Slower Illinois Market Leads to More Real Estate Auctions

It’s a wild Chicago housing market these days.

Just ask real estate broker Crystal Nells, who put three Chicago apartment buildings on the market last year. Months later, only two were sold.

“This one just wasn’t going anywhere,” said Nells.

So what did she do? List the property on eBay, where she previously had sold books.

“I’ve gotten e-mails from all over the U.S. about it and a lot of people right here in Illinois that for some reason weren’t seeing it before.”

Nells is one of a growing number of sellers turning to online real estate auctions in the midst of a slow Illinois housing market. In addition to e-Bay, other online businesses are attempting to hit on the trend.

“We’ve almost doubled our business in the last six months,” said Tony Isbell, CEO of Rainbow City, Ala.-based RealtyBid International LLC.

He said a majority of the company’s sales are concentrated in the Midwest and Southeast. RealtyBid.com lists commercial real estate and timeshare properties, but Isbell said 99 percent of business is selling residential properties.

The company sells mostly bank-owned homes or foreclosures.

A report commissioned by the National Auctioneers Association shows that real estate is by far the fastest-growing sector of the auction industry, expanding almost 13 percent in 2006.

“It’s been within the last year that they’ve been selling real estate online successfully,” said Bill Sheridan, president of the association. “Our online technology is much better than it was five years ago and the consumer is more conditioned to using online bidding.”

While eBay has popularized online auctions, especially in this climate of slugging Illinois mortgage demand, real estate in general has been slow to develop as an auction-worthy commodity.

A few years ago, “the public wasn’t ready for it yet,” said Rick Levin of Chicago-based real estate auction company Rick Levin & Associates Inc., who launched online real estate auction site bid4real.com in 2000.

“People still have some trepidation about bidding for their largest asset on the Internet,” he said. “People want to see the property before hand, smell the smells, feel the walls.”

Isbell said buyers and sellers in online real estate auctions are the same as those in a live auction, including real estate investors as well as first-time mortgage loan applicants.

“The difference is that it’s a lot more convenient for the bidder with the online process,” said Isbell. ”You can bid anywhere, anytime.”

Companies auctioning more expensive real estate find consumers prefer to bid in person - especially if the would-be buyer plans on living there, rather than simply investing in real estate.

“We use the Internet a lot, but we don’t use it in the bidding function,” said Steven Good, CEO of Chicago-based real estate auction firm Sheldon Good & Co. LLC, who uses online auctions less than 5 percent of the time.

“Before someone’s making a half-million dollar or above buying decision, they understandably want to see the individuals involved and become comfortable with the transaction.”

SOURCE: Chicago Daily Herald