeful it will go under contract soon.

Once again, I found that marketing a property using an auction gets people to notice and into the house (even in less than ideal conditions).

Regardless of the final results, I always learn something. Here are my takeaways...

1. Friday open houses aren't very popular in St. Louis, I only had 4 people come that day.
2. Saturday & Sunday open houses are well attended.
3. Seller needs to be more motivated (He is now and has come down on his "reserve")
4. Put it in the MLS sooner - I didn't put it in the MLS until Saturday, thinking I could find a "pre-auction" buyer looking for a non-MLS "deal" and not pay an agent co-op. By the time most agents saw it in the MLS, the bidding had ended. (Won't do that again!)
5. With NO heat, warm boots and two pairs of socks are a MUST.

If you're interested in learning more about using online auctions to sell your listings, join us on our next webinar - Real Estate Online Auction Webinar

Do buyers bid online for real estate?

I get this question a lot. ..

Do buyers bid online for real estate?

The answer is yes and it's becoming more and more common.

As you know 90%+ of buyers are already finding their homes on the Internet, so it's a natural next step to negotiate with all interested buyers simultaneously online.

As a listing agent, an online auction is just a different marketing strategy. They naturally attract more buyers and help a property stand out.

They do take a planned marketing effort, but it can be well worth it.

Interested in learning more? Join our next online real estate auction training session.

Auction.com - Are you watching?

A couple of weeks ago I noticed a new sign in the front yard of an REO property I was showing from real estate auction company REDC - website Auction.com

I called the listing agent and found out that the bank that owned the property had turned it over to REDC to sell through their online auction process.

Whether on purpose or just too much going on, the listing agent never updated the MLS information and since this property was at the end of a cul-du-sac I think very few people knew about the auction.

In addition, the payout from REDC to a buyer's agent is 1%, so I imagine very few buyer's agents working with buyers even let their buyers know about these.

It was last listed in the MLS at $194,900 and the opening bid was $69,000.

This property was not like many of the REO's I've looked at. The bank had actually spent money replacing all the carpeting, painting and putting in new vanities and toilets in all 3 bathrooms. It was a very nice 4 bedroom home in a great area of west county St. Louis.

My buyer won the bid at a great price and now we are just waiting on confirmation from the seller (bank).

But, what's the opportunity?

REDC is a huge auction company selling tens of thousands of homes across the US through their auction process, but what seems to be missing is the local marketing for these properties.

This is a great time for the local broker to get up to speed on using an online auctions to market their listings and provided that needed local customer service that is missing from the REDC auctions. Join us to learn how

An online auction gives you 3 ways to sell

One of the many benefits of using an online real estate auction to market a property is that it gives you 3 ways to sell the property during the process.

1st way (Pre-bidding): Instead of letting people bid on the property as soon as it goes online, you can advertise it in a "preview" mode before bidding opens. By having it in "preview" mode for 7-10 days before opening the bidding, you create the urgency for buyers to submit a written offer and get it under contract so they don't have to compete. The seller can accept a pre-bidding offer and cancel the auction before online bidding opens.

2nd way (Online bidding): This is the most obvious. At the end of the online auction, the high bidder puts the property under contract as expected by the terms.

3rd way (Post auction): If for some reason, the bidding doesn't meet the reserve price, the auction process will have produced a list of buyer leads interested in the property. You can contact all of them, let them know the seller is interested in the highest and best offer they are willing to submit.

If you'd like to learn more about this process join our next online real estate auction training session.

Why would I do an online auction?

"Why would I do an online auction?" - I get this question a lot from real estate agents who are not familiar with using online auctions to market and sell their clients property.

Here are the top 10 reasons....

10) Nobody's been through the property in weeks.

9) You're tired of the seller complaining that you are NOT "doing anything".

8) The seller has moved out and is making 2 house payments.

7) The seller is facing foreclosure and needs an offer for a short sale.

6) Your seller insists you keep doing open houses EVERY weekend.

5) You want to be able to offer something other than another "price reduction".

4) You seller doesn't want to hear about another price reduction.

3) You are an "innovative" Realtor who offers better solutions than your competition.

2) You and the seller just want an offer....ANY offer, PLEEEEASE!

1) You know everything you need to know about running your own online auction because you attended our online auction training event.

Why use an Online Auction?

Do you consider yourself a progressive real estate agent who keeps up with technology? Are you using online auctions yet?

