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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

Google chrome: The anti-cookie monster in 2022

(TECH NEWS) If you are tired of third party cookies trying to grab every bit of data about you, google has heard and responded with their new updates.

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3rd party cookies

Google has announced the end of third-party tracking cookies on its Chrome browser within the next two years in an effort to grant users better means of security and privacy. With third-party cookies having been relied upon by advertising and social media networks, this move will undoubtedly have ramifications on the digital ad sector.

Google’s announcement was made in a blog post by Chrome engineering director, Justin Schuh. This follows Google’s Privacy Sandbox launch back in August, an initiative meant to brainstorm ideas concerning behavioral advertising online without using third-party cookies.

Chrome is currently the most popular browser, comprising of 64% of the global browser market. Additionally, Google has staked out its role as the world’s largest online ad company with countless partners and intermediaries. This change and any others made by Google will affect this army of partnerships.

This comes in the wake of rising popularity for anti-tracking features on web browsers across the board. Safari and Firefox have both launched updates (Intelligent Tracking Prevention for Safari and the Enhanced Tracking Prevention for Firefox) with Microsoft having recently released the new Edge browser which automatically utilizes tracking prevention. These changes have rocked share prices for ad tech companies since last year.

The two-year grace period before Chrome goes cookie-less has given the ad and media industries time to absorb the shock and develop plans of action. The transition has soften the blow, demonstrating Google’s willingness to keep positive working relations with ad partnerships. Although users can look forward to better privacy protection and choice over how their data is used, Google has made it clear it’s trying to keep balance in the web ecosystems which will likely mean compromises for everyone involved.

Chrome’s SameSite cookie update will launch in February, requiring publishers and ad tech vendors to label third-party cookies that can be used elsewhere on the web.

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Tech News

Computer vision helps AI create a recipe from just a photo

(TECH NEWS) It’s so hard to find the right recipe for that beautiful meal you saw on tv or online. Well computer vision helps AI recreate it from a picture!

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Ever seen at a photo of a delicious looking meal on Instagram and wondered how the heck to make that? Now there’s an AI for that, kind of.

Facebook’s AI research lab has been developing a system that can analyze a photo of food and then create a recipe. So, is Facebook trying to take on all the food bloggers of the world now too?

Well, not exactly, the AI is part of an ongoing effort to teach AI how to see and then understand the visual world. Food is just a fun and challenging training exercise. They have been referring to it as “inverse cooking.”

According to Facebook, “The “inverse cooking” system uses computer vision, technology that extracts information from digital images and videos to give computers a high level of understanding of the visual world,”

The concept of computer vision isn’t new. Computer vision is the guiding force behind mobile apps that can identify something just by snapping a picture. If you’ve ever taken a photo of your credit card on an app instead of typing out all the numbers, then you’ve seen computer vision in action.

Facebook researchers insist that this is no ordinary computer vision because their system uses two networks to arrive at the solution, therefore increasing accuracy. According to Facebook research scientist Michal Drozdzal, the system works by dividing the problem into two parts. A neutral network works to identify ingredients that are visible in the image, while the second network pulls a recipe from a kind of