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Becoming Sold on Online Auctions


People outbidding each other in an event held last year by Taylor Woodrow Homes for 17 high-end model homes in Orange County's Ladera Ranch and the Woodlands in Valencia drove prices higher than the builder would have sought on the open market, said Barbara Stowers, the company's vice president of sales and marketing.

But events such as these have led consumer groups to caution that home buyers and sellers are exposing themselves to some risk when they make what in most instances is the biggest purchase or sale of their lives online.

Indeed, almost half of the Internet-related complaints received by the Federal Trade Commission last year concerned online auctions-albeit for events related to small items such as Beanie Baby fraud.

Buyers and sellers should make sure they thoroughly research the other party before initiating a deal, FTC attorney Delores Gardner said. Buyers should have the home appraised and inspected, and sellers should make sure buyers are serious, she added.

And some online real estate ventures still aren't sold on online auctions.

Richmond, Calif.-based online broker has a deal to post its home listings on EBay's real estate site, at

Buyers can't bid on these listings online. Instead, the deal is meant to bring buyers and sellers together, who will then work with a ZipRealty agent to close the deal.

ZipRealty President Scott Kucirek said it's too early to say whether the firm's listings will eventually be available for auction on EBay. It's still difficult to gauge how many consumers would be interested in such a service, he said.

Even if online auctions never gain a mainstream following, chances are they will always appeal to investors who purchase foreclosures-historically the meat and potatoes of the auction industry.

Some auction sites, such as and, cater to this market by primarily offering repossessions.

Gadsden, Ala.-based has used its Web site to reach a greater number of investors nationwide who are looking for properties priced at 50% to 85% of their market value, said Tony Isbell, the company's president. The company has sold about 600 homes on its site since it went live in June.

Investors are able to review properties on the site for a few weeks before they're offered for sale and aren't rushed as they are when they attend a traditional auction, Isbell added.

Even though online auctions have proven themselves to be a good advertising tool, builders say they need further testing to determine their true appeal to consumers.

"There hasn't been enough proving out of the circumstances in which it's beneficial to both sides," said Glen Barnard, president of E.KB Inc., KB Homes' e-commerce division. "I think six months from now we'll reach some definitive answers."


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