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Industry ponders Internet auctions
Association examines role of auctions
By Jean Newton
In the past, auctions have played a part in the real estate industry as a way to dispose of distressed property or to manage the sale of a new home release in certain communities experiencing high demand. With the popularity of the Internet and online auction sites, what is the reality of selling a house over the Internet?
"When you go online to bid for a home, it's a little different than going online to bid for a Tiffany lamp," said Realtor David Barca of zipRealty.com. "There is not a huge cry or demand for it right now. Most people want to look at the property, to see it and touch it. You really need an intermediary, someone to control the situation, and you still need someone to provide the professional expertise to evaluate the property and help with the transaction."
Barca said he believes that the time will come when a platform is developed in which people can go online to bid on houses. Internet real estate company, zipRealty.com has already established a relationship with the auction site, eBay, for this purpose, but Barca said there are still many complex real estate issues that need to be addressed before an auction format becomes viable from the consumer angle. People who go to eBay's website can look at properties through a link to zipRealty.com. The auction format, however, is still in the works.
"Companies like eBay and others have great opportunities to pursue in this area, but there will need to be a great deal of consumer education about the process. It's a leap for real estate and it could change how the agent interfaces with the client," Barca said.
Although zipRealty.com has a strong presence on the Internet, Barca said the company has never sold a home over the Internet. Personal relationships with people are still one of the most important parts of the business. With headquarters in Richmond, zipRealty.com has a market presence in 12 metro areas across the country. Agents are known for driving around in blue zipRealty.com cars as one way to keep a fresh presence in the communities they serve.
"We are just like every other real estate company, but we are taking advantage of technology. Our clients can come to the zipRealty.com site and do their homework and prepare ahead of time for loans, inspections and all aspects of real estate. We provide information and support online and then our agents work with clients throughout the transaction," Barca said.
As one of only a few Internet real estate companies still around, zipRealty.com's approach is more in line with other real estate companies who have increased their use of the Internet to do business, said Jeff Barnett of Alain Pinel Realtors in Los Gatos and president of the Silicon Valley Association of Realtors. He said he believes that auctions are not prevalent in the real estate industry because people haven't bought into that kind of gimmick.
David Barca
"Selling real estate online is a real long shot, especially in California, where there are so many disclosures required during a real estate transaction. Auctions haven't caught on and won't probably happen until the real estate industry gets involved and initiates it," said Barnett.
The National Association of Realtors is working to change opinions about auctions and to reinforce the idea that auctions are a popular and proven way to sell land, and commercial and upscale properties. Their goal is to provide education and information that improves the image of the real estate auction profession and promote better understanding of the auction industry.
The association has appointed a Real Estate Auction Task Force to examine, analyze and make recommendations to the association's board of directors concerning the role of auctions in the disposition of real estate. The task force was charged with examining the increased use of auctions to market real estate; the types of real estate most suitable to offer via the auction method; licensing laws affecting auctions; barriers to the present and expanded use of the auction method; opportunities for Realtors in marketing properties by auction; the need for education in the auction method; and ways of integrating the auction method under the umbrella of the association.
The task force reported that there is a growing preference for the auction method of selling property in many foreign countries and also recognized changes in the domestic marketplace that show auctions to be a "viable sales and purchase option."
While the Internet auction is very popular for personal property, the National Association of Realtors thinks that online real estate auctions will "most likely become a standard option in every successful auction company." The association is hoping to introduce its own online component through www.realtor.com, the associations' official website.
Although the future of online real estate auctions is still unknown, Realtors are in agreement about one thing--they will still need to play a crucial role in assisting clients with complicated real estate transactions.
"When a seller utilizes the many services a Realtor can provide, including marketing, negotiating, legal and financial skills, and most importantly, providing a realistic price analysis based on recent closed sales, then the seller has done due diligence regarding their valuable asset," said Realtor Judy Jarvis Ellis of Alain Pinel Realtors in Palo Alto.
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Saratoga, California Since 1955
