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"Real Estate Auction Action"

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Kevin M. Hickey Photo
12/3/99 Interview with Kevin M. Hickey
8700 North Gainey Center, Suite 150
Scottsdale, AZ 85258

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An Overview of

  1. The web site is the next phase of a company that has pioneered home auctions in other settings; in January 1999, the company held a successful test auction of 150 properties on the Internet.
  2. Though originally limited to the institutional side of the market, the company shifted focus to include private residential; Homebid has an auction facility as well as an e-offer for private residential.
The E-Auction

  1. The auction offering is geared toward selling properties for institutions such as Fannie Mae, Freddie Mac, HUD, bank REOs or investors; Homebid advertises the properties on the web site, including virtual tours; home inspections are usually done up front.
  2. Prospective buyers can screen via the site and then visit what interests them; bidding is conducted on the web site.
  3. A bidder sees the suggested retail price and is prompted to submit a bid; a bidder competes against other prospective buyers, but there is also a hidden minimum - the home will sell as long as the minimum price is reached.
  4. A timeframe is set for the auction, but once the stated deadline is reached, there must be a 15-minute interval with no bids before bidding is cut off.
  5. An autobid feature allows you to bid automatically up to a limit you set; you can arrange for the system to notify you by email or phone if the bidding surpasses your limit.
  6. Agents can act as bidding representatives for prospective buyers; the agent whose client wins the auction gets paid a 3% fee (or whatever is negotiated) by the selling institution; Homebid typically gets 1%.
The E-Offering

  1. In summer 1999, Homebid tested the auction process for the private residential marketplace by auctioning 150 properties in Phoenix and 300 in LasVegas; about 25% of the properties sold.
  2. As a result of those trials, Homebid adjusted the process for the private marketplace and redesigned the web site to be intuitive and easy to use; the adjustment for private residential sales is called the e-offering system.
  3. Homes can be added to the listings on the site every day; no timeframe is set for the posting to remain up.
  4. The system shows all bids (with contingencies) to the seller; when the seller decides that an acceptable bid has come in, the seller sets a time limit for any additional bids.
  5. The system notifies all other bidders by email of the acceptable bid to allow them the chance to up their own offer.
Promotion Strategies

  1. E-offerings are put on the MLS and major listing sites, such as Homestore,, HomeSeekers and HomeAdvisor, for maximum exposure; Homebid is branded so people will know where to look for a home.
  2. Off line advertising avenues such as radio, television, print and yard signs are also employed.
  3. An important service to buyers also enhances the sale: the feature "My" allows prospective buyers to put in their own criteria for a home and be notified by the system of matches on Homebid.
Opportunities for Selling Agents

  1. Homebid is willing to co-brand with selling agents and brokers who wish to use the Homebid technology for their sales listings.
  2. Both the auction facility and the e-offering system can be used by selling professionals.
  3. In a co-branding situation, Homebid charges a transaction fee/technology fee instead of participating in the commission.
Industry Perceptions

  1. Something new in business generally encounters skepticism or even fear until understood, so education is one of the company's priorities; once the public and industry participants understand Homebid and how its services can benefit them, they will embrace it.
  2. In keeping with Real Estate being a service industry, Homebid is centered on the consumer; many Realtors recognize the site as an important tool to build their success.

  1. Since Homebid has begun to get excellent press coverage, about 15-20 other companies have claimed to be in the auction business; but at this point, the company has no serious Internet competition.
  2. Competition could develop from Kruse International, a pioneer in satellite broadcast commercial auctions that has been acquired by eBay; Homebid is well prepared to compete on service, price and confidence,
  3. More activity with real estate auctions on the Internet could lead to partnership opportunities for Homebid.
The On-going Role of the Realtor

  1. Direct information available to the consumer has streamlined the real estate process, but relationships are key in the real estate industry and will continue to be key.
  2. The greatest benefits of the Internet for Realtors who utilize it are quality information, speed, and the chance to enhance service.
  3. Cost savings to consumers (lower commissions) are likely, so volume will become more important to Realtors than commission per transaction; Internet-savvy Realtors will be prepared to double or triple their volume.
The Confidence Issue

  1. Experience is important: in marketing services: Homebid stresses its track record of over $5 billion in sales without any harmful transactions; there have been no law suits.
  2. Homebid has built its services on a foundation of knowledge from experienced internal personnel and world-renowned external partners.
Sales Success

  1. On the institution side, most sales come as a direct result of the auction process; on the private residential side, most homes sell within 24-hours prior to the auction starting.
  2. The Internet brings absolute convenience to the process; it allows prospective buyers to screen effectively and speeds up the dissemination of such information as virtual tours, home inspections and appraisals.
  3. The Internet also enhances the consumer's participation in negotiations by making the submission of bids less personal and allowing bidders to see what else is submitted.
  4. Studies have shown that the Internet streamlines the real estate process by half; Internet buyers spend an average 4 weeks and preview 4 homes, vs. 8-10 weeks and 8 homes for traditional buyers. Dominant Internet Players Homestore has created the market and is the leading Internet player now; HomeAdvisor may come on strong with its Microsoft backing.
Personal Insights

  1. Established favorite sites on the Internet for convenience and comprehensive information include eBay, CNN and Yahoo!
  2. Over the next two or three years, expect properties to be commonly bought and sold over the Internet; a nearly paperless process can telescope transaction time into a few days or even 24 hours.
Contact Information for Kevin M. Hickey:

(v) 480-998-1168
(f) 480-609-4646

Real Estate Sites & Tools in this Briefing: