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.

Lighting a fire under the buyer!

A couple of weeks ago, I was working with a real estate agent on her first online auction.

The seller was a widow who had equity in her home, but could no longer keep up with the payments or the size of the home. The house had been listed for 6 months with no offers.

They wanted to try something new, something to get attention and motivate buyers to make offers so I helped them market it through an online auction.

We put up signs, mailed post cards to the neighbors and put up fliers in the local businesses.

The marketing attracted interest, but more importantly the process lit a fire under a buyer who had previously viewed the home. They didn't want to compete with other buyers so they wrote an offer that was accepted before bidding opened.

This is not unusual as I've seen about 20% of the properties I market through auction get a "pre-auction" offer before bidding opens.

There is something to be said about being able to create urgency by setting deadlines like the auction process does.

It's definitely a unique, powerful and exciting way to sell real estate.

You're welcome to join our next training session where we discuss the online real estate auction process in more details. Register Here

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.

Have you heard of online bidding?

Yesterday I had the opportunity to talk to a group of Coldwell Banker Agents at their office in Kirkwood (St. Louis, MO area).

It was a great group and I was able to share how online bidding works and how they can offer it as an option to their sellers.

Almost everyone had no idea this option was so easily available to them and there were lots of great questions. Here are some of them...

Q: Is the seller forced to sell to the highest bidder?

A: No, the most common practice in the industry is to state in the auction terms that "Winning bid is subject to seller approval". In the case of a short sale, "Winning bid is subject to lender approval".

Q: How do people find out about the online auction?

A: Marketing is key. Yard signs, flyers, postcards, Craigslist, MLS, etc. Most agents do some sort of marketing campaign around a new listing, you would want to do the same thing for an online auction.

Q: How long should an online auction last?

A: In general 3 weeks or less, but it can depend on the property and marketing campaign you have planned. I've seen online auctions done successfully in as little as a week.

Q: Do people buy a property site unseen?

A: It does happen, but it's rare. You have to expect to hold at least 2 open house "previews" during your marketing period so buyers have easy access to see it. Open house previews should be 2 hours or less so you can get multiple buyers in at the same time, creating competition.

Q: Aren't auctions just for distressed properties?

A: Not anymore. Cher recently sold a property in Hawaii she owned at auction, pocketing a $2.5 Million profit. Check out this beautiful property in Texas up for auction.

Overall, it was a great group of agents with great questions and now they have an additional "tool" they can offer their clients.

If you'd like to have this additional "tool" too, register here.

Where is all the action?

Real Estate Auction = Action

You've probably noticed that real estate has changed radically in the 2000s. One change is the new role of real estate auctions as a useful effective selling tool, a viable supplement to yesterday's private negotiated, put a sign out, run an ad, wait for the phone to ring, one on one, marketing efforts.

To make an auction even easier, faster and more accessible to today's buyer, the Internet is becoming the preferred method for conducting them. Buyers can participate from wherever they have access to the web, and today, that's almost everywhere.

The Internet also opens up auctions to real estate agents as an additional selling tool for their customers. The agent can run an auction themselves without coordinating a "live" event or learning the auction chant.

To me, the biggest benefit is the reduced time frame to market and find a buyer. Live auctions typically take 30-60 days to market and coordinate, but with an online auction, some agents are doing them in as little as a week.

Interested in learning more - Click here to register for our next online auction training session.

Real Estate Auctions Today - What's going on?

Most people are not aware of what's going on with real estate auctions today, so I'd thought I'd share some highlights…

• Celebrity Cher sold a Hawaii property through an auction in January for $8.7 Million

• Ballroom & studio auctions where 100's of REO properties are being sold are becoming more common and frequent in the larger cities.

• The largest real estate auction company right now is Real Estate Disposition Corporation (REDC/auction.com). For just the first 9 weeks of 2010 they have already sold 7,488 properties for a total of $403 Million.

• REDC is now selling more real estate through their online auctions than their live ballroom events. As an example, for the week ending of March 6^th 2010 they set a record sales volume of $71M sold and $43.2M of it (more than half) was sold online.

• REDC just partnered with a company in the United Kingdom to use online bidding only. In their first event this past February they sold 57 properties.

• County courthouses around the country are beginning to move their foreclosure auctions online. The most recent example is Dade County in Miami.
  

• Real estate brokers & agents who recognize the opportunity are going to auction school or partnering with experienced auctions.

• RE/MAX International in Denver has partnered with a local auction company and is holding their first “live” hotel auction event with 200 homes on April 10^th.

If you're interested in learning more about online real estate auctions,join our next webinar

Online Real Estate Auctions - A new option for Agents

After 14 years of working in the computer industry, I was naturally drawn to the concept of online auctions when I got my real estate license. 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 agents does it in 2 days. It all depends on 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, 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. 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 have motivated buyers fight it out online for their property?

