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Google invests $50M in Auction.com: good for Google, bad for consumers?

(Tech News) Auction.com has recently seen a fat cash infusion from Google, and both seek to revolutionize real estate. Again. But who really benefits from this investment, and is it at the cost of consumers?

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Google Capital Invests Big Bucks in Auction.com

The online real estate auction site, Auction.com, landed a monstrous investment from Google Capital. In a press release on the Auction.com website, the largest online auction site for buying a selling homes announced that Google Capital invested $50 million dollars in their Irvine, California-based company.

According to the Jeff Frieden, CEO and Co-Founder of Auction.com, “Google is the world’s greatest Internet company and we’re thrilled to have the opportunity to work closely with them. This will give us an opportunity to tap into their deep expertise in digital marketing and mobile, as well as in building world-class products.”

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In speaking about their decision to extend funding, Google Capital Partner David Lawee is equally enthusiastic. He states, “We think Auction.com can fundamentally change how real estate, and particularly commercial real estate, can be bought and sold, leveling the playing field for smaller investors.”

Since Google is widely recognized as a forward-thinking business leader, one might want to take stock in their decision to back such a company.

Real Estate Consumers and Professionals May Want to Take a Second Look

While this cash infusion may lead to some fundamental changes in how real estate is bought and sold, Auction.com currently has some noteworthy practices.

Nationstar Mortgage Short Sales

One of the largest contributors of properties to the Auction.com website is Nationstar Mortgage. Nationstar requires borrowers who want to sell their homes as short sales to auction those properties through the Auction.com website, and this process is not without its criticism.

For one, the Nationstar/Auction.com process is a little bit disjointed. A real estate agent lists a property, obtains an offer, and submits the paperwork (including the fully executed purchase contract) to Nationstar. Nationstar then requires the property to be listed on the Auction.com website, and the bidding on this property is now open to the public.

Many agents complain that this process completely ignores the existing purchase contract between buyer and seller. Given the fact that the seller (not the bank) is the rightful owner until the property, it is the seller who should determine the best purchase offer on the property. The existing contract should not be ignored.

Auction.com Surcharge

Another hot button issue for consumers is that Auction.com requires a surcharge when you purchase a property through their site. For some properties, the surcharge is $2500. But, for those short sale properties that came via Nationstar bank, the surcharge is 5 percent. So, if you bid $250,000 for a property listed on the site, your total purchase (excluding settlement fees) could be $262,500. In effect, homebuyers may end up overpaying for a property.

Possible Price Inflation

Most consumers have the impression that an “auction” begets a deal. In some instances, that may be the case. However, in an auction, people bid against one another and that raises the price, often even causing a buying frenzy, which clearly works to the benefit of the seller.

Elizabeth Story, a San Diego County Realtor® at Allison James Estates & Homes, points out the following unfair consumer practice: “Auction.com’s properties listed for sale have unpublished reserves that allow the seller to decline the transaction, even if you are the winning bidder. In order to encourage bidding up to the unpublished reserve, Auction.com will bid against buyers in its own auctions.” It’s true that Auction.com does not publish their reserve amounts on their site, unlike other sites (such as ebay) where the reserve is visible to the consumer.

But, unlike other auction sites, Auction.com does actually reserve the right to bid against the consumer. In their Reserve Auction Terms and Conditions, Auction.com states, “The starting bid is not the Reserve Price. Except where prohibited by law, during a live bidding event (online or otherwise) the Auctioneer may open bidding on any Property by placing a bid on behalf of the Seller and may further bid on behalf of the Seller up to the amount of the Reserve Price by placing successive or consecutive bids for a Property, or by placing bids in response to other bidders.”

Homebuyers need to understand that the Auctioneer may be bidding against them and, as a result, inflating the price paid to the property to their own benefit and the benefit of the seller.

Online Bidding May Benefit Sellers

The truth is that the online bidding process may also benefit those home sellers that list their homes for sale on the site. In situations of properties where there has been limited interest at the local level through common real estate advertising practices, sellers may be able to increase their buying pools. In the example of luxury homes valued in the millions of dollars, widening the buying pool could possibly lead to a quicker closing.

Thinking of buying a home on Auction.com? Think that if it’s good for Google, it’s good for me? “It’s important to know the facts,” Story says. “Buyers need to know that they are not shortchanging themselves.”

It’s true that the online real estate auction site may have some good features, but as always… caveat emptor!

