Online Bidding Offers New Market for Housing RISMEDIA, July 6, 2006—(KRT)—Ada Focer and her late husband, John Marlier, were urban pioneers when they purchased their home on Ashmont Hill in Dorchester in 1977. At the time, the racial strife of Boston's busing crisis had yet to loosen.
Only one bank would give the couple a mortgage for the house's $30,000 purchase price. "They were almost giving properties away," Focer said.
She is again a pioneer, as part of a small but growing cadre of Americans who are spurning real estate agents to sell their homes themselves, in online auctions. Bids on her 1886 house were due at 9 p.m. last Tuesday.
The appeal of auctions -- whether a Picasso is on the block or a house -- is to condense the selling process by focusing prospective buyers on a bid date, trusting serious bidders to determine a value. The Internet makes it possible for anyone to auction a house. Their appeal may be heightened because they give sellers a feeling of control at a time Boston's housing market is in a downturn and a glut of properties makes it difficult to find a buyer.
"You're going to see it more," predicted David Berman of Berman Auction Marketing Group in Boston, which conducts public auctions of properties. "It's got to go that way. The auction process is getting more popular, so people are going to try it on their own with the Internet."
If online auctions are the wave of the future, do they work?
Long Island businessman Larry Kagan said he attracted 100 bidders and sold his condominium for $366,000 last year, when the housing market was strong. A bidding contest winnowed them to 50, 10, and, finally, a handful of serious bidders were left.
"One really, really wanted it, and he stayed to the end. He qualified, and it closed, and bing, it all worked out better than I dreamed of," he said.
Phyllis Troia's June 18 auction in Plymouth was a flop. "I got nine bids that were virtually meaningless," said the health administrator. Her house, minutes from the beach, is sitting on the market.
To consolidate households, Troia and her new husband decided to auction her house after an agent last year drew two $385,000 bids, which fell through. Their auction created such a buzz there was a traffic jam on her street as people came to see the house she had advertised with jumbo postcards and on plymouthsale.com.
She had poured thousands into renovations and felt the top bid, $305,000, didn't reflect the work. Bidders seemed to have the inaccurate impression her property was facing foreclosure: "I think that people had never seen this before," she said.
Auctions may be efficient, but they can't generate wild bidding for a property in a weak housing market, said Berman, the auctioneer. "An auction is not a miracle."
George Cappony, whose Web site 5day.com offers tips on his round-robin bidding technique, said that three-fourths of the 1,500 house auctions he is aware of or has consulted on -- including Kagan's and Troia's -- got offers. Asked how many of those ended with a sale, he said often people receive bids they may perceive as too low but are what the market is telling them their home is worth.
"I have to question those that say it didn't work," he said.
Thirty years of memories dwell in Ada Focer's three-story Victorian. She raised a son and daughter there; renovated the kitchen with 19th-century chemistry cabinets plucked from a relocating Girls' Latin School; grieved her husband's death at 46; and helped her mother live out her final years.
Focer is not a novice in the real estate world. She is a former journalist and deputy Massachusetts banking commissioner, who rooted out lending discrimination, a trained appraiser, and an activist who helped spearhead a renewal of Dorchester's Codman Square.
She knew marketing would be critical to attract as many bidders as possible. Focer did it all herself, putting ads in newspapers and mass-mailing and e-mailing flyers to her vast network.
Focer's "support group" included daughter Grace Marlier, 25, hosted the Sunday open houses in May and June. The auction idea came from Jonathan Carson, chief executive of cMarket.com, which auctions, say, George Clooney's Oscar gift bag, to raise money for charities. On Carson's advice, Focer's opening bidding was $750,000, the least she was willing to take for her house. Her son, Ian Marlier, 26, set up and tracked her website, 107ocean.com. A week before the bid deadline, Focer was encouraged by her son's analysis of traffic on 107ocean.com.
Buyers already flock to the Internet to peruse listings or size up property values -- three of four homebuyers conduct searches online, says the National Association of Realtors. Internet selling has developed more slowly: 13 percent of sellers use for-sale-by-owner websites but may turn to an agent if they fail.
Marlier, who joked that his full-time job is "the entire development and analysis team" for StudentUniverse.com, a budget air fare site, counted more than 700 unique visitors to his mother's site in a month -- better than an open house. In one five-day period, a solid majority of 45 visitors read the auction instructions, looked at photographs of the home's 3,320-square-foot interior, and read the valuation information.
As her anxiety rose, Focer's analytic mind kept it in check. While admitting she would be "disappointed" to sell for $750,000, she prepared for anything.
With five days to go, a bidder surfaced. He personally delivered his mortgage preapproval to Focer, a requirement for all bidders. Asked about the bid's significance, she downplayed it and hoped for a second. The offer was below the "zone" she'd hoped for, $825,000 to $875,000.
"She is amazingly excited. This is where the nervousness comes in," her son said.
A rain-soaked weekend passed with no more offers. On Tuesday, with bids due that night, Focer swam laps at the YMCA and then prepared a roast-beef dinner for her support group and friends.
"I think the market's going to be frozen awhile. There's huge aggravation in doing this," said Focer, as she stuffed deviled eggs. About selling, she said a house "is a complicated thing to let go of."
She agreed to accept the $750,000 offer, because she'd save thousands on broker fees -- an attorney will close the sale. If it goes through, she'll have the freedom to pursue her dream to complete a doctorate on the impact of religion on social action. When she achieves that, said Focer, who is 56, "I can die happy."
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