Is it time to sell your home via an online auction?
Not getting any bites? An online auction can expose your property to people all over the world.
© Raoul Minsart/Masterfile
Millions of Americans who are eager to sell their homes are losing hope. The real-estate market is stuck, and there's a huge backlog of inventory weighing down potential sales.
But technology gives sellers another alternative: online real-estate auctions. By going online, you can cast a larger sales net that reaches more buyers across the country and even around the world. And you don't pay any commission unless your home sells via the auction. Even some online auctioneer heavyweights such as eBay have become players in the home auction arena. (Bing: Home-listing photos you must see to believe)
That's why this small but growing facet of real-estate sales is emerging as another vital home-marketing tool. Private residential listings at Alabama-based RealtyBid.com have soared from 1% to 10% of business, CEO Tony Isbell says. (Foreclosures still account for the majority of sales.)
Sellers make a big mistake trying to sell a home themselves in a market with a huge backlog of property, says Matt Baker, CEO of Maryland-based Bid4Assets.com, another online auction site. Previously, multiple-listing-service operators had a lock on home-sale information, making online sales difficult, he adds. But that's changing as more information becomes available via the Internet.
These days, value-priced property sells best. At Bid4Assets, the sweet spot is $100,000.
Yet before jumping into the online auction fray, sellers must weigh the pros and cons:
The upside of selling online
It can happen fast: Properties often are auctioned off quickly, usually within two weeks. "What makes an auction work is fear of losing," Isbell says.
In an online auction, the homes that sell the quickest are those that offer buyers the most details. Bid4Assets advises sellers to disclose as much information as possible, such as nearby attractions, and include a lot of high-quality photos.
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"We walk sellers through the process," Baker says. Sellers can create "storefronts" and upload maps, title information and disclosures.
Bid4Assets also coaches sellers on the best days to hold an auction — usually weekdays.
Exposure the world over: Online auction sites get heavy traffic. At Bid4Assets, hundreds of thousands of visitors check in weekly. And lately, foreign homebuyers — mainly from Europe, Israel, India and Canada — are popping up more and more. For even more exposure, Bid4Assets also syndicates listings with 65 top real-estate websites.
"We reach a wide global audience at the lowest transaction cost," Baker says.
You can also drive more traffic to your auction by posting your property on social networking sites such as Facebook or Twitter, or uploading videos to YouTube. Other free listing sites include Craigslist, Backpage and BiggerPockets.
At RealtyBid, sellers can't list the home themselves; they must go through an agent. However, you can request that your agent list your home on the site. Exposure is large: In October, for instance, the site had 2 million visitors, including foreign buyers.
At Bid4Assets, sellers can choose whether to list themselves or go through an agent.
Buyers are vetted: Online auction companies usually authenticate buyers. For example, Bid4Assets uses proprietary databases to verify identity, matches names to credit cards and verifies working email addresses.
At RealtyBid, there's a $500 penalty if the buyer defaults on the winning bid. "Once they win the property, they have 24 hours to put down a 5% deposit," Isbell says. The winning bidder has an additional 30 days to come up with the rest of the cash. These days, many buyers make all-cash payments, adds Daren Blomquist, a spokesman for RealtyTrac.com, an online marketplace of foreclosure properties based in Irvine, Calif.
If a winning bidder can't come up with the financing, the second-highest bidder gets a crack.
The downside of selling online
Lower bidders may win: If you sell your home using the online auction approach, your home may sell for less than you would like. "If your objective is getting a certain price, an auction isn't the best strategy," Blomquist says.
There are protections, though. Sellers can set high reserves and withdraw a property if the reserve isn't met. Sellers can lean on auction company expertise or use other online sources for valuing and setting an open bid.
Your home may not sell: At RealtyBid, only 55% of auctioned properties are ultimately sold. "The rest go back on the market," Isbell says. Sellers usually gather more information and put the home up for sale a second or third time.
An online auction may not be the best choice for every seller, but it's an option for some of those struggling to sell in today's tough real-estate market.
Online auctions might work well in Kansas, but we're not in Kansas anymore. Unless your selling for pennies on the dollar with no reserve number, you, as the seller, are paying out of pocket all advertising dollars for a promise and a pipedream.
Keep it real and trust that a competent realtor can deliver a higher dollar and weed out the bottom feeders from your door.
I've utilized online auctions on everything from a condo to a large commercial bldg. and all of the results were dismal, depressing for the seller and disappointing for me. Why? Because with on line auctions there is too long of a time line till the magic moment and no man-to-man or woman-to-woman (and all other variations) spirit of competition bringing the drama and unreasonable emotions to the bid.
Better to trust that the realtor has a price point to get it sold. List it below that price point and chances are much better that....you won't have to click your heels to get what you want.