Table of Contents

Why Online Auctions Make Good Sense
How to Sell a Property via Online Auction
Strategies for Optimizing the Sale Price
Auction Glossary

Why Online Auctions Make Good Sense

It’s no secret that people are buying more products through online auctions, and real estate is no exception. Large numbers of homes are still sold through traditional methods, but for today’s buyer and seller there is much to like about online auctions.

You may be familiar with the scene of foreclosed homes being auctioned on the steps of the county courthouse. Or, you may have heard advertising inviting you to a hotel ballroom where large numbers of properties will be sold. Some buyers prefer this environment; but at Bid4Homes, years of conducting online auctions have taught us that many people prefer to do their buying and selling online. Let’s look at some of the reasons.

What bidders like about online auctions

“I bought a house in my underwear.” Yes, we actually heard this from the purchaser of a property listed on bid4homes.com. For millions of bidders, it’s this ultra-convenience and a feeling of being in complete control that draws them online. During the auction period, which lasts anywhere from a few days to several weeks, bidding can occur 24 hours a day from any computer with Internet access. This means that potential buyers can bid from home, the office, an airport, a restaurant—virtually anywhere and anytime.

Contrast this with standing on the steps of the local courthouse in a sleet storm. Compare it to the craziness and inconvenience of a jammed hotel ballroom. Then consider the privacy, anonymity, and easy availability of an online auction—for many there is simply no comparison.

Online auction sites present a special opportunity for investors who are seeking undervalued properties or properties that will generate a steady rental income. Bidders can start by viewing property from all over the country, or they can look at numerous options in a location of their choosing. They can consider thousands of opportunities instantaneously, from many miles away, and quickly identify properties that fit their investment needs.

Web sites rich with information let bidders assess the value of a property. Good online auction sites provide potential bidders with extensive information on any property they may be considering. Such sites often include built-in applications that allow bidders to communicate with potential sellers. They also allow bidders to easily get information about comparables, as well as a home’s proximity to local points of interest. Sites like Zillow, Google Maps and ZIPskinny are just a few of the information resources that online buyers have at their fingertips. Many homes posted for online auction even coordinate open houses for interested parties to attend.

Let us not forget another crucial aspect of participating in an online auction--exhilaration. As auctions draw to a close and the pace of bidding picks up, bidders tell us that there’s an element of genuine excitement. Will theirs be the winning bid? Will somebody outbid them at the last second? On a site like bid4homes.com, if bids are still being placed when the auction is scheduled to end, the auction will move into “overtime” until five minutes pass without a single bid.

Leading online auction sites even assist in the management of the settlement process online.

What sellers like about online auctions

Sellers of real estate in the online auction environment are a diverse group with a wide range of needs. Some are owners of a home or plot of land that they must sell. Some represent a U.S. Government agency trying to sell forfeited property. Others are asset managers from large banks overseeing hundreds of REO homes. Some may even be real estate agents with a particularly hard-to-sell property. But they all have one thing in common—they want to move their property as quickly as possible for the highest price possible.

Online auctions offer many advantages, but sellers find one aspect particularly appealing. Online auctions happen quickly. A “preview” of the property is available online followed immediately by the bidding period. Total elapsed time for both preview and bidding normally ranges from two to four weeks. The old saying, “time is money,” rings particularly true when an owner absolutely must sell a property.

Here’s where the appeal gets even stronger. Unlike on-the-ground auctions, online auction companies charge only a nominal amount to list a property. The seller pays a commission only when the property sells. During times marked by an overabundance of supply and a shortage of buyers, sellers find this comforting. An online auction is a no-risk method to move property quickly.

Many sellers understand that they can attract far more bidders online. After all, online auctions can be accessed by anyone in the world. Bid4Homes, for example, has over 400,000 subscribers worldwide who have registered to bid on real estate in online auctions. Most properties listed on Bid4Homes are also syndicated on RealtyTrac.com, which has more than 2.5 million subscribers.

If a property is priced appropriately, a seller can expect bids—each one higher than the last. This is quite different from a traditional sale through a real estate agent where the price is set high and offers usually start below the asking amount.

If a property doesn’t sell, the seller will learn a lot about what the market can bear. This will help the seller adjust pricing accordingly, whether they list the property with an agent or try another online auction. Think of the auction as a pricing “beta test”. Another advantage to this “beta test” is that sellers with large pools of homes can place a small number in auction and judge the effectiveness of online auctions in a short period of time.

The managers of good online auction sites often work with sellers to liquidate property. Let’s use an example, in which the highest bid received is just under the reserve price, resulting in an unsuccessful auction. The website’s account managers know how eagerly the seller wants to move the property. At the conclusion of the auction, an account manager might confer with both the seller and the high bidder and negotiate a sale after all—a final personal touch that satisfies both parties.

Above all, both buyers and sellers must remember that the company holding the auction does not own the property. It simply provides the marketplace to bring sellers together with as many qualified buyers as possible. The company’s primary goal is to satisfy both property owners and purchasers.

Given the convenience, speed, and power of the Internet, it is easy to see why hundreds of thousands of real estate buyers and sellers say online auctions bring unmatchable value.

How to Sell a Property via Online Auction >>