Could Online Bidding Be the Missing Link?

By John Bickel

RISMEDIA, Oct. 17, 2008-In today’s market agents need all the tools that are available to succeed. One that you may not be maximizing to its fullest is online bidding. Providing a link to an online bidding site on your website is a great, value-added offering that can increase your web presence and help build business.

Much more than simply a list of details and photos for properties, a link to online bidding creates a 24/7 interactive platform that sellers will soon demand from their agents, and buyers will expect to see.

As a professional service agency, you have a choice. Either integrate this new Internet technology into your marketing efforts, or lose significant market-share as sellers flock to those agencies who offer a true full-service marketing program.

Before you underestimate the potential of this marketing method, let’s look at the problems facing conventional real estate agencies today, and then explore how online bidding can not only help you to survive the present tough market conditions, but thrive well into the future.

The U.S. has a tremendous surplus of unsold properties and sales are slow. This will continue until buyers are convinced the time is right to buy, and sellers are willing to accept “true market value” for their properties.

Meanwhile, agents are dropping out of the business, and brokers, faced with ever-increasing costs of advertising, energy and fuel, are struggling to survive by cutting costs, thereby almost guaranteeing failure.

Buyers need to be able to obtain financing, and with the recent bailout of Fannie Mae and Freddie Mac, money for mortgage loans will become available to qualified buyers.

But, lending agencies will have tighter restrictions on lending standards, including valuations of the properties securing those loans.

As a listing agent, duty-bound to represent the best interests of sellers under these market conditions, how can you effectively handle these challenges?

Online bidding can be a “magic-bullet” if you will, to both increase marketing exposure and sales, while simultaneously reducing the costs-per-transaction.

I am not talking about multi-property, live “distressed sale auctions,” although the case can be made that the entire real estate industry is presently distressed. Live auctions are the province of professional auctioneers. Although they usually work very well, they are expensive and labor-intensive to produce.

Online bidding gives conventional real estate agencies a way to use the best feature of auctions, competitive bidding, without the expense or the risk of a live auction.

Wondering where the bottom of the market is? So are your prospects, hesitant to act because of the uncertainty plaguing the financial markets and bad economic news making headlines every day. But, the truth is that real estate is on sale, and online bidding not only gives buyers the ability to “name their own price,” but also the reassurance that “one bid higher” will win the auction.

Can a licensed agent legally do this? It depends on state licensing laws. In Florida, for example, all that is needed is a broker’s license, same as for conventional sales. Any agent’s listings can be offered for online bidding as long as the brokerage name is included, the same as required for any form of advertising.

Are online auctions binding? Yes! Be sure that the requirements to meet the standard for an enforceable contract are built-in to the system you are using and that you can easily add whatever addendums, terms and conditions you feel are necessary.

“In today’s market, it is difficult to determine true market value,” said Tom Wood, CEO of RE Auction Systems, also a Missouri licensed real estate broker and auctioneer. At auction, sellers set the terms, but buyers set the price. Sellers can be confident that the highest possible price is reached when bidders actively compete, and the Internet is obviously the way to offer properties to the greatest number of bidders at the lowest cost.”

It should be obvious that this is the best way to handle short-sales and REO’s. There’s no better way to convince a bank that “market value” has been reached than by documenting multiple bids.

Tom continued, “Look at what is happening now. Most home buyers start their search on the Internet, and technology is improving low-cost, high-speed access. It just makes good sense to do as much as possible online.”

Online bidding creates more sales with less telephone and e-mail time, less paperwork, and less face-to-face contact with unqualified prospects, resulting in a higher bottom line.

Selling online means no commission splits with buyer agents, full control of the sale with a minimum of effort, and maximum benefit from constant technological evolution..

Make sure that with the system you use, bidding can take place immediately as soon as the property photos and descriptions are uploaded, and that there’s plenty of flexibility for entry of property listings, terms of sale, and length of auction.

Also be sure that an inherent flaw of some timed online auctions is avoided by using a system where the closing time is extended beyond the deadline, so that when last-minute bids come in, the seller is assured the highest possible price.

This is the future of real estate sales. While “technology-driven” today, it will soon become “demand-driven” as sellers insist that their listing agents use all possible tools to market their properties. Just as every listing is now entered into local MLS systems, there’s no reason why they shouldn’t simultaneously appear for online bidding.

About the author: John Bickel is a Florida-licensed real estate broker, auctioneer, and marketing consultant for RE Auction Systems. For more information, visit their website at reauctionsystems.com or its global site, www.reiauctions.com.

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