Before this year, the eBay user “bluemoon” had never tried to sell anything on that Web site except for a slightly used printer and some old Playbills from classic Broadway shows. Now she has a much bigger item up for sale — a $400,000 home.
“There’s so many houses for sale on my street that I felt I needed to do something out of the box to get mine noticed,” said "bluemoon," aka Jean Simon, a 42-year-old resident of Corona, Calif. Two years ago, she and her husband, Doug, bought a four-bedroom house in booming Riverside County, near Los Angeles, but since Doug found a new job on the East Coast, they want to sell fast so they can move. After four months of trying to sell the house via traditional methods with no solid offers, the couple turned to the Internet and put the house up for auction on eBay’s real estate pages.
Simon says the $400,000 reserve price is a tad below the house’s fair market value.
“We built up a lot of equity since we bought it, so it’s not like we’re losing money,” she said. “But we’re motivated sellers who don’t have the time to find renters, and who don’t want to be saddled with property taxes and a mortgage for a house we no longer live in.”
A couple of people have e-mailed with questions and some interest, but the Simons are still showing the house through an agent, just in case.
Other motivated sellers are resorting to similar non-traditional techniques now that the real estate market is losing steam. Real estate auctions are gaining traction again, with revenues increasing 39 percent over the past three years, according to the National Auctioneers Association.
Despite their past reputation of selling distressed and foreclosed homes at dirt-cheap prices, auctioneers say they are now selling homes at all price ranges to multiple bidders who sometimes raise the final price to above market value. Auctions also allow the seller to control the timing of a sale and avoid the contingencies common in conventional sales, such as stipulations that a buyer can pull out if he is unable to sell his current home or obtain financing.
Online revenues are currently just a small fraction of the overall real-estate auction figure, but that number is expected to grow, according to Ben Anderson, an auctioneer and real estate broker in Destin, Fla., and chairman of the National Association of Realtors’ auction forum.
“Websites like eBay.com have encouraged more people to view auctions as a way to sell all kinds of things, so it’s not that far of a leap for them to list real estate,” he said. “It’s still somewhat of a ‘feel me, touch me’ procedure, but the Internet will definitely become a significant part of the auction process.”
Currently, eBay Real Estate lists 1,900 homes for sale; nearly a quarter are in the formerly hot Florida markets. eBay touts its site as being particularly popular with those selling unique homes, vacation homes and homes as investments, and an ideal venue for sellers to get their houses noticed beyond city limits.
Despite its reputation as an auction Web site, eBay’s Real Estate section does not act take a cut of every transaction. Instead it lets sellers put their houses up for auction, eBay style, charging $35 to $50 to post listings for up to 30 days. eBay also charges a “reserve” fee of up to $50 for sellers who want to put a floor on the lowest bid they’ll take, but the fee is fully refunded if the house sells. For sellers who simply want to advertise their home, eBay charges $100 to $300 for listings of up to 90 days.
Online home auctions are not putting real estate agents out of business. Many agents are learning how to use these Web sites to their — and their clients’ — advantages. RealtyBid.com, an auction site that works directly with Realtors instead of home sellers, has seen its listings skyrocket since the market started heading south last spring. The site had 1,000 homes listed for sale in July, compared to just 200 a year prior.
“We have more and more agents contacting us every week,” says RealtyBid CEO Tony Isbell. He expects to be partnering with more agents in the next five years as the real estate market goes through the downward curve of its selling cycle.
RealtyBid.com charges $100 for each home listing and takes a buyer's premium of 1 percent from every sale. Each listed house has a reserve price, but RealtyBid.com requires the house to be listed at 5 percent below that in order to stimulate bidders. It sends sellers an auction sign to place in their yard, does basic advertising and promotion, and then lists the house online for 14 days’ worth of online bidding. Similar to eBay Real Estate, RealtyBid lets the seller know if the reserve price was met but does not disclose that figure to bidders.
Isbell said sellers needs to be more realistic about pricing when they put their houses on the market. “There’s a lot more competition out there for them, with five times the number of properties listed compared to a year ago. But more people are comfortable with the auction format, thanks to eBay, so they’re taking charge of the process. They don’t want to list the house with an agent and just sit back and wait, they want to put it out there to the masses. And that will be to their advantage, since online auctions allows geographic boundaries to be knocked down.”
One of RealtyBid’s recent bidders was Donna Boycott, a former medical office manager living near Chicago, who wanted to buy a second home as an investment. After being outbid at other sites, she surfed RealtyBid.com and found a three-bedroom, two-bathroom house in Michigan City, Ind., a small town two hours away, listed for $6,750. Even though Boycott knew it was a fixer-upper, she bid and won the auction. “I know I should have checked it out in person before I bid, but the info seemed trustworthy so I went with my gut," she said.
Boycott never did see the house because at the closing, the sellers’ agent told her of another interested bidder who wanted to make a deal. “I ended up selling it right there and made a profit without doing anything.”
She declined to say how much money she made but said she plans to continue searching the Internet for more real estate deals. “The market around here doesn’t seem to be going down at all," she said. "Houses still seem to sell and there is no shortage of bidders. Everyone needs shelter."