All About Real Estate Auctions

Online Real Estate Auctions Platforms Continue to Grow

2016-08-04T06:43:00.001-06:00

I came across this recent article which discussed how the housing bubble in the U.S. caused the number of auctions to spike because lenders needed a quick and efficient way to move their assets.

Now that we're past that, the momentum of online auctions continues, and the biggest growth is with Commercial properties. In fact, Ten-X reported a 20 percent increase in their Commercial sales last year.

About 70% of the Commercial properties sold last year were owned by banks, but in 2016 they see a change where 70% will be sold by private owners and 30% will be from banks.

I think that what's happening in the Commercial real estate sector with online auctions, is a precursor of what will happen in the Residential sector in the coming years.

Great news for all of us!

Hear is a link to the full article in case you're interested.

Until next month,

Tom Wood

CEO & Co-Founder

Real Estate Auction Systems

877-234-6706

Buyer's Premium - Do you charge one?

2015-05-04T06:50:00.001-06:00

I often get asked about the use of a buyer's premium for an online auction. How much should I charge or, should I charge one at all?

Before I share my thoughts, here is a little background on buyer premiums.

From Wikipedia...In auctions, the buyer's premium is a percentage additional charge on the winning bid at auction that must be paid by the winner.

In the auction industry, the buyer's premium came about because the auctioneer needed a way to collect a marketing fee upfront to cover the cost of advertising and running an auction as well as a way to get paid for their services. So, instead of tacking on an additional "commission" to be paid by the seller, it was determined that sellers were more receptive to having the buyer pay for the auctioneer services by adding a buyer premium to their purchase.

So, should you charge a buyer premium on your online real estate auctions?

It depends.

In general, I feel that if you have a good way to get paid for your services without charging one, an auction will always be more appealing to a bidder when there is not one.

However, I also realize there are many cases when using a buyer premium is the best way for the auctioneer to get paid. There are also areas in the country where a buyers premium is expected.

As an example, I'm a licensed real estate broker in my area (St. Louis, MO). I collect a $250 marketing fee upfront and then charge the seller a 6% commission. I do this because sellers are conditioned to paying a realtor commission and many buyers in my area are not familiar with a buyer premium.

So, it really comes down to your area, your business model and what works best for you.

Until next month.

Can properties sold at auction be inspected?

2015-03-28T07:51:00.000-06:00

There is a common myth that properties being sold at auction cannot be inspected.

Unless a property is being auctioned by the County’s office, or if it’s a judicial auction, most properties being sold auction can usually be inspected before bidding takes place.

I always encourage buyers to do a thorough inspection and even bring inspectors with them while previewing a house being auctioned.

In fact, in some cases, I've given the buyer a 5 day inspection period after the auction ends. Many auctioneers don't do this as it leaves you open to having a buyer back out. However, in my area, auctions are still new and sometimes I need to get more buyers involved and comfortable with the process.

Allowing an inspection period after your auction can help your bidders be more comfortable with the process, but each property and area is different, so it really depends if it makes sense with your process.

Online Real Estate Auctions In Austraila?

2015-02-28T09:24:00.000-06:00

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.

Highest and Best - Does anyone win?

2013-03-14T14:53:00.001-06:00

This month, I've noticed that the market in my area of St. Louis is really starting to pick up, especially on bank owned & HUD owned properties. More times than not, when I submit an offer for one of my investor buyers, I get a call from the listing agent letting me know they received multiple offers. They then asked for my buyers "highest and best".

When this happens, my buyers usually ask me if I think there are truly multiple offers or just a game the agent is playing. I sincerely believe that most listing agents are being honest, but it's hard for buyers not to be skeptical.

I advise my investors to submit what they are willing to pay, and not get emotionally attached. It's a numbers game for them anyway.

When my buyers get their offer accepted in the "highest and best" situation, they all want to know what the other bids were and I don't blame them.

When I started in real estate, I was investor and the "highest and best" situation is why I became interested in auctions. I much prefer to be in an open competitive situation where everyone can see the other bids.

