Online Bidding : Consider the efficiencies!

Take a moment to ponder the efficiencies that online bidding can bring to your daily life as an active real estate agent, and ask yourself a few questions.

How many active listings do you have?

Suppose you got simultaneous calls with prospects wanting to see all of them, right now. How do you do that?

Suppose they wanted to make offers on all of them, right now. Again, how do you do that?

If a prospect wants to make an offer on one of your listings at 2AM, do you want to take the call?

Have you ever talked yourself into, and then right out of a sale?

Wouldn't it be better if a prospect could make an offer as soon as they were ready?

Are you trying to figure out how to cut down on your gasoline consumption, especially if it goes to $5/gallon or more?

Do you have attractive second-home, upscale vacation, or investor-type listings?

Would you believe that such properties can sell sight unseen?

Suppose you could eliminate the drudgery of writing up an offer, and a counteroffer, and the phone calls and visits that go with them?

Do you think you could get more listings if you could offer listing prospects online bidding?

Could you use another tool to help compete with individual Internet-savvy FSBO's, as well as For-Sale-By-Owner agencies?

Could you use an automatic "lead generation" system that attracted worldwide attention to your local listing farm?

What will you tell Sellers who expect you to offer online bidding if you don't have it available?

Do you think your Sellers might be more impressed with your work if they could monitor the bidding on their property themselves, without calling you?

If you could spend more time and effort on marketing, and less on busy work, do you think your commissions would increase?

Would you like to increase your number of in-house sales with no commission splits to buyer agents?

How to protect sellers with a "Reserve" price

One of the most important terms is to determine whether the auction will be "absolute" or "with reserve." Absolute means that the property sells to the highest bidder regardless of price. Obviously, this method is extremely risky, and is best left to the professional auctioneers.

We recommend that all online real estate auctions be held "with reserve," meaning that the property does not sell unless the reserve price is met or exceeded. Wait a minute - does that mean we are back to guessing at a price in advance? Not necessarily, although both you and your client will likely have at least some idea of a reasonable price range that the property should bring.

You can, if you choose, set a reserve price when entering your auction listing into the Auction System. If you do, the display that bidders see will show "Reserve not met" until the reserve price is met or exceeded. At that point, the display changes to "Reserve met" and bidders know from that point forward that the high bidder is going to buy the property. Your listing agreement with the Seller should indicate that the Seller is obligated to sell if the reserve is met or exceeded.

However, it is not necessary to establish a reserve price. Your terms can say "subject to confirmation by Seller." This is simply another form of auction with reserve, but avoids having to guess a reserve price in advance. After the online auction closes, both you and the Seller examine the "bid history" and the high bid to decide whether "fair market value" has been achieved.

This method of protecting Sellers is the most common form of real estate auctions across the country today. It is used by most professional real estate auctioneers and is accepted by bidders as a necessary protection for Sellers. You will discover that very often Sellers will agree to a sale price that is less than the lowest price they may have previously insisted on.

The difference between online bidding and "live" auctions

As a licensed Realtor, you can hold successful online auctions. "Live" auctions, however, are strictly the province of the professional auctioneer. It's easy to underestimate the preparation and expense an auctioneer has gone through to get to the point where he can stand in front of a crowd and sell a property in a few minutes. Don't even think about it trying it yourself. Many Realtors, as well as ambitious FSBO's have failed in the attempt, despite spending significant sums on print advertising. Even a pro auctioneer may fail to sell a property at live auction. That alone should be enough to tell you not to attempt it.

The alternative you CAN successfully use is the online equivalent. The only real difference is that you won't be bid-calling in front of a live crowd. It all happens online over the Internet.

Some might argue that the online version lacks the excitement and intensity of a live auction. We beg to differ. Try bidding for something on eBay that you really want and watch the clock tick down toward zero as the auction nears closing time. See if your pulse rate and breathing go up in the last few minutes while you hope you don't get "sniped" in the last few seconds. When you win, do you feel the adrenaline rush?

There's no limit to the number of bidders you may have watching and bidding on your online auction.

They don't have to remember to show up on auction day. You'd be surprised at how many calls auctioneers get from bidders who wanted to attend an auction, but forgot the time and date.

In fact, they don't even have to watch the close of the auction on the Internet. The system allows them to place a "maximum bid" at any time before the auction closes. In other words, if a bidder decides in advance the highest price he is willing to pay, the system will record that amount, but not display it, and "auto-bid" on behalf of that bidder as other bids come in, always keeping him one bid increment higher than the next highest bid, until his maximum is reached.

Bidders don't have to drive to the auction site, nor do they have to stand in line to register.

They can remain anonymous because the system doesn't display their true identity to other bidders.

They can bid from anywhere in the world, even from a data-capable cell phone.

They can place bids anytime, day or night, at their convenience.

They will get an immediate email from the system if they are outbid.

Take a moment to consider how online bidding solves scheduling conflicts. Most buyers are working the same hours you are - weekdays. How do you effectively communicate and coordinate with them? Online bidding lets buyers act on their own schedule, whenever it suits them, with no need to call you. You should, however, schedule a "preview" of the property and show the time and date on the auction listing. Two hours on a Saturday, say from 10 - 12, is plenty. At least one agent should be on hand to conduct the showing. All prospects see the property at the same time, demonstrating interest, and stimulating bidding. Two agents is even better. One to show, one to explain the bidding process.

Contributed by John Bickel

Why online auctions make sense for Realtors

In a "normal" market, the conventional method of using comparative market analysis to establish a listing price works reasonably well, despite the fact that everyone involved knows that the eventual selling price is typically somewhat less. Getting a property priced right can be a challenge, and how close the Realtor gets it to prospect's "opinion of value" is critical to how long it takes to actually get a sale. No matter how good the Realtor's guess is, it's still a guess. Even a formal, written appraisal is defined as an "opinion of value," a phrase that simply means a guess.

Consider the textbook definition of "market value." In simplified form, it is the highest price that a buyer is willing to pay in an open market. What does that remind you of? Of course, an auction. At auction, you don't need to guess at a listing price. You don't need to wonder if you got it too high or too low. The market will determine the eventual selling price, and competitive bidding drives that price upward to "fair market value."

Mankind has never developed a better method for setting "fair market value" than competitive bidding.

The key concept of any auction is "Sellers set the terms, buyers set the price."

Another key concept easy to overlook is the "time value of money." In other words, an accurate CMA assumes the likely "days-on-market" to achieve that anticipated selling price. Is it reasonable to assume that the selling price should be less if there was a way to sell it right away? Sure it is. It costs the Seller money to hold the property.

When's the best time to sell in any market, no matter whether it's trending up or down? As soon as possible after the Seller decides to sell!

Contributed by John Bickel

The impact of the Internet on real estate sales

This post written by a member of our team John Bickel - Auctioneer.

Not long ago, Realtors wondered why they would want to own and operate an Internet web site. A combination of demanding buyers and forward-thinking Realtors soon changed the way properties were advertised and described. As technology improved, from high-speed Internet access in the home to a host of hardware and software upgrades, real estate listings could be brought to life in a manner that print advertising never achieved, with multiple still photos and streaming video "walk-through" displays.

Both the Internet and the technologies that take advantage of it continue to evolve to the benefit of both real estate prospects and the agencies that serve them. Just as the Multi-List system revolutionized the way properties were listed and sold back in the '70's, the concept of online interactive bidding will soon become commonplace.

Those agencies who are first to offer online bidding will have a distinct marketing advantage, both for listing presentations, and for increased sales of their own listings, as prospects recognize the value of their use of the latest interactive technology.

We believe online bidding will be an integral feature of every real estate agency's web presence in the very near future. Your existing website can be much more than a glorified advertisement - it can actually SELL property.

One thing that hasn't changed is the concept of "Location - Location - Location" Real estate is a local activity - best handled by local Realtors. Although the properties are local, buyers could be anywhere on the planet.

The Internet is the backbone of global commerce - ignore it at your own risk. Everything else is selling online - As soon as Realtors pick up this tool and use it, so will real estate. List - List - List locally, but sell globally!

Statistics show that most prospects begin their search for a new home on the Internet. Online bidding helps to capture those prospects and turn them into buyers.

Imagine your existing print ads showing something like a little "gold star" in the corner of each property photo. Somewhere else on the page, there's a note that explains that every photo with a gold star is available right now for online bidding. Can you see how this minor addition would add immediate interest and action to the ads you are already paying for?

Real Estate Online Auctions - Part 3 of 3

This is part 3 of 3, but just in case you missed part 1 & 2 here is a little background ... After 14 years of working in the computer industry, I got involved in real estate. I was drawn to the concept of online real estate auctions and I've spent the last 3 years using them. Here are some more answers to common questions about them.

Q) How do auctions give you 3 opportunites to sell?

A) By holding an auction it's not uncommon for someone to bring a written offer when the auction is announced to try and get it without competing with others. The second opportunity is when the auction ends with a winning bidder. The third opportunity is from follow-up with all interested buyers if it doesn't bring a winning bid.

Q) What about non-U.S. buyers?

A) An online auction makes a property open to a worldwide audience. I was surprised the first time I saw a buyer from France win an auction. It demonstrated to me that online bidding is an effective way to get a property in front of a worldwide audience.

Q) Will an online auction work in my market?

A) It depends. If you are in an area where most people have high speed Internet access, than it will work. If you're in an rural area where most people use dial-up and therefore aren't on the Internet much, it will be much harder.

Q) Do I need a special contract or process to sell through an online auction?

A) No. An auction is simply getting you to agreement on price and terms with a buyer. The standard contract takes over from there, just like any other purchase agreement.

Thanks for Reading! I hope you learned something.

Real Estate Online Auctions - Part 2 of 3

This is part 2 of 3, but just in case you missed part 1 here is a little background ... After 14 years of working in the computer industry, I was naturally drawn to the concept of online auctions when I got involved in real estate. I've spent the last 3 years using online real estate auctions and here are some more answers to common questions about them.

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

A) No, not anymore. I'm starting to see auctions for brand new properties from builders and banks who just need to get rid of them. Owners of any type of property, who are motivated, are turning to auctions for a solution.

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

A) Typically about 3 weeks. It depends on your marketing campaign and how many open houses 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. However, there is no requirement that I've come across that requires a special license.

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 watch hungry buyers fight it out online?

Thanks for Reading! In the next few days, I'll share part 3