Editor’s note: This is the second in a two-part series. Read Part 1.
There are numerous ways to market your listings using the auction process, including doing a traditional auction, an auction you conduct yourself as the agent, or by using one of the online real estate auction platforms. Is one of these approaches right for your business?
Part 1 of this series outlined key points of having an auction house handle the auction. This type of auction can be quite effective, especially when the auction house has multiple properties that will attract more bidders. Here are three other options you may want to consider.
1. Agent do-it-yourself auctions
I once spoke with an agent who was conducting his own auctions on his listings. The first week of his marketing campaign was devoted to creating all the marketing pieces he would use to advertise the property and placing them with the appropriate advertising outlets.
The second week, he initiated his plan with an advertising blitz for the property, including mailers to the area, newspaper ads, local radio, as well as advertising on the major social media sites. In most cases, he persuaded the sellers to offer the house without a reserve (i.e., no minimum price), as this attracts more bidders. The house was available for showing the following Saturday and Sunday.
Bidders had until 7 p.m. Sunday evening to submit an offer. The agent then looked at the offers. Once he identified who made the highest offer, the agent then contacted each of the other bidders by phone and asked them if they wanted to increase their offer to exceed the current bid.
He continued this process until only one bidder was left. When that happened, the buyer had one business day to deposit his 10 percent earnest money in escrow.
This service conducts auctions on foreclosure and real estate owned (REO) properties, both on the courtyard steps as well as online. In most foreclosure sales, you have to pay the full amount in cash at the sale. That usually means paying off the entire loan amount. This is clearly an issue when the property is worth less than the mortgage.
Auction.com actually has starting bids below the loan amount in these cases. They also provide bidders with property value reports so the buyers can make a more informed decision.
RealtyBid.com has been doing auctions for large lenders, builders and real estate firms since 2001. Its offerings include virtually all types of real estate, including residential, luxury, international, ranches, farms, bank-owned properties, condominium, commercial properties and more.
Purchasers can bid online in real time or they can submit a sealed bid directly to the financial institution or to the owner.
In terms of the fees, sellers are charged a flat rate of $150 to upload their listing into the system. Buyers pay either $500 or an Internet transaction fee of 1 percent of the purchase price, whichever is greater.
RealtyBid emphasizes keeping the broker at the center of the transaction. As a result, all properties must have a listing agent, and no for-sale-by-owners are allowed. The RealtyBid website says that 60 percent of all offers on their listings are submitted by real estate brokers.
Furthermore, its "BidAssist" program prevents what is known as "stalking." This refers to people who wait until the last minute to bid. The bidder can enter the maximum amount that he wants to pay for the property. Then, when a new bid comes in, BidAssist will automatically increase the person’s bid up to the predetermined limit the bidder sets.
4. The new kid on the block: RealBay.com
RealBay.com, which will be coming out of beta in late April, may be a real game changer for both agents and clients alike. Unlike the other auction models, there will be no charge for the users at RealBay.com.
Instead, RealBay will monetize its site in two different ways. The first is through highly targeted ads and the second is by preapproving vendors much like the Angie’s List or ServiceMagic models.
RealBay.com breaks down the barriers between the various parties in the transaction allowing complete transparency throughout the process. Buyers and sellers can openly communicate with each other. RealBay will allow all types of owners to post properties, including for-sale-by-owners.
For real estate agents, the online bidding provides another avenue to sell their listings. You can post classified ads much like you can on Craigslist.
RealBay.com, however, wants to prevent scams, so owners will have to provide some sort of documentation (a copy of the deed, for example) to verify that they own the property. Agents will have to provide their license number. Agents can also use the site to market their services as well.
Where RealBay.com will really shine, however, is getting the information out there to buyers that would never find you on the multiple listing service. Hundreds of the buyers that RealBay.com has worked with are either outside the state or outside the country. Many of these people are buying properties sight unseen.
Consequently, having certified vendors who can give accurate bids and handle any repairs or improvements needed simplifies the process for almost everyone.
If you haven’t considered adding an auction component to your business, now may be the perfect time to do so.