Melissa Zavala is the Broker/Owner of Broadpoint Properties and Head Honcho of Short Sale Expeditor®, and Chief Executive Officer of Transaction 911. Before landing in real estate, she had careers in education and publishing. Most recently, she has been able to use her teaching and organizational skills while traveling the world over—dispelling myths about the distressed property market, engaging and motivating real estate agents, and sharing her passion for real estate. When she isn’t speaking or writing, Melissa enjoys practicing yoga, walking the dog, and vacationing at beach resorts.

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8 Comments

8 Comments

  1. Missy Caulk

    March 10, 2014 at 12:15 pm

    Thanks Melissa, I tried to use it for myself for a condo in TN. I sat there and watched the bids go up. The scary part of your post is that they can bid up the price. There was a discussion on FB about this a few days ago and most folks said the paper work was horrendous. Makes me concerned for the consumers.

  2. Nick Fisherman

    March 11, 2014 at 1:00 pm

    I am a 26 year old bachelor with no kids. I have no current plans to buy a home. But, my philosophy has pretty much always been “if it’s Google, it’s better.” Apparently, that is no longer valid. Thank you so much for this enlightening article. I will stay away from Auction.com.

  3. Chris Wilkenson

    March 11, 2014 at 2:51 pm

    In theory, if the seller’s reserve is not met by the market, then the
    seller will not sell the property. That same concept holds true on ebay,
    where there is a reserve and if it’s not met then the product doesn’t
    sell. So what’s the difference is the seller bids up to the reserve or
    doesn’t? The same theoretical framework holds true. I feel this article
    is a misinformed, judgmental piece based on analogous insight that’s not
    actual validated through a conceptual framework. Stay away from
    publishing such opinion with such assertion and matter-of-fact
    confidence.

    • Kumar

      April 11, 2014 at 1:14 pm

      What if the buyer made the last bid (which was inflated by auction.com) and puts it over the reserve price?

  4. Maryann Little

    March 11, 2014 at 4:27 pm

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Tech News

FCC Chairman confirms fears, jokes about being a Verizon shill

(TECH NEWS) FCC Chairman Ajit Pai jokes about being a shill for Verizon, feeding into what many suspected when he was appointed.

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Leaked video shows FCC Chairman Ajit Pai joking about being a shill for Verizon, as we all suspected when he was nominated. Last week Pai was a speaker at the Federal Communications Bar Association, an event similar to the White House Correspondents Dinner.

Major telecom companies and the FCC gather at this annual event for dinner, mingling, and enduring awkward political policy jokes. At the event, Pai roasted himself about major headlines from the past year, like his decision to kill net neutrality against the wishes of the majority of the nation. Hilarious.

Pai also brought up the whole thing where he refused to cooperate with an investigation into the validity of comments filed in support of ending net neutrality.

Although cameras weren’t officially present at the event, someone surreptitiously filmed and sent the clip to Gizmodo. The kicker comes around twenty minutes into Pai’s speech when he jokes, “in collusion—I mean, in conclusion, sorry, my bad—many people are still shell-shocked that I’m up here tonight.”

He goes on, “they ask themselves, how on earth did this happen? Well, moments before tonight’s dinner, somebody leaked a fourteen-year-old video that helps answer that question, and in all candor, I can no longer hide from the truth.”

Pai then starts a video, which opens with 50 Cent’s “In Da Club” playing in the background. This is the only thing I’ll give him points for on this amateur drama class project.

The skit is set in 2003 at “Verizon’s DC Office”, when Pai was an attorney for the company. In the video, Kathy Grillo, current Verizon senior VP and deputy general counsel, tells Pai, “As you know, the FCC is captured by the industry, but we think it’s not captured enough, so we have a plan.”

“What plan?” Pai asks. Grillo tells him, “We want to brainwash and groom a Verizon puppet to install as FCC chairman. Think ‘Manchurian Candidate.’” To which Pai responds, “That sounds awesome!”

Gizmodo posted the video on Friday after the dinner, and the internet exploded with reactions to Pai’s gag. Reddit in particular went nuts, to the point that one thread in r/technology was locked—as in no one else can comment—for “too much violence.”

In a thread on the r/television subreddit, a moderator reminds users, “please refrain from encouraging or inciting violence or posting personal information […] don’t post anything inviting harassment, don’t harass, and don’t cheer on or upvote obvious vigilantism.”

While some of the threads were full of awful remarks, other posters commented in the spirit of reasonable conversation. The general sentiment of those engaged in non-harassing discussions is that Pai is a symptom, not the cause of FCC’s problems.

However, many argued that the video showed Pai’s willingness to bend (then joke about) FCC regulations indicates he’s not a puppet so much as a willing participant in corruption. Pai’s appointment to FCC Chairman was suspicious from the beginning considering his ties to Verizon.

