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Making Money with Online Auctions

    
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Making Money with Online Auctions
By Mike Jones, CAI, GPPA, BAS
President, United Country Auction Services
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“What can I do to stimulate my business today and close more sales?” This is a question I am
asked nearly every day of my professional life. The frequency with which I hear this question is
due in no small part to the current economic conditions affecting the U.S. Of course there are still some areas of the country that are doing well, but in most locations such prosperity is the exception and not the rule. With that in mind, the online auction method is one solution that can quickly put money in
your pocket.

In the ever-changing world of sales and marketing, real estate professionals must be willing to
think differently about how real estate can be offered and sold. Believe me, your competitors will be attempting anything and everything to stay relevant in the years to come. You need to be willing
to do the same.

Online bidding platforms are not new, but until recently the vast majority of them have concentrated
on personal property and not real estate. That has now changed – out of necessity, online real-estate platforms are making strong inroads into our industry.

Please remember that these platforms are sales and marketing tools that are readily available to all brokers and agents today. Depending on how long you have worked in this industry, the word “auction” may bring a wide variety of preconceived notions to mind, but don’t let it alarm you. Simply open your mind to seeing and doing things different, for the benefit of both your sellers and, ultimately, yourself.

Why should you start using online auctions? Here are a few reasons that should peak your interest:

• Online auctions place a “spotlight” on the seller’s property.
• They draw the attention of auction-minded buyers.
• Auctions have become increasingly more accepted by the general public.
• Most auction buyers are prepared to buy immediately.
• An auction sale price is not limited by a “set price,” but rather is established by placing the property
into a competitive environment that can often allow the final sale price to exceed expectations.
• Major real estate firms, banks and governmental agencies are using online auctions today because
they know that they work.
• The auction method is extremely affordable and relatively easy to implement.
• It demonstrates to the seller that you are being proactive in using innovative ways to find
them a buyer.
• An auction lets you expose the property to a worldwide pool of buyers that can participate in
the buying process remotely, without having to be anywhere near the property.
• As buyers become fewer in number and more discerning with their purchases, the importance of real estate auctions will continue to grow relative to brokered sales. Plus, as the number of online auctions grows, we’ll see increasingly more overseas buyers due to the current weakness of the dollar.
• Online auctions are a great way to attract future customers by differentiating your service offering
from your competitors. After all, auctions appeal to potential sellers, bankers, attorneys, trust officers and accountants.

Some auctioneers prefer to offer a blended sale method by initially collecting bids on a property online, then converting it into a public outcry auction. In some cases, the auction terms and conditions disclose that all properties are subject to prior sale, and as such, the seller will be presented with any and all
viable offers. There have been cases in which the sellers have accepted online bids or offer, and the auctions were called off.

In regard to property inspections, the due-diligence process between the online auction and a conventional real-estate offering is largely the same. In most cases, buyers and sellers will be able to download a complete due-diligence package from the auctioneer’s website.

As an auction veteran of over 30 years, I have seen software vendors come and go, but the cream always rises to the top. Today we have many reputable vendors that offer secure, private and customizable online auction software. Live and online bids usually flow seamlessly, and legal issues
remain the same for both online and live bidders.

You’re probably wondering, “What will this cost me?” That will be determined by your choice of online auction provider and your marketing plan. It is not realistic to believe that you can just load a property onto any online auction website and expect positive results. You’ll need to create a marketing campaign
to work in coordination with the auction process.

In regard to online provider cost, you can expect to prices range from as low as $200 to as high as $1,500 to post a single property. Factors that you should consider before engaging with an online
auction provider include the company’s history of success, the number of prospective bidders or
buyers in their system, types of properties they specialize in and what kind of advertising
and marketing packages they offer.

Some properties can be sold “absolute” to the highest bidder, regardless of the final price,
while some sellers will opt to offer their property “with reserve,” i.e. “subject to a minimum bid.” Remember that if the seller has a significant debt on the property and is not in the financial position
to make up the difference on the remaining balance, the seller cannot offer the property “absolute” without fear of litigation.

Much like a traditional listing, there will be property inspection opportunities during the online auction process that will be facilitated by an agent or broker. Having a well-trained professional on-site is reassuring to prospective bidders and serves as an important part of the sales process.

For the buyers or bidders, the process is relatively simple. First they’ll register online by providing a
credit card to verify their identity. Then, depending on the terms and conditions of the auction, a deposit amount will be presented to the bidders. Once the auctioneer has received the deposit (either by overnight funds or wire transfer), a given bidder is qualified to bid. Once each bidder has been given a bidder identifier or bid number, they may observe the auction action or participate from any remote location where the internet is available.

Much like a sporting event, the auction has a beginning and ending time. The bidding action typically
heats up as the clock winds down. The allotted bidding time is often extended as long as competitive bids are coming in. Virtual tours of the properties are always available online. In some cases, someone may even make a pre-emptive offer without ever visiting the property in person.

A huge benefit to offering property in an online auction is the asset’s exposure to a large marketplace. This creates traction with prospective buyers and initiates a negotiation. Hopefully, the property will sell online. However, if the reserve price is not met, the interest generated by the online event should still allow the agent or broker to facilitate an expedited sale.

Most importantly, remember: If you are going to pursue online or live auctions, engage with a
professional that does it for a living. Learn how it works, and master the method. If you don’t already have a relationship with a professional auctioneer, interview three or four before creating a relationship. It won’t take long to recognize whether they know what they are talking about.

Naturally, it’s always best to work with a professional who has strong online capabilities and is recognized by the National Auctioneers Association, the auction industries most recognized trade organization.
Do your homework, learn all you can about the method and remember: Online auctions can help “make things happen and put more money in your pocket.”

Originally published in the Fall 2011 issue of REALTORS Land Institute’s TerraFirma newsletter: http://www.rliland.com/Resources/TerraFirma_Fall2011Issue.pdf

About United Country

United Country Real Estate is the largest fully integrated network of conventional and auction real
estate professionals in the United States. Based in Kansas City, Mo., the company has been an
innovator in real estate marketing since 1925. United Country supports nearly 600 offices across the U.S., Costa Rica, Panama and resort areas of Mexico, with a unique, comprehensive marketing program that includes one of the largest portfolios of property marketing websites (more than 3,000 separate
sites and traffic of approximately 3 million visitors per month), multiple United Country real estate
catalogs with national distribution , an extensive buyer database and national advertising of local properties that reaches more than 90 million homes per week. United Country has recently been recognized by AllBusiness.com, The Land Report, Entrepreneur and The Wall Street Journal
as one of the top U.S. real estate companies.

NATIONAL HEADQUARTERS
2820 NW Barry Road, Kansas City, MO 64154
816-420-6200  www.unitedcountry.com


Members of the media needing information on United Country or our marketplace, contact
Angela Smith, Public Relations & Social Media Manager
Phone: 816.620.6241 or Email: angelas@unitedcountry.com

  
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