More Sellers, Buyers Show Up Online

Demand for expedited processing of small to midsize residential mortgage asset sales is hurrying sellers, and more buyers, to explore new auction sites.

Jim Hodson, CEO of Countdown To Buy, a real estate auction website he founded only one year ago, says that barely five months after its launch in December 2009 Countdown has expanded operations in 18 states and is in negotiations with some of the country's largest lenders who have signed up or are pilot-testing the auction site.

Hodson told this publication that to date the company has matched 20 properties on an average of 11 days on the market "at prices that are very competitive with fair market," exceeding institutions' expectations. Clients are coming back to test different market spaces and scenarios, he says, as buyer and seller strategies change along with the market. Properties about to sell as short sales and new additions to the real estate-owned homes in major metropolitan areas are a "hot sale."

"I challenge the market to keep up with us. We get to an 11-day match and close just a couple of weeks after," says Hodson.

Countdown's patent pending technology favors upfront valuations that combine an appraisal, a broker price opinion, and an automated valuation model when determining the upper and the lower price limit. It helps reduce fall-out and allows sellers to get the higher price if there is market demand, but automatically minimize loss if demand is weak. After the property has been on the market for 10 days the price is reduced 1% daily within that range.

Hodson says the Countdown model has proved successful in trading assets up to $500,000.

The company has "not tested above this limit," he adds, but is looking forward to it.

Meanwhile, demand for disposable lower-end properties is expected to grow. The average property price has continued to drop to the present $170,000, which is within the Countdown range even though the lower price range in Minnesota may be $20,000, compared to $200,000 in the Northeast.

The platform was designed to offer a fair trade, but not necessarily with REOs in mind, Hodson says, so it covers "a wide spectrum," including short sales.

However, Countdown's top clients are some of the country's top REO holders.

One such seller disposed in 18 different states lower-end properties aged by 90-120 days or more moving them out of the market at a price very close to their last price list.

Another client he would not name that manages an inventory of 25,000 REO assets at any given time, mostly on the East and West Coasts, is pilot-testing the Countdown method.

A new pilot program will bring to the market recently foreclosed properties from 17 communities in Georgia ranging in price from $20,000 to $288,000, where the lowest-priced homes sold "as is."

While online auctions help improve the dynamic of sales, Hodson says, factors that help expedite fair market price sales still "have to bear out fully."

For sellers it is equally important to expose properties to the marketplace and to view buyer responses to a particular asset. If for example 150 people looked at the asset and nobody placed a bid the seller needs to inquire why. REO holders see value in getting a second, even a third opinion, "because they are not emotionally attached to these properties."