Although Pai is obviously joking in the leaked video, the general public isn’t find it nearly as funny as those at the dinner.

Check out the clip for some cringe-worthy digs at net neutrality and have fun questioning the integrity of the FCC.

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Tech News

FCC Grinches plan to steal poor peoples’ Internet access

(TECH NEWS) Merry Christmas! The FCC is trying to take away poor people’s Internet access, pointing the finger one way to distract you from the other.

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In case anybody with enough bandwidth to read this wasn’t sufficiently terrified by the FCC’s ongoing campaign to break the internet by dismantling net neutrality, the nation’s communication authority has kindly provided another reason for any digital-enabled American to expatriate and/or secede.

The FCC’s most recent reform proposal proposes to reform the absolute Hell out of Lifeline, the $2.25 billion program to provide low-income Americans with broadband Internet access. Also, phones. The Lifeline Program has been doing its job since 1985, when noted socialist firebrand Ronald Reagan instituted it to subsidize phone service in underprivileged communities. It was expanded to include broadband Internet access in 2016, and right now 12 million households benefit from Lifeline-subsidized phone and Internet access.

That’s apparently a problem.

The FCC’s stated concern is that the General Accounting Office recently found $1.2 million of the $2.25 billion Lifeline budget was being used fraudulently. Fraud is bad! But in case you don’t have your TI-85 handy, that’s less than a tenth of 1 percent. That is not very much fraud. Not enough to nix an entire program, at least.

The greater concern, as usual, appears to be about profit. Under the current Lifeline guidelines, many subsidized companies are small ISPs and resellers providing access to third-party networks. Often, these services are the only Internet access available in rural areas, tribal lands, and other underserved communities.

That doesn’t work for Commissioner Pai.

Earlier this year, Pai used “delegated authority,” the FCC’s version of executive orders, to bypass oversight and personally rescind subsidy access from 9 ISPs providing services to rural areas and tribal lands.

These reforms continue that trend. They ban subsidies for no-cost Internet service, which is the business model of 70% of current Lifeline subsidy recipients. It is notably not the business model of large ISPs that rhyme with Buhrizon. I’m sure that’s a coincidence.

They also impose an absolute budget cap, meaning that millions of poor households could lose their Internet access, and the increased opportunities for education and employment that come with it, if someone in a comfy office a thousand miles away effs up the accounting.

In short, it sucks.

The proposed reforms to the Lifeline Project are another example of the FCC, deliberately or through negligence, rigging the market in favor of major conglomerates at the expense of consumers, small businesses and the general public.

Lifeline isn’t perfect, but it’s doing its job. Whether the same can be said for Ajit Pai’s FCC is, at best, an open question.

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Tech News

Get motivated with a ding sound every time someone visits your new site

(TECHNOLOGY) This tool provides motivation for new websites by ding-donging every time a new visitor stops by! Talk about a dopamine rush!!

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It seems like everyone these days has a brand new website they can’t wait to share with the world. All these micro-businesses are starting their journeys at the very beginning: with zero website visitors, big plans, and a lot of hope. A new chrome extension has found a way to help motivate these big dreamers at the very beginning of their business’ lives.

Startup Bell – a doorbell for Google Analytics – audibly rings every time a website gets a new user and shows the number of current active users right in their browser’s toolbar.

That simple ding-dong could soon provide a dopamine rush to any founder that uses it. In the early days of startups and passion project websites’ visitors- though initially, typically the founder’s mom and their Facebook friends – are a positive indication that business is growing and that reassuring ding-dong is real time motivation to keep doing what you’re doing.

Marketing a business is now as inexpensive as it’s ever been with cheap Instagram and Facebook ads reaching a prime millennial audience. With to-the-minute feedback, this Chrome extension can give you insight into which marketing strategies work and which flop. It’s also an immediate payoff to that ten dollar Facebook ad.

While this lean extension only provides a ding-dong for every new visitor and has very few settings, maker Branimir hopes that future versions will include the option to have dings at certain intervals (like every 100 visitors) to support websites as they grow and don’t ding incessantly.

Branimir also stated on Product Hunt, that future versions of the plug-in may offer a similar tool for sales. When the noise played means money in your pocket, that dopamine rush could get even more addictive.

This is simple little plug-in could provide much needed motivation for startups and new businesses alike. With real-time feedback, companies will get a morale boost in the early stages of their company’s life. The next step is to make sure users’ dogs don’t go crazy every time someone visits their website and they hear that ding-dong.

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