I am constantly doing market research in an effort to monitor real estate sales activity and forecasting. In this research I will look at everything from unemployment rates, cost of financing, real estate trends, new construction starts, and regional population growth studies. There is a lot to stay on top of if a Real Estate Broker wants to position themselves correctly in any given market condition. This current and relevant market data also contributes to reaching a successful outcome on any existing or upcoming client projects. With that said I recently came across some interesting information that I felt was important enough to share with you on my blog.
I am going to jump right into this and try to summarize as much as possible so that I make my point without writing a book on the subject. During my research the other day I noticed that some Real Estate Brokerages are trying to mimic online home auctions like we had seen during the massive downturn in our housing market when foreclosed property (REO) was the primary product for sale. To make a long story short these online auction sites were used to provide transparency between all parties while selling a number of properties quickly and in some cases at a reduced cost to the seller. The big question, did they work? Well, most properties did sell and indeed they sold fairly quickly due to the number of investor buyers we had in the market at that time. Because these sites usually had online transaction management features associated with them the seller had the extra benefit of maintaining a digital transaction file in real-time which reduced the chances of them not receiving a complete and compliant transaction file at closing. For the purpose in which it was created these sites functioned extremely well.
Since most of our sellers in the market today are usually only selling one property at a time instead of hundreds or even thousands I am certain without any doubt that these sites would not serve the same purpose for these folks. The first and most obvious reason is because a non-institutional seller does not look at their property as a just an asset to be liquidated. They care about every dollar and want the highest possible price for their property. This is hard to accomplish when most online bidding sites disclose the highest offer to every potential bidder. There is a reason why Real Estate Agents do not usually disclose the highest standing offer during the marketing process. You never know what someone is willing to pay and unless you like receiving a bid for one-dollar over the highest bid amount I suggest you allow the buyer prospect to generate a figure that they feel best reflects their interest in your home.
So the big question, can you save money by selling your home with a company that offers an online bidding service? The one thing that will never change in real estate is that there will always be a need for Real Estate Brokers and the Realtors who represent them. This means the the fees associated with this type of service will always exist, however the way in which brokerages may present these fees to you can and will vary. The few who are using this online bidding approach are charging the prospective buyers a premium upon contract acceptance as way of spreading out the fees normally burdened by the seller in connection with the sale. Sounds kind of nice when you think about it. Here is the best way to look at it though. You have two homes that feature similar upgrades each of which are located on the same street, but one has a buyer premium of ten-thousand plus dollars ($10,000+) associated with it and the other has no buyer premiums. Which do you bid on?
In my opinion, less prospective buyers coupled with a transparent bidding process will almost surely result in a lower net profit to the seller at close of escrow. In the end, you, the seller, end up paying the listing fees anyway. It just depends upon how you look at it. I suggest that people who are interested in selling their home seek a reputable and experienced Professional Real Estate Broker and/or Realtor who can present them with a good plan for marketing, selling, and closing escrow on their home. Ask them about their fees. Maybe they can accommodate you in some manner that doesn’t wind up scaring away your valued buyer prospects. Additionally, we would like to leave you with this thought. Next time you get a chance go to your television or computer and watch an episode or two of House Hunters, Million Dollar Listing, or Love It or List It. You will notice that there is a lot that goes on behind the scenes for these real estate professionals and their work performed online does not incorporate an online bidding site. Why you ask? Because they are busy selling, which is what all really good Realtors and/or Brokers do. If it were a clerical job Realtors would be paid by the hour.
I hope this sheds some light on a topic that I couldn’t find anyone else discussing. For more information on buying or selling real estate please feel free to contact the author directly at: (916)223-8119 or firstname.lastname@example.org.