Online property auctions mean new ways of selling, novel challenges for the players, and questions for the regulators, but it could be the way of the future.
Melbourne on Saturday is like nowhere else in the world. That is when two of the city's most enduring cultural activities play out — Aussie rules and home auctions.
But just as AFL has had to compete with the rising popularity of soccer, Melbourne's enduring love affair with auctions could be challenged by a new concept.
Online property auctions have long been predicted as the next step for real estate, an industry in which buyers, sellers and agents have embraced internet marketing.
Property has been sold in Australia for some time through web-based negotiation systems such as eBay, which currently has 15 mostly rural homes for sale, including a $665,000 house in Penrith, NSW.
The new year will bring at least three new online home auction players onto the market, including one based in Melbourne. All will take a different approach to selling, raising a host of questions for regulators. But will any of them take off?
There is no doubt the industry is yet to harness the full selling potential of the web. However, attempts to catch up with the booming online trade for retail goods have so far fallen short of revolutionary.
In February, West Australian property site GeeWizAuctions.com claimed its first sale when a modest home in suburban Perth attracted several bids over a five-week cyber-auction.
Agent Laura Grimes of Supersell Realty said her "low-ball opening bid created huge interest" and while the property failed to reach its reserve price, she negotiated afterwards to get the sale.
"There was a huge saving in costs for the seller," she said. The site at present has 13 properties for sale, all from the same agency. It follows Queensland-based 2bid2.com.au that launched last year and operates in a similar way.
Both sites sign up vendors through real estate agents. But unlike GeeWiz, an auction on this site runs for just an hour, starting when a registered bidder makes a first offer.
With Brisbane's property market all but dead, the advantage for vendors is that hard-to-sell properties can stay listed indefinitely while they wait for an offer.
Several well-known agencies have a scattering of properties available on the site, including Ray White, LJ Hooker and Elders.
He said there was no greater risk of dummy bidding than at a public auction, with bidders required to view the property and register their details.
However, Real Estate Institute of Victoria chief executive Enzo Raimondo said the trend towards online was being tempered by user caution in what is often the biggest transaction of their lives.
"If you buy a house online or at an auction you should be confident that the same laws and protections apply," he said. "At this point they don't.
"The Sale of Land Act and the Estate Agents Act do not cater for physical and online sales . . . which is why the REIV asked the State Government to review its laws some 19 months ago."
Consumer Affairs Victoria is conducting a review. The REIV (the peak body for real estate agents) is particularly scathing of a website being formulated in Canberra called Uber Estate.
It will be the first to allow sellers and developers to list without the intermediary of an agent. Bidders will verify their identity through the same software used by online gambling sites.
"There's no chance of anyone being dodgy or fraudulent," founder Mark Higgins said. "It gives you as the seller total control in a way that's more transparent than anything you see on the weekend."
He said that while bidders must be Australian, the online format would be accessible to interstate and expatriate buyers.
Online-specialist agent Paul Osborne said Uber Estate would struggle because web portals such as domain.com.au excluded private sellers.
So it seems Melbourne's Saturday pastimes of a street auction in the morning and footy in the afternoon are safe for now.
Online auction sites mentioned
GeeWizAuctions.com WA
2bid2.com.au Qld
Uber Estate ACT
Author: Marika Dobbin
Date: December 7, 2009
