Real Estate Online Auctions - FAQ's

I've spent the last 4 years using online auctions to market and sell real estate.

During that time, I've encountered a lot of confusion from both buyers and sellers. Here are some answers to some frequently asked questions.

Q) Will an auction force me to sell too low?

A) No, not if you set it up correctly. There are 3 main types of online auctions. If you use a Reserve Auction, you can set a hidden reserve price on the system and the auction will not be considered successful unless the reserve is met. If you use a Minimum Bid Auction, you don't set a system reserve but you can state in your terms that the winning bid is subject to seller approval (This type is commonly used for short-sales and bank owned property). The third type is an Absolute Auction, and this is the only type that could force you to sell it too low. When yo sell "Absolute" you are telling buyers that the high bidder is the winner regardless of how high bidding gets.

Q) Are online bids legally binding?

A) Yes, if the terms indicate they are and the online auction system has a trail to show the bid was made by the person. If you're interested in more details about this, here is a link to an article published on this subject in the March 2008 Auctioneer magazine. http://64.27.82.10/ActiveMagazine/getBook.asp?Path=AUM/2008/03/03

Q) What if the high bidder backs out?

A) There is no difference than having a signed sales contract on a property. You decide how much of an effort you want to take to pursue the person legally. Many Online auction systems now provide tools such as credit card capture so a penalty can be charged to the high bidder that doesn't perform.

Q) Are there any liens on the property?

A) Many buyers seem to think that an online auction is subject to the same terms of a foreclosure auction done at the courthouse where there could be other liens on a property. That is not the case. The property sold through an online auction goes through the same closing process that any "traditional" sale would go through. The title passes free and clear of all previous liens.

Q) What's the secret to being successful with an online auction?

A) A quality auction listing and good advertising. The online listing needs to contain thorough information about the property, terms that are easy to understand, many good pictures and a virtual tour, if possible.

You also need to have a good advertising plan. Auctions naturally attract attention but people need to know about it. Yard signs, open house "previews", fliers, local ads, Internet/e-mail marketing, post cards, etc. The more you let people know about it, the better the chance for success.

Hope this was helpful, I'll share some more next week.

Online Auction "Jolts" the Hamptons

Two weeks ago a couple of brokers in New York had great success running an online auction for properties in the Hamptons.

Here are some highlights from an article published after the auctions ended. A link to the full article is at the end....

A Prudential Douglas Elliman-sponsored online auction, run by brokers Vince Horcasitas and Enzo Morabitohas has helped bring buyers back to the market.

“We jolted the market,” Mr. Morabito said. “We jolted the brokers, we jolted the sellers, we jolted the buyers. We bred a little action. Our open houses yesterday were swamped.”

During the eight days that online bidding was going on, the activity surrounding the houses was significantly improved over what it had been and what other, non-highlighted properties, saw. In three days of open houses, Mr. Morabito and Mr. Horcasitas and their associates showed the 17 properties more than 100 times.

“It was a huge success for a couple of different reasons. We basically sold two properties, and we brought a tremendous amount of exposure to all the properties,” Mr. Horcasitas said. “We created a frenzy on a couple of properties. We had 25 people go through the [Bridgehampton] house on Sunday. They had 20 go through the one on North Main in Southampton [Village].”

In all, 50 bids were entered over the eight days the auction was live by a total of 14 different bidders. Most of the bids came on Sunday, the last day of bidding.

To read the entire article click here

It's a great time to be a buyer!

There is no doubt that there are great deals to be had in today's real estate market.

Motivated sellers, low interest rates and government incentives of up to $8,000 for first time home buyers are just a few of the factors that are turning the market around.

I heard today that we are starting to see a big increase of first time buyers hit the market. That should have a ripple effect all the way up the line.

Buyers are even finding deals in places like The Hamptons, New York. Check out this article for more details.

Auction.com for $1.7 million - are you serious?

REDC which is famous for the real estate foreclosure auctions going on in ballrooms across the country has just bought the domain www.auction.com for $1.7 million.

To me that indicates, 2 things:

1) REDC is doing extremely well with their auctions.

2) REDC believes real estate auctions will continue to grow as an effective way to sell real estate quickly. (I agree, and see it as an opportunity for local agents to piggy-back on their success)

To read the entire article, click here.

Online auctions hit the Hamptons

Here is a link to an interesting article about a progressive real estate office in New York using online auctions to move their listings. If they can make it work in the Hamptons, you can make it work in your market!

Read it here: Hamptons under the Hammer

Is the media helping you market?

Everyday we hear the "doom & gloom" of the economy from the media. Even if there is something positive, they tend to put some sort of negative spin on it.

Real estate is talked about continually, foreclosures, loss of equity, homeowners in trouble. It makes it kind of difficult to sell properties in today's market...Unless, you use the media to your advantage.

The media often shows some of the great deals buyers are getting on real estate. As a result, buyers are starting to come back in the market, but are easily overwhelmed with the choices.

That's why you need a way to stand out to these buyers, and an auction does that.

Real estate auctions are growing fast, because they attract buyers and get the highest and best offer in the shortest amount of time. The media is helping by the messages they keep sending "real estate is cheap", "great time to be a buyer", etc. Now, when a buyer sees an auction sign in a yard, an ad in the paper or any marketing related to auctions, they take notice more than ever before.

On top of that, more real estate auctions are moving online. They are easier, the marketing is less expensive and Realtors can do it themselves.

When you have a motivated seller and they want to know what you can do to help them sell their property faster, why not offer an online auction?

Now is your opportunity to use the "doom & gloom" of the media to get more buyers interested in your listings than ever before! Are you taking advantage of it?

Living in a cave?

I ran across this fascinating story about a family who turned a cave in Missouri into their home. They are not able to get bank financing so they are trying to sell it on Ebay.

They have received so much exposure that the last time I looked they had over 900,000 views on their online real estate auction and there are still 11 days left.

Evidently they are having technical problems trying to answer questions and approve bidders and Ebay is working on it.

All this attention will surely bring a solution. I'm sure a bank will step in and offer financing or they will be able to sell it for a nice profit. It's another example of how well the Internet can work for marketing.

Here is a link to their blog and forum http://www.Caveland.US