The online auction site, www.AgencyBid.com, includes homes on the brink of foreclosure.
An auctioneer is helping homeowners who are facing foreclosure to auction their properties before the bank does.
Neil Kaplan operates an online auction site, www.AgencyBid.com, which includes homes on the brink of foreclosure. Kaplan also lists the properties in the state’s largest multiple listing service, MLS Property Information Network.
The goal is to attract the highest bid and then negotiate a deal with the lending institution to accept it as a short sale. A short sale is when a lender agrees to accept less than what the borrower owes on a home.
“Most people who do short sales do it backward. They contact the bank before they have a buyer and then they try to find a buyer,” Kaplan said.
He explained, “When we do a short sale, we show the bank that it was listed in the MLS and had an open auction so retail buyers and rehabbers could bid for it Â… We also show them the bid history.”
Kaplan, who got his real estate license last month but has been an auctioneer for more than a year, has been operating the site since 2007. He said he’s been able to successfully negotiate 16 short sales and only about three weren’t accepted by the lender.
Online auctions aren’t a new idea. But some say the idea of auctioning short-sale properties is a unique twist.
Leominster-based Donna Brooks said most lenders are reluctant to work with agents on short sales unless they already have a buyer. “I think [the site] has a lot of potential,” she said.
Val Gehringer, an auction expert in Virginia, said although online auctions have been around for a while, live auctions are more likely to get higher bids.
“The way to drive bidding higher is to have the users onsite to stare at what they want to buy,” said Gehringer, who teaches a class about auctions for the Massachusetts Association of Realtors.
Bidders on AgencyBid.com must register online and fax a $1,000 deposit, which is not cashed unless their offer is accepted. Bidders must be prequalified by a lender.
If the offer is accepted, a buyer has to pay 5 percent of the purchase offer to Kaplan Auctions to negotiate the short sale. The fee is refunded if the bank rejects the offer. For selling the property, Kaplan also receives a broker’s commission from the bank that ranges between 1 percent and 2 percent
“Effectively, we’re doing three jobs. We’re doing the auction and we’re being a broker, and Kaplan Auctions is doing the auction,” he said.
Prospective buyers can see the properties at open houses that Kaplan arranges. They also can hire an inspector to check the property prior to the auction.
Kaplan explained that inspections before the auction begins can help consumers make an appropriate offer. Builders and rehab specialists will be able to spot problems that consumers might not be able to during a typical open-house tour, Kaplan said.
“We want everyone on the same playing field so they don’t overbid during the auction,” he said.
Last week, the site included eight properties that were clearly identified as short sales. The properties also are identified as auctions in MLS PIN with a minimum starting bid.
Brooks said the site includes important disclosures. But the listings lack disclosures about whether the properties’ septic systems have been inspected, she said.
