If desired, Zillow could devise a new PublicMLS system – they have the format, reputation, and eyeballs to get off to a flying start.
Redfin could too, but as a brokerage they are going head-to-head with traditional realtors so it’s more likely afight would erupt, where Zillow is a third-party and could be positioned as an ally.
Auction.com is knocking on the door too - have you seen some of the heavy advertising they are doing these days? Could they take over?
They seem to have the desire, because they are selling everything now - trustee sales, bank-owned properties, commercial properties, land, mortgage notes, and auctioning regular home sales too.
The package sounds good to sellers:
You set the reserve price so you don’t “give it away”.
You have a set timeline for selling/moving.
Buyer pays the 5% commission.
But will sellers get top dollar? Convincing them won’t be easy.
If auction.com can convince the agents first, and partner together to help blaze the trail it would be smart. Here is their first attempt:
It sold for $1,102,500 or 110% of the reserve price and closed 9/14/12.
BUT WAS THAT TOP DOLLAR?
Sellers would need conclusive proof to be convinced – it’s not enough for sellers to just get the reserve price, they want top dollar!
Let’s do what a potential seller would do, and try to estimate the value of their auction house.
But first let’s note that the sellers had been trying to sell since early 2011 – they had already exhausted the market, starting with their initial $1,649,000 in March 2011, and wound up being listed for $1,299,000 for the nine months preceeding the auction. Based on that alone, it probably wasn’t worth $1,200,000.
Using comparable sales from that era, it looks like it may have “comped” for $1,300,000, or so, and sellers who generate their own comparison will think it that the auction gave it away:
However, those comps were inconclusive at best – the two in Monarch Bay are paying $2,400/mo HOA for that privlege, and trying to estimate the proper view premiums is just guessing. But if you are a casual seller using the only tools available, you/re not going too look too hard – especially when you are just looking for a reason to say no.
Here’s a review by a Redfin agent calling the floor plan “unusual”:
Large lot with pool, sand/beach area, updated bathrooms, wood/tile/carpet flooring, unusual floor plan.
The sales price might have been as high as any buyer would have paid, but without easy and conclusive proof, sellers will be wary of auctions - because the last thing they are going to do is “give it away”.
It didn’t work here, and the seller is a bank:
The bank rejected the $825,000 high-bid from in the first auction, so they put it back on again with the same teaser opening bid of $450,000.
The ultra-low opening bids are a deterrent from being able to get to top dollar, because of the gap. As a result, the buyers will focus solely on going high enough to hit the reserve price, and even going that high will seem like over-paying to them when the opening bid is so low. They already resent having to tack on the 5% vig, so they will be aiming low.
The lack of conclusive proof plus the ultra-low opening bids will make regular sellers be skeptical that buyers will ever hit their top-dollar number.