Here are some of the advantages/reasons to look at adding online auctions to your services.

Reason #1: It's a Quick Sale
An online auction gives the owner an opportunity to sell at today's prices and not wait for a buyer to bring an offer.

Reason #2: High Carrying Costs are Avoided
All property incurs costs during it's marketing period. By accelerating the sale the owner will substantially reduce the holding costs such as debt service, taxes, HOA fees, insurance, maintenance, etc.

Reason #3: Property Market Value can be Demonstrated
Instead of relying on the appraiser to assign an asking price, the auction process demonstrates the value of the property to the sellers and potential buyers. Selling a property using the traditional method, you may wonder whether you could have bargained higher. If a property is sold at auction, the proof of the market value is in the process itself, the selling price is truly market-driven.

Reason #4: Auctions Receive Maximum Marketplace Exposure
The marketing time frame for an online auction is more condensed than in traditional methods. Additionally, buyers are naturally attracted to auctions because they are different. They stand out and buyers become curious. Buyers don't want to miss out on a great deal so they visit the property.

Reason #5: An Urgency to Buy is Created
An online auction has a specific ending date/time. A sense of urgency is created: "buy this property today, it won't be here or available when the bidding ends". It forces hesitant buyers to act.

Those are some of the main reasons, to learn more about using online real estate auctions join us on our next training session.

What, this isn't a seller's market?

A few weeks ago I was working with a new customer, a real estate agent in Las Vegas, on a condo he was marketing through an online auction.

Typically we put a listing up in a "preview" mode for a few days before we open the bidding. The idea is to flush out a written offer and, if good enough, cancel the auction.

Well, that's what happened, a buyer's agent brought him an offer that was decent and within the range of what the seller wanted to get.

However, my customer, the listing agent, was a little disappointed because he really wanted to go through the online bidding process to see how it worked. So, he talked to the seller and they both agreed to reject the offer knowing that they might not be able to go back to it if things didn't work out. This isn't something I advise, but they wanted to do it so I didn't argue against it.

Well, the decision worked out well, there were several other buyers who were interested and the winning bid online came in at just over $5000 more than the written offer. As you can imagine the seller thinks the agent is a hero and she can't wait to have him market her next property she rehabs.

As an added item of interest, the winning bidder was from the east coast. They had never seen the property, just the pictures and information online. This is definitely not typical as the online bidding usually takes place between local buyers who have visited one of the open house previews. However, it is an example of how holding an online auction reaches a bigger buyer pool and helps increase the competitive bidding.

If you're interested in learning more about using online bidding in your market, you can join our next online real estate auction webinar.

Do you hold open houses to sell land?

I was recently coaching a RE/MAX agent who was using our online bidding system to market a 4 acre piece of land in the St. Louis area (St. Charles).

Most of our customers are selling homes so it was a little different but not unique.

When selling a home I teach that you need to schedule at least 2 open house "previews". By having an open house "preview", you get all the interested buyers in at the same time which creates competition, nothing new there.

So, this RE/MAX agent decided he would try an open house for his land. Honestly, I thought it was a waste of time, but I was also curious so I didn't try to talk him out of it.

The second thing he decided, was that he would do it on a Wednesday from 11am - 1 pm. I also didn't think that was ideal, but I still didn't try to talk him out of it.

The results... 5 interested buyers came out during that Wednesday to walk the property with him and ask questions. This a property that had been in the MLS for 8 months with very little interest. And 5 may not seem like a lot, but he and I both thought it was amazing to get that type of response under the circumstances.

Once again I learned something, which I do every time I help someone use the online bidding process.

And the final results... It received 16 bids with the high bid being $105,000 and it actually just closed escrow last week.

If you're interested in learning more about how this online bidding process works, join our next Real Estate Online Auction Webinar

Short sales: I need the highest offer quickly!

Short sales are a lot of work and if want nothing to do with them, I don't blame you.

However, for the listing agents actively involved with them, I discovered a better way to get the highest offer for the lender quickly.

I've seen lots of different strategies, but an open/online bidding process seems to be one of the best options out there today. The process puts a deadline on submitting offers (like HUD homes) but it keeps a fair playing field for all buyers by letting them know the current bid price. This can actually drive up the price and create a heated bidding war as it ends. At completion, the high bid also comes with all the bid history to help substantiate a "fair market value" for the lender.

