eBay to make real estate bids binding
Think "sold" rather than "sale pending." Winning a bid for real estate at the online auction giant no longer means simply expressing interest in a piece of property.
It will apply the new rule on a state-by-state basis, according to the laws of the state in which the seller resides. The new rule means that bidders will be required to purchase a piece of property for the price they bid. Currently, eBay considers bids on most real estate transactions simply a way for buyers to express interest in a property.
"'Binding' auction listings for real estate are designed to directly result in the sale of the property to the highest bidder," the company said in a post on one of its announcements boards. "While eBay cannot guarantee consummation of the sale to either the seller or a potential buyer, our rules require the seller and the winning bidder to follow through in good faith."
The company did not say when it will implement the new plan. eBay will charge sellers whose auctions close with a binding bid a $3 transaction fee. The company already charges sellers between $50 and $300 to list property on its system.
Company representatives did not return calls seeking comment.
eBay has been pushing to expand the diversity of products and increase the number of high-value items listed on its site. In recent months, the company has increasingly focused on its real estate listings as part of this overall effort.
eBay acquired real estate auction site HomesDirect last August, then incorporated the site's listings into its own site in February. San Jose, Calif.-based eBay increased its real estate fees later that month.
Under the new format, eBay will determine on a case-by-case basis whether it can require the auctions to be binding. Real estate auctions will be binding in all states where that is legal, the company said in its post. It did not give a list of which states permit binding online real estate auctions.
eBay sellers will still have the option to list their property as a simple ad on eBay. Members can't bid on properties listed in eBay's ad format; instead, the company provides a form with which they can contact the seller. eBay typically charges higher rates for its ads, but sellers will not have to pay a commission to the company on completed sales.
Homes are not the only high-ticket item listed on eBay. Last weekend, a golf fan bid $425,000 on eBay to play a round of golf with Tiger Woods. Meanwhile, everyday sellers list high-priced cars, boats and even airplanes on the auction service.
But it remains to be seen whether bidders will agree to the binding nature of the bids and how eBay will enforce the new rule. Unlike most other products on eBay, each house or piece of real estate is essentially unique, and buyers almost always want to inspect the property in person first. In addition, the process of selling or buying a house can take weeks or months, even after the two parties agree on a price.
Real estate has existed in a kind of gray area for eBay thus far. While the company typically bans sellers from communicating with bidders offline about products listed on its site, it has encouraged such communication with its real estate listings. It was not clear whether this policy will change for binding real estate auctions.
Selling real estate online has not been easy. Homestore.com, for instance, was once one of the bright lights in the dot-com industry and has relationships with the National Association of Realtors and Cendant, which owns the Century 21, ERA and Coldwell Banker brands.
But Homestore has been on shakier ground in recent months because of consistent losses and an internal inquiry that led it to restate its earnings after it overstated revenue and understated losses by millions of dollars.