I know my buyers would ALL prefer the auction format for these situations and I believe it would also help the banks get the best price.

Interestingly enough, we've recently been approached by listing agents looking for an online "offer" system. They are still unsure of the word "auction", but agree that having an open "offer" solution where all the buyers can see the highest offer would be ideal. It would also cut down on the juggling of paperwork in multiple offers situations.

Call it an "online offer" or "auction" doesn't matter to me, just glad to see traditional real estate moving in that direction.

Are the banks doing sealed bid auctions

2012-11-15T11:20:00.001-06:00

I just noticed a new trend with bank foreclosures in my St. Louis market, maybe you've noticed it in your market?

When a foreclosed property first comes on the market, the listing agent puts in the agent remarks that no offers will be reviewed for the first 7 days.

As you can guess, the goal is to get multiple buyers competing in a "highest & best" situation and I don't think it's a bad strategy. It creates the urgency and competition that can help the bank get the best price.

In thinking about it, I realized this is exactly how a "sealed bid" auction works. It may be a little less structured, but the concept is the same. Get as many buyers competing before a given deadline to produce the best price for the seller.

As always, every time I see sellers moving towards the "auction" concept to sell, no matter in what form, I'm grateful. It truly is the best way to market and sell real estate.

$16,500 over list price is not enough?

2012-08-30T09:02:00.000-06:00

This past week I was shocked by what happened with a bid my buyer made on a HUD owned home.

In case you're not familiar with the HUD bid process. There is a website www.hudhomestore.com where HUD registered brokers can submit "sealed bids" for their buyers. Typically only owner occupants can bid on HUD owned homes for the first few weeks. If, after the owner occupant bid period ends, HUD has not accepted a bid, it then opens up to all bidders - investors included.

Well, my buyer is an owner occupant and in the construction/rehab business so he was looking for something that needed work but was in a good location with good resale potential (Owner-occupants need to live in the property 12 months before they can "flip" to a new owner). We found, what we thought, was the perfect property. It needed about $25-30K of work, wasn't move-in-ready, only open to "owner occupants" and was priced fair. In addition, it was a split-level home which is not in as high demand for the area it is located.

So, when my buyer wanted to offer $16,500 over list price, I thought he was crazy. But, he had made a few offers on other bank owned properties and was out bid, so I understood where he was coming from. I still felt his bid was way higher than it had to be, but he really wanted this house and after I looked at the numbers again, I realized $16,500 over list price was still an okay deal for him.

So, I submitted his bid before the deadline and was absolutely shocked the next morning when I found that HUD had accepted a higher bid. Are you kidding me? What is going on? I couldn't believe it!

My buyer was understandably frustrated. He was willing to bid higher, maybe even higher than the bid HUD accepted.

These experiences always make me appreciate, even more, the open online bidding process. What a luxury for a buyer (and their agent) to know what the current bid is and to have the control to increase their bid and buy the property. I can't wait until the open online bidding process becomes more common place. Any chance HUD would ever change to an "open bid" process? I won't hold my breath.

On a another note - I learned that if the buyer of a HUD home is planning to use FHA financing to purchase, the list price (FHA appraisal) is the appraisal that is used for the new FHA loan. That means that if your buyer bids over list price, they have to come up with the difference in cash at closing. Found that out the hard way after my buyer finally won a bid over list price on another property.

Even Kenny Rogers is selling via auction

2012-06-22T08:19:00.000-06:00

As most of you know, I stay "tuned-in" to what's happening with real estate auctions across the country.

One of the more interesting things taking place is the number of celebrities & professional athletes that are turning to auctions to sell their real estate. The most recent is Country Legend Kenny Rogers who is selling his home in Athens, GA via Absolute Auction on June 26th

It makes sense for several reasons:

Equity - They either own their property free & clear or they have pretty good equity and can let it go at a "discount".
Public Interest - As a celebrity, the public takes notice and it's even easier to market one of their auctions. After all, who wouldn't want to own Kenny Rogers home.
Why wait - As you know an auction accelerates a sale, especially important if you're a professional athlete that's been traded to another team.
Absolute - Along with having equity, many celebrities are selling absolute (like Kenny) with no minimium bid, helping entice bidders even more with the possibility of a "steal".