Here is a simple overview of the process...

1. The property is marketed using an online bidding platform (in coordination with the MLS) for as little as 1 week. It includes holding at least 1 open house preview, preferably 2. In the auction terms it MUST be clear that the high bid is subject to lenders approval. The online auction makes it simple for buyers and their agents to submit offers and it's all automated (No more juggling multiple offers and all the paperwork involved).
   
   
2. When it ends, the high bid is written up as an offer and presented to the lender. In addition, the agent also explains to the lender how the property was marketed through an online bidding process, and they provide stats such as number of people who visited the property, number of bids, number of people bidding, etc. This will help the lender realize the highest bid is "fair market value".
   
   
3. The short sale process is managed as normal, but the agent can also follow-up with the non-winning bidders and sell them other properties.

A real example...

I recently worked with a RE/MAX agent to use this process in St. Louis. The property being sold was not a short sale situation when he took the listing, but after several months of not being able to sell it, the sellers situation changed.

He was able to use the process to get several buyers interested in it by starting low and having them bid online. When it was over he brought the highest offer to the lender (a local lender) and they felt the process got them a fair price so they approved the short sale and it closed in about 6 weeks.

The agent, seller, lender and buyer were all happy with the results. A win-win-win-win.

SOLD in 7 days or less!

I've been involved with using online bidding to sell real estate for about 5 years now. The strategies have changed as I constantly learn new marketing strategies and how to work best with the MLS.

In general an online auction usually runs about 3 weeks. The idea is to give it enough exposure and have time to have 2-3 open house previews.

Recently I've realized that with the right marketing strategy and processes in place, this could easily be reduced to a week or less.

Here is what it could look like....

Day 0 (Sunday night) - Listing goes active in the MLS and online auction is in "preview" mode (bidding not open yet)

Day 1 - 4 - Heavy marketing using online ads, signs in the yard, flyer box in the yard, and anything else you use to advertise in your local market. NO Showings allowed during this time.

Day 5 (Friday) - This is the first day that agents can show the property to their buyers, but online bidding is not open yet. Written "pre-auction" offers are allowed until 7 pm Friday night.

Day 6 (Saturday) - If the seller has not received & accepted a pre-auction offer, the first public open house is held for 2 hours sometime in the afternoon. Online bidding opens immediately following the open house. When online bidding opens, it is mandatory that all offers/bids be submitted online.

Day 7 (Sunday) - The second scheduled open house is held for 2 hours sometime in the afternoon. Online Bidding ends at 9 pm Sunday night. The highest bid is presented to the seller for their approval or counter.

That's it on the high-level. The process creates a sense a urgency missing in today's market and gives you a new option for sellers in the right situation.

I know it will work, but I need agents with listings that want to help prove it out in their market.

If you're interested, give me a call at 636-527-3439.

Upcoming Webinar Demonstrates the Latest Advances in Online Real Estate Auctions

Upcoming Webinar Demonstrates the Latest Advances in Online Real Estate Auctions

Why doesn't anyone notice you?

Could it be that there are so many real estate agents to choose from, that the general public can't differentiate?

Maybe it's time to stand out and do something different. Using online real estate auctions to market and sell properties is one of the things you can do. It's new, different and exciting. It will definitely get you noticed.

I've spent the last 5 years using online real estate auctions and here are some answers to common questions about them.

Q) Aren't auctions just for properties that need a lot of work?

A) No, not anymore. Auctions are now being used for brand new properties from builders and banks. Owners of any type of property, who are motivated to sell quickly, are turning to auctions for a solution. Celebrity Cher just sold a property she owned in Hawaii this past January via auction for $8.7 Million.

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

A) Typically about 3-4 weeks. However, the speed of information is so fast and technology so good, that one real estate agent does it in only 2 days. It all depends on how fast you can execute your marketing campaign.

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, Rhode Island & Georgia are the only states that I know of that require 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. If you've ever sold a property where you received multiple offers, think of how much fun it would be to have them bid it out online. What owner wouldn't want to have motivated buyers bidding against each other for their property?

The other thing to realize is that the Internet is never going away. Our society gets more tied into it everyday. Almost everyone looks for properties online today, being able to make a bid online is the next logical step. Online bidding for real estate will change the traditional list & wait for offers model.

If you want to learn how you can use online bidding for your listings, join our next webinar Real Estate Online Auction Success