Time Limit Bidding – The next generation of homes for sale online
The residential real estate industry has taken quite a hit over the past few years from the recession since 2007. Much of the recession has come at the hands of corporate or even “Wall Street” not providing more transparency to “Main Street” in the real estate transaction. As homes were bought and sold, many home buyers did not quite understand the underlying home values, mortgage industry or complexity of the real estate transaction. For years to come the average home buyer will be very cautious entering into new real estate transactions and the increased demand for transparency and credibility with homes for sale will emerge.
What has changed in the market? Real Estate Owned properties (or Bank Owned Properties / Listings) in the recession have allowed more bidding to take place. The Real Estate Owned (or REO) properties provide a larger discount to home buyers as they were previous foreclosures. Given that the bank needs to sell the home at a discount, it offers a better opportunity to home buyers and/or investors. REO properties for sale have become very popular and will help transcend the paradigm of online home buying from an “offer” world to a “bidding” world. In a few years, all residential home buying will be open to this process and “Main Street” will be more comfortable with the new paradigm.
Online, the business models of buying and selling homes have not changed much over the years of the Internet. With web 2.0, the home buyer clearly has been provided more data but the businesses models still have remained very ad-based – delivering leads to real estate agents. Websites like Zillow and Trulia still just generate leads for real estate agents and produce other ad products or services. A new paradigm will soon emerge online where online bidding and time limit bidding becomes more of the norm. Time Limit bidding puts more trust back into the home buying transaction as it creates visibility to all parties as to bids on a residential home listing or ‘for sale’ property. Unlike our current system where a home buyer merely submits an offer to a real estate agent, it is up to the agent to work with the Seller. The Seller can view offers ‘behind closed doors’ and decide on its ‘highest and best’. However, with Time Limit Bidding online, the home buyer can view all the bids of all interested parties in a home – whether it’s an owner occupier bid or an investor bid. In addition, many REO web sites are beginning to provide more credible data to home buyers to place bids – whether it is the original loan amount, property details, scoring, etc.
With the recession, REO properties offer such a discount to market prices that the new bidding paradigm can emerge. Bank owned properties need to be sold quickly and have more attractive prices than the traditional residential real estate market. Today, there are emerging web sites like GoHoming where time limit bidding on REO properities is permitted. It will be interesting to see how it all pans out in the coming months.