The players involved say that the home auction is a test that could lead to big changes in how homes are bought and sold nationwide. "We're here to try to advance the industry," said Ed Krafchow, president of real estate giant Prudential California.
The auction will take place within Yahoo's real estate site. The new E-HomeSale section will first display some twelve different homes, most of which are located in the Bay Area.
Interested buyers will be able to place bids on the homes beginning Feb. 20. The auction ends March 6.
Through the service, buyers can place open bids on the homes, meaning that all buyers will know the current high bid. Unlike most auction sites such as eBay, the seller has no obligation to accept the highest offer, and buyers can add conditions to their offer, such as asking that the house be repainted or a broken window be replaced.
When the seller accepts a bid online, the system will direct the buyer offline to sign the sale contract and closing papers, and initiate escrow.
Home sales are one of the biggest industries in the United States. According to the Census Bureau and the Department of Housing and Urban Development, 904,000 new single-family homes alone were sold last year at an average price of $194,000.
Homebid.com, a business-to-business e-commerce start-up, developed the auction system that will be used for the home sales on Yahoo. Unlike other real estate sites, the listings will be updated in real time.
In competitive housing markets such as the Bay Area, such a system could soon be adopted by sellers looking to get top dollar for their homes, said Blanche Evans, editor of Realty Times, a real estate trade publication. Other, less aggressive housing markets may take to the system a little more slowly.
"Most of the nation doesn't have 40 bids per listing like San Francisco," Evans said.
Although Homebid.com originally planned to sell homes directly to the public, its new site on Yahoo will point buyers and sellers to established real estate agents. That could speed the system's adoption, Evans said.
"I think this will become the norm a few years from now around the nation, maybe sooner," she said.
Most of the houses up for auction will be offered through Prudential California. Krachow, however, has encouraged other real estate brokerages to offer their own listings, and Homebid.com chief executive Kevin Hickey said his company plans to license its system to a wide range of real estate brokers and online portals.
"We'd like all the different portals to use this platform for (selling) homes," Hickey said.