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 is changing the traditional list & wait model.

Many progressive Realtors are already using them in their markets, if you want to learn how to join them, register for our next webinar.

Short sales: Perfect for an online real estate auction

Now, more than ever, lenders are willing to consider short sales when the borrower is in financial trouble and there is no equity in the home. They really don't want to take properties back in foreclosure.

The Opportunity : You can now use an online auction as the perfect tool to get the highest and best offer for the lender quickly.

Here is a simple overview of the process...

1. You market the property through an online auction (in coordination with the MLS) for as little as 1 week. In your 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. Then, you can take the high bid, write it up as an offer and present it to the lender. In addition, you also explain how the property was marketed through an online auction, and you provide stats such as number of people who visited the property, number of bids, number of people bidding, etc.
   
   
3. Manage the short sale process as normal, follow-up with the non-winning bidders and sell them other properties.

This is a very simple overview as there are a lot of strategies and techniques that make an online auction successful. You're welcome to join our next webinar to learn more. Real Estate Auction Webinar - Click Here

Creating urgency & buyer demand

One of the things missing in today's market is a sense of urgency for buyers to act. Sure the government tax incentive is helping a little and I'm sure we'll see things pick up a little more before we reach that deadline, but then what?

Remember the days of multiple offers and offers that went above listing price? That sure was a lot more fun.

In talking with a RE/MAX broker this week, he shared with me an interesting observation... Whenever one of his short-sale listings goes under contract, or if he temporarily takes a listing off the market, then he gets several calls from other agents who want to know what happen or who have a buyer who wants to write a contract on a short-sale. These status changes are creating a sense of urgency for buyers.

So, is there a better way to create a sense of urgency and demand for a listing?

Yes, there definitely is and I've seen it work many times. It's online bidding and it involves taking a listing and marketing it in a non-traditional way. Marketing it in a way that sets scheduled open house previews with no other access (gets all the buyers in at the same time), setting a limited time for buyers to make an offer (usually 2 weeks or less), open competitive bidding so all buyers know the highest offer at all times and providing an interactive engaging online bidding experience.

If this concept is new to you, it's a lot easier than you would expect and think of the control it gives you and the seller. You now have a solution for someone who needs to sell quickly.

If you're interested in learning how you can use this strategy in your market, RSVP for our next webinar.

It will open your eyes to a whole new world of possibilities!

A Common Real Estate Online Auction Myth

I want to clarify another 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. 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 that the online bidding automates negotiation with the local buyers you've attracted through your marketing (MLS, open houses, yard signs, 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.

Multiple Offers: A good thing!

Getting multiple offers on a property is a good thing, right? 2 offers is usually not a problem, but what about 3, 4, 5, 6 or more?

On one level it's a good problem to have, but it sure can be a lot of work sorting out which one is best for your client. That's why I love the real estate online auction model for selling. You can get all interested buyers competing online in an open format and all the negotiation happens automatically.

It's much easier, exciting to watch and you end up with the highest price for your seller.

To me, it just makes sense. The process is a more proactive way to market and sell real estate. It attracts more buyers and accelerates the sale of a property.

It's fun to see real estate agents embrace and apply this new approach to selling. There are some very creative strategies being used which we will be sharing at our next webinar.

You're welcome to join us!

Why Real Estate Online Auctions?

Here are the reasons why online real estate auctions are going to be a major part of selling real estate in the coming years.

• The use of the Internet is only going to continue to grow. Most buyers already search for homes online, placing a bid is the next logical step.

• If you have kids, aren't they more technically savvy than you were at their age? The Internet is already a large part of their lives.
  
  
• Ebay has helped many Internet users become comfortable using online auctions to buy and sell items.
  
  
• The traditional "list & wait" option for selling real estate is outdated. A more proactive approach is needed.
  
  
• Some large auction companies are starting to see more sales from online events than from their live events. Why would they continue to bother with the cost and coordination of a live event?
  
  
• Too much inventory on the market. The online auction provides a more efficient way to accelerate the sale of real estate.
  
  
• An online auction is exciting for both buyers and sellers to be involved in. When done right, they are the best way to achieve "true market value" for a property.
  

2010: The Year of the Online Real Estate Auction

This is the year we will see exponential growth in the use of online auctions to sell real estate. The technology and user experience is getting better all the time and it's easier than ever for real estate agents to use them.

On Thanksgiving weekend, REDC (Real Estate Disposition Corporation) sold $33.6 million of real estate through online auctions on it's website (www.auction.com) and the following weekend sold $37.8 million. REDC is one of the largest companies using online auctions, but there are many others.

One misconception is that people will bid on real estate without seeing it in person. This is NOT how it usually works. Real Estate that is sold via online bidding usually has "Preview" times when the house it open for interested buyers. The Internet just provides the technology to automating the bidding process.

With the huge amount of real estate inventory, the continual growth of the Internet, and the need to accelerate the sale of real estate, it only makes sense that in 2010, we'll see an explosive growth of online real estate auctions.

Are you ready?

A Real Estate Online Auction brings true market value

In a competitive buying environment, it been proven many times that selling by auction is the best way to achieve true market value for something.

Think about the high-end auction houses like Sotherby's who have been thriving since 1744. They have the auction marketing strategy and process down to a science and are good at it. Whenever an owner of an expensive piece of art wants to sell it, they usually turn to Sotherby's to help them get true market value. It sure beats putting an ad in the paper.

Within the last 10 years, more and more auctions have moved to the Internet. You've probably heard about unique items on Ebay that attracted thousands of bidders and resulted in a very successful sale.

My point is this, the auction method of selling has proven as a very successful way to bring true market value for any item when the marketing is done right. It brings buyers together within a time boundary which creates competition.

Today's real estate market needs this badly and we are seeing more auctions as a result. However, even though the Internet has opened this process to real estate agents, most are slow to adapt. It could be lack of understanding, resistance to change, or maybe a combination of both. It reminds me of time not too long ago when many real estate agents said "Why do I need a website?"

As we all know, change is constant and technology has sped up change. Those who understand and embrace change have a huge advantage on those that don't.

I'll be the first to admit, an online auction is not a good fit for every property. It's not the end-all solution. However, it's a powerful option in the right situations and if you're not familiar with how you can be using them, it's time to start learning.

Real Estate Online Auction - Success Tip

In the past 4 years, I've seen hundreds of successful and unsuccessful online real estate auctions.

One of the things I've noticed with the successful online auctions is that, the listing agent puts together a marketing plan. They plan scheduled open house previews, signs in the yard and surrounding neighborhood, Craigslist, Facebook and other Internet marketing. On higher end homes, direct mail postcards and other print advertising is also used.

One of the great things about an online auction is that it naturally attracts attention. Buyers are anxious to know about them and they stand out. So, it just becomes a matter of figuring out the best ways to let them know about it.

If you're a Realtor and not yet familiar with how you can use online real estate auctions, come join our next Free webinar

Real Estate Internet Auctions - Gets things moving

The real estate market has been slow and sellers are getting tired of waiting for offers and lowering their listing price.

Now is the opportunity to become proactive by using a real estate online auction and get a listing under contract in 30 days or less.

Technology has provided the tool. Join us Thursday for a Free Introduction to using Online Real Estate Auctions

Real Estate Online Auctions - Continue to grow

Real Estate Disposition (REDC) just reported $68.8 Million in sales from their auctions held December 5th & December 6th. $37.8 Million of that was sold through it's "online only" auction site.

This is now the 2nd consecutive week that their "online only" sales exceeded their "live" on site sales. Another strong indication that online auctions are growing quickly.

The great news is, that technology is available today that allows any Realtor to take advantage of this growing trend.

If you're a Realtor and not yet familiar with how online auctions work, make sure you take advantage of our Free webinar - Register Here

Real Estate Online Auctions - Misconceptions

When it comes to online real estate auctions, I'm finding there are still a lot of real estate agents who don't understand them.

Here are some of the most common misconceptions...

1) The seller must accept the highest bid - Not true. The only time that is true is when an auction is done absolute. Almost all online auctions are done with a reserve price or "subject to seller confirmation"

2) Auctions are only for distressed properties - Not true. Luxury homes and brand new homes are regularly being sold through online auctions.

3) People will Bid without visiting the property - Not realistic. Yes, in certain situations when you are auctioning land or something for pennies on the dollar, you could receive bids from someone who hasn't physically viewed the property. Realistically you need to have scheduled open house previews for potential buyers to visit.

4) No way to validate bidders - Not true. Many auction systems have credit card validation processes as well as full "bidder pre-approval" processes. As a listing agent you can require the same requirements you do for presenting a written offer.

Want to learn more? Join our next webinar - Click Here to Register

Real Estate Online Auctions - Growing

It seems almost every week I discover a new online auction site for real estate. This is clearly not a passing trend, but something that is going to continue to grow.

As I think about it, it's easy to understand why. All teens and young adults are very connected to the Internet. As they move into home ownership, it's only natural that they will want to bid online.

Real Estate Internet Auctions are here to stay...

If you're a real estate agent and not yet familiar with how online auctions work, make sure you take advantage of our Free webinar - Register Here