Here is the link, in case your interested in learning more or even attending Kenny Rogers ABSOLUTE Auction

Have you been watching Auction.com?

2012-05-17T11:52:00.000-06:00

As most of you know, I always have an eye on REDC (Auction.com).

They are the undisputed leader for real estate auctions and especially with their "online only" auctions. I haven't found any other company that comes close to the volume of sales they do.

REDC is still selling primarily bank owned real estate but I've noticed 3 new variations show up in the last couple of months.

Short sales - They now have auctions for properties where the lender is willing to take a "short" on the amount owed in order to avoid foreclosing. This is a great use of an auction and something our customers have done for a while. However, the short sale process can take a while and that increases the chance that buyer won't wait around to close.
Still Occupied - I've also noticed auctions for properties where they are "occupied" and that it will be the buyer's responsibility for evicting the owner. So, not only is the buyer prevented from seeing the property before they bid, they have the fun job of getting the owner out after they buy it. I've talked to a few investors about this, and not one of them was interested in bidding on something like that. I'm surprised that they are finding any buyers for these.
Luxuy homes - I've also seen a few press releases anouncing the successful sale of multi-million dollar homes through REDC online only auctions. This proves once again that auctions are not just for distressed properties.

Seeing these new additions to REDC's auctions, is just another indicator to me of where real estate in the U.S. is heading.

Are bank properties worth the risk?

2012-03-08T13:29:00.001-06:00

A couple of weeks ago, while teaching a real estate online auction class in Mankato, MN, I met a successful auctioneer from Chicago who has been in the business for over 20 years. He does FDIC auctions of personal property as well as real estate auctions.

He shared a story with me about his first opportunity to auction a group of 100 bank owned homes in the Chicago area. The bank would not give him a penny for marketing/advertising and ALL of the properties would be sold with reserves.

He knew the auction would require at least $100,000 in marketing to make it successful and after giving it some thought he took the chance. He put his own $100,000 up for the marketing and prayed that the bank would have reasonable reserves and the properties would sell. Fortunately, it was very successful and he made over $600,000 on the deal (not a bad return on his investment).

The same bank offered him more properties to auction, but this time in Detroit. Unfortunately, this time he learned a hard lesson by losing money (essentially paying to auction those properties). Detroit is a much different market than Chicago and a lot tougher.

I was surprised to find out that the banks are unwilling to pay any marketing money, but I can also understand why. It was very interesting for me to think about this opportunity and wonder if I would put up that kind of money if given the same chance. The bank has zero risk and the auctioneer has it all.

One of the big things you are advised in auction school is to not pay for the marketing out of your pocket.

What do you think, would you do it?

Want to learn more about running your own real estate auctions online? Join our next webinar

Highest and Best - Does anyone win?

2012-02-06T20:27:00.001-06:00

Last month I shared how a growing number of asset managers/REO agents are taking offers online.

This past week I submitted written offers for 2 different buyers on REO properties and was told by the listing agents that they received multiple offers. They then asked for my buyers "highest and best".

When this happens, my buyers always ask if I think there are truly multiple offers or just a game the banks are playing. I sincerely believe the listing agents are being honest, but it's hard for buyers not to be skeptical.

I advise my buyers to submit what they are willing to pay, and not get emotionally attached. It's a numbers game for them anyway.

When my buyers get their offer accepted in the "highest and best" situation, they all want to know what the other bids were and I don't blame them.

When I started in real estate I was investor and the "highest and best" situation is why I became interested in auctions. I much prefer to be in an open competitive situation where everyone can see the other bids.

I know my buyers would ALL prefer the auction format for these situations and I believe it would also help the banks get the best price.

Things are heading that way, it's just a matter of time.

Online only offers for REO properties - it's happening!

2012-01-09T10:19:00.001-06:00

7 years ago when we created our online real estate auction system, I expected a much larger adoption by the asset managers at the banks to use the auction process to sell their REO (Real Estate Owned) properties (i.e. foreclosures).

Today, several asset managers do use auction companies such as REDC, Hudson & Marshall, Williams & Williams, etc to move some of their inventory. However, the majority of the REO inventory is still being sold through the MLS.

Well, last week, I got really excited because I came across some REO agents in my market that are making a change.

A few REO agents have made it mandatory that offers for their listings be submitted online. Not only that, but in the 3 examples I saw, each agent had a different system. One of the systems told the amount of the highest offer, while the others just showed the number of offers.

So, it's finally happening. A growing number of asset managers/REO agents are adopting technology to make it easier to handle offers on their properties.

Unfortunately, there is still a BIG piece missing. There is no sense of urgency, no deadline for submission (timed auction), it's just wide open. The bank will take offers until they get one they like (I guess).

I'm grateful that they are starting to take offers online, and I just hope it won't be too much longer before they realize the benefits of doing it in a timed/auction format to create the urgency and get the best price for the banks.

Interested in learning about using online auctions in your market? Join us this Thursday

How many price reductions does it take?

2011-12-05T14:12:00.001-06:00

The most common way to sell real estate in the U.S. is by listing it in MLS and then, if it doesn't get any interest, begin to drop the price until a buyer makes an acceptable offer (see above).

Most real estate agents don't realize that this method of selling is actually a type of auction. It's called 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.

So, since real estate agents are already using one type of auction, why not try a more traditional auction? An auction where you open bidding to a group of interested buyers and let them compete against each other to 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 the bidding can be done online.

Not sure how you can do it in your market? Join us Thursday for our next online auction training session.

Have you been involved in HUD sealed bid auctions?

2011-10-06T08:28:00.003-06:00

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

2011-08-31T08:50:00.004-06:00

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?

2011-07-26T10:55:00.004-06:00

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?

2011-06-29T11:18:00.001-06:00

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?

2011-05-19T12:09:00.001-06:00

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?

2011-04-14T12:10:00.002-06:00

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?

2011-03-09T10:23:00.002-06:00

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.

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.
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.
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!
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

2011-02-09T09:16:00.004-06:00

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...

Friday open houses aren't very popular in St. Louis, I only had 4 people come that day.
Saturday & Sunday open houses are well attended.
Seller needs to be more motivated (He is now and has come down on his "reserve")
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!)
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

2011-01-13T10:32:00.004-06:00

Last month, I shared how I've found some "hidden" deals for buyers in my St. Louis market on Auction.com (REDC auction company)

I'm still finding them, and the reason they are "hidden" is because of the lack of coordination and communication between the local listing agent and REDC. A big opportunity for the local listing agent who takes ownership of the process and does the online auction themselves.

In addition, I've been contacted by at least 2 buyers a week wanting to know where to find the "deals". I think it's because the word is starting to get out in the media that the real estate market has hit the bottom and on it's way back up.

Many of these buyers are intimidated by online auctions because they are still "new", so I started to give some thought to what can be done to help buyers be more comfortable with the process.

Here are some initial ideas (some obvious, but surprisingly often not done)...

Clearly communicate the dates and times of the open house previews
Create short video that answers FAQ's and invites them to contact you with additional questions
Make it easy for buyers to ask questions (email, phone, online chat, text, etc.)
Give the winning bidder 5 days to do inspections after the auction (not done with traditional auctions)
Don't use a buyer premium, collect your commission from the seller

Do you have any additional ideas? I'd love to hear them.

Interested in our next online real estate auction training session? Register Here

Do buyers bid online for real estate?

2010-12-15T13:25:00.004-06:00

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?

2010-10-27T13:49:00.004-06:00

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

Lighting a fire under the buyer!

2010-09-30T16:26:00.003-06:00

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