I’m always a sucker for the next good idea, and the single-family residential market could use a good idea. With more than 3.6 million homes on the market as of third-quarter 2009, perhaps someone could invent a way to sell more of those homes and stabilize the supply-demand equation.
Jim Hodson and Dan Connell certainly haven’t built the automatic sell-a-home machine, or even topped the time machine on "The Rocky and Bullwinkle Show" cartoon, which could return us to a point before the subprime mortgage crisis tipped the country into a recession … but they did create and are now putting to market one of the more unique concepts to help move foreclosed homes quicker.
It’s an Internet-based technology that takes the online auction concept and twists the scope slightly for a time-limited, open-market bidding system for foreclosed single-family residences. At first glance, Countdowntobuy.com’s methodology operates in a similar manner to other Internet auction technology such as eBay, but once you get into the site the differences are very apparent.
The biggest change is that once the estimated value of a foreclosed home is established, the price is reduced 1 percent a day for 30 days until the property is sold or reaches the bottom price at which the property could be transacted.
The whole process is automated so there are no messy negotiations. And unlike on eBay, the whole bidding war does not come down to the last 60 seconds.
Here’s a quick overview of how it works: A foreclosed property has an estimated value of $750,000. It goes to market on Countdowntobuy.com at $800,000 (usually listed slightly above estimated value so the bank has a little time to capture higher market value if there is demand out there).
For 10 days it is listed on the site for $800,000 and if there are no takers the site will drop the price 1 percent (of the estimated market value, or EMV) each day for 30 days. So after the first day, the price drops $7,500 (1 percent of $750,000). If there are no bidders at that price, it declines the next day another $7,500 and on and on until a bid matches or is bigger than the current day’s pricing.
As a buyer, you might think that property is worth just $710,000, so you put that bid in. The site will record your bid and tell you how many other people are bidding, but their prices are not disclosed. As the price is ticking down day by day, you might get nervous, thinking the other bidders put in prices higher than you, so you offer a new bid at $720,000.
Basically, a buyer submits a sealed offer anywhere within the established offer range and can adjust the offer daily.
If you’re not following any of what I just explained, no worries. The Web site has nifty little graphics that do a good job of illustrating the bid process.
Will this better idea work? Who knows? When I saw the Web site, it was in its beta stage. But, I liked the concept enough that I spoke with Dan Connell, president of Countdown To Buy. …CONTINUED