Even experienced bidders can trip.
John Jepson, a longtime bidder in Michigan, bought a house recently that he could only see from the outside because it had been locked up by the bank. He was assured by a neighbor, the son of the former owner, that everything on the inside was shipshape.
"After I won it at the auction, I got inside and saw that it had been destroyed. There was water damage. The roof was leaking. Pipes had been pulled out of the walls. I had to spend about $40,000 to fix everything."
John Kern in Jacksonville, Fla., had a different kind of surprise when he cracked the door of a home he had won at auction.
"There was a dead body inside," Kern said. "You can imagine what I had to go through that day with the homicide detectives."
Hanigan at Innovest Resource Management said most people are overwhelmed by the amount of work involved and that creating a simple online interface will give people the courage to take dangerous financial risks.
"People are going to be bidding on properties they have never seen," Hanigan said. "What are they going to do? Go to Google Street View?"
That's exactly what they're going to do. RealAuction provides a link to the Google service that allows viewers to see recent snapshots of an address and then see properties up and down the same street. It also provides links to county tax records, sales records and zillow.com pricing information.
"We don't do the homework for people, but we provide them with links to all kinds of information to make the homework a lot easier," said Lloyd McClendon, RealAuction's chief executive.
One model for how online bidders might act can be found in RealAuction's core business: back taxes.
In Arizona, RealAuction allows bids for people's unpaid property taxes. If you win, you pay the taxes. The person who owns the property has to pay you back, usually with interest. If they don't, you can claim ownership of their property.
When Arizona used in-person auctions, the local bidders knew what properties to avoid. There is a cluster of homes in the northern part of Yavapai County, for example, that has no access to water.
"The local guys avoided those properties. We couldn't sell them," said Ross Jacobs, the Yavapai County Treasurer in Prescott.
"Now we get bids on everything."
Arizona, one of the states hardest hit by the foreclosure crisis, is a prime market for RealAuction and other online companies.
