Online Auctions.. Do they work ?
It seems like in the past 3 years that there has been a big increase in the use of Online Auctions by Asset Management companies like Freedie Mac, Fannie Mae and others to dispose of some of their foreclosed homes by using online auction sites.
Since I list a number of foreclosed homes and also sell a number of foreclosed homes I have had some experience with online auctions. There are mainly 4 companies that seem to be used by these asset management companies, they are
There are others but these seem to be the main players. As a buyer looking to make an offer on an online auction you can and should most definitly have a realtor register you and act as your representative in the transaction. Usually the realtor will get paid a fee for representing the buyer. These different web sites have different fees and different ways of conducting their auctions.
Some auctions are run with a reserve price, whereby you would have to exceed a certain dollar amount that has been set my the seller in order for the property to sell to the highest bidder. Some auctions are absolute, where there is no reserve price and the property is sold to the highest bidder. There is usually a time frame before the auction starts where you can have the realtor show you the home before you make a bid. These homes are always sold as is where is so it is best you check out the home before bidding.
Since these homes have usually been listed with realtors previous to the online auction, they continue to be listed for the most part. Some auction companies will still take offers on those homes right up to the time the auction starts, if they receive an acceptable offer before the auction starts they home may get pulled from auction.
Some auctions are run where there is a 14 day time period to make offers and you can watch where the bid amount is at and what the minimium bid is that you would have to make. At the end of the 14 days the highest bidder will be notified that they are the winning bidder as long as the reserve price has been met. Other auctions are conducted where by if the auction company receives an acceptable offer during the bidding then the auction will end then regardless of the time period left.
These online auctions appear to be for the sale of foreclosed properties only, with the exception on one company that I am aware of, and that is Realty Bid. They have a program where a home that is not a foreclosed home can be auctioned off online. They home has to be listed with a realtor, no for sale by owners, and there is a one time up front fee of $150 to post the property on Realty Bid's web site.
The question is, do they work? As I mentioned I have been involved in 4 online auctions in the last couple of years. Three of them involved foreclosed homes, and I have been on both sides of the transaction, in some cases as the listing realtor in another I represented the buyer. Those 3 properties all sold and closed smoothly and without problems. I did post a non foreclosed home for for auction on Realty Bid's site a year ago for sale after paying the $150 fee. That property did not sell and we received no bids, this was probably due in part to the price that was set by the seller to start opening bids.
Online auctions have their palce in the market and are here to stay for awhile. It will be interesting to see in a few years when the number of foreclosures drop way down whether selling non foreclosed homes this way becomes popular or the number of companies offering this service can all survive.
If you would like more information here in the Montrose area of Colorado about online auctions, whether buying or selling by that method, or just buying a home, a foreclosed or not. Feel free in contacting me Alan Brown 970-209-8436 cell AlanBrownRealtor@gmail.com
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