Auctions go hi-tech; Bullhead properties sell well in online auctions

By Ric Swats

River Cities Business Journal

BULLHEAD CITY - Nearly everyone is looking for new and better ways to buy and sell homes in a sluggish market that shows no sign of accelerating in the near future.

But, at least one company has found a way to thrive during the slowdown and is helping area builders move inventory that sat dormant for months or even years.

Freedom Realty Exchange brings buyers and sellers together via the Internet and then conducts online auctions of homes and commercial properties in cyberspace.

“Sellers need to become very comfortable with online auctions, but buyers have become completely comfortable with buying a home this way,” FRE Director of Operations Kelly Lovegrove said. “The advantage to the seller is they are able to get exposure to more buyers on the Net. The advantage to buyers is they can access the auction and the property without a lot of inconvenience. It's a great solution for both the buyer and the seller.”

In many ways an online auction is not very different from a sale by an agent or a live auction.

“When we have a seller that comes to us they normally come in with an advertising budget. We spend a lot of time with the client finding out what their market will be. We do a very focused campaign. We use all the media, radio and print, usually for 30 to 45 days before the auction,” Lovegrove said. “The campaign is expensive, very expensive. We sit down with the client and work out an advertising and budgeting budget that covers all our marketing operations. Then we decide what radio, Internet and print ads we'll use.”

Once the marketing campaign is underway the focus is on the buyers.

“Wherever we are we have an onsite property host available to take people through homes,” Lovegrove said. “That agent will open up the home and show them anything they want to see.”

The timeframe of the auctions allows potential buyers time to travel to the home site for a firsthand visit and to arrange financing to qualify as bidders.

Once the bidders have qualified and the auction goes live the bidding is done over the Internet much like an e-Bay auction. The auction lasts at least a few weeks so buyers have the opportunity to respond with bids or decide the price is out of the range in which they are interested. Although it might be possible to buy a home significantly below market value, that hasn't been the case with any of the auctions FRE has staged so far.

“At the end of the day that's it - the market has spoken,” Lovegrove said. “That is the value of the home.”

Most of the homes sold in the Mohave County region by FRE have been in Laughlin Ranch.

“In Laughlin Ranch many have been second homes, vacation homes or primary residences,” Lovegrove said. “I don't think many might have been speculators or investors.”

FRE makes its money from a commission on the sale and a premium paid by the buyers for making the purchase through the auction.

Sales have been so brisk through the Internet that FRE, which has been auctioning properties for 30 years, gave up on live auctions altogether.

“We did start out on the commercial and land side and it was a slow start, a little trial and error,” Lovegrove said. “Where we really are getting traction is on the residential side. We took our commercial experience and knowledge and applied it to residential and it really started to take off.

“We have not done a live outcry auction for about five years now.”

The process is working well helping builders.

“There are a lot of builders who have standing inventory and being weighed down by carrying costs,” Lovegrove said. “But, we have more buyers than there are clients out there.”