I am about to start field testing a very new and innovative way to buy property at auction. The purpose of this blog is to get it right for the prospective buyer. It is an online only auction option. I am going to give you a little insight to how it will work and would really appreciate your feedback, good or bad. 
For starters, the bidding will take place on the "auction" section of my website at http://www.gryphonusa.com/. We are using a proven platform and partnering with an online bidding platform that I have used before. In an online only auction, there will be no live bidding at an auction site.
In order to bid, a prospect will need to register with a credit card and have a deposit amount put on hold. This is similar to reserving a hotel room. The $$ is on hold, but not charged against the card until you actually buy.
Terms will be that the property is offered as-is and non-contingent. These are the same terms as one would find in a live auction.
Bidders will have the opportunity to view the property and all state required disclosures will be provided. Inspections will be encouraged. Broker participation will be encouraged. Agents representing bidders will need to register them with Agency Disclosure forms before bidding to qualify for commissions. We are also considering a "find a local agent" link for out of town bidders. The lawyers think that might be a stretch. There is liability here.
Virtual tours from http://www.realestateshows.com/ will be posted for all of the properties as well as a basic property condition report. No representations or warranties on the accuracy of the report, of course. Informational purposes only. The lawyers think this is good. Limits liability here.
So, at the end of the bidding period the high bidder is sent a contract, probably via email, signs and sends back via fax with original in the mail. Working on this part.
If the auction was Absolute, the deal is ready to close. If the reserve was met, the deal is ready to close. If the reserve was not met, the seller may accept anyway, may reject or may counter. This is the same thing that one would expect at a live auction.
Why am I doing this? Our clients are asking for it for one. Second, some other auctioneers have already started in on the model and I need to keep competitive. Lastly, bidders/buyers want it.
I don't think that, right now, it will take off in main stream for owner occupied properties. Investment properties, land, tax sales, timeshares and the like are good targets though. Can anyone say Bank REO ??
Agents, please give me your feedback. If you were working with a buyer and liked one of our properties, what would you be expecting from this platform?
By the way, I do have a marketing plan to get these properties noticed. It is a super secret and locked in the safe.
Do you have questions about distressed assets, receivership or bankruptcy sales, auctions? Email me at rfk@gryphonusa.com and I'll try to answer it in an upcoming post.
Richard F. Kruse is the President of Columbus, Ohio based Gryphon USA, Ltd. (www.gryphonusa.com). The Gryphon Organization includes Gryphon Asset Management providing receivership and consulting services in the distressed marketplace, United Country Gryphon Realty & Auction Group (www.ucohiorealty.com & www.ucohioauctions.com) providing real estate brokerage and auction services throughout Ohio and OnlineAuctionUSA.com (www.onlineauctionusa.com) providing commercial asset liquidations from the Midwest to East Coast.
United Country Gryphon Realty & Auction Career Opportunities Available. Call 614-885-0020 x 17
Very informative...
Thanks for sharing!
Indeed. Thanks for sharing your thoughts.
Rich,
What would be the criteria to bid. Would it only be through Agents or would someone be able to bid on their own? As an Agent, I would probably like to able to have a password into the site. Also, how would it work as far as a Realtor uploading an investors charge card?
Karen - Thanks for the great questions. The bidding will need to be completed by the bidder themself. I suppose I wouldn't know if the agent was bidding for them or not though. The registration process will involve name, address, email, phone anc CC#. The CC# is mostly for verification that the name and address coorespond. At this point someone is partially registered. To complete registration, someone will need to tender their deposit. This can be done by cc, send me funds that I put in escrow or ....it looks like we can get it done with paypal!! After all of this, the person is able to bid. They can also enter a max bid and the system will bid for them up to a max number.
If you do not have a passwrd, you can still lurk just can't bid. Realtors participating will need to send agancy and broker registration forms to us before the prospect bids. We are working on an "out of state" participation program in conjunction with my attorney.
Hope this answers some of your questions. If noy, please ask again.
R
Rich,
Yes it does answer my questions, thanks. I guess it would kind of eliminate the Realtor also unless one had an investor that hired a Realtor to actually do this for him. Good luck on the site, sounds good!
I don't think it takes the Realtor out at all.
The issue with the Realtor bidding is a legal one. The Realtor can not bind the client to the bid. Each bid is binding on the bidder, just like their signature would be on a written offer. An example would be that a Realtor can't sign their clients name on a contract, and have it be binding, without POA.
We are most definately interested in agent participation. Just like in a live auction, the agent registers the bidder with the auction company on a separate form but the bidder must also register, accept the terms and conditions in writing themselves and bid for themselves. As in a live auction, the agent can be advising the client, but it is ultimately the client that will make the bids on their own behalf. Instead of raising a bidder paddle, they are typing a number and clicking "submit".
Someone may want a Realtor for a number of reasons. A couple come to mind right away.
1 - The bidder may not be in the area where the property is located. A local expert giving them advice could be very beneficial. Since a buyers agent making the bidder comfy is good for the seller, a co-op is paid with a smile.
2 - Agents have buyers. We market a lot to agents.
A Realtor would not need to sign up for anything necessarily. They would, I am sure, want to register their client in advance of any bidding to protect any commission that would be offered.
There are a number of auction companies looking into this.
Thank you for the comments and questions. This conversation is very helpful to me as I do not think like a buyers agent.
Rich,
Is this as I understand it a public auction? If so, I would like more information, I have several investment clients that are want to buy property in this area. This is a interesting concept.
www.besurehomeinspectionservice.com
Mark - This will be a public auction. Open to all, but bidding will be on the internet only.
Karen - It may be coming to you soon. Many auctioneers are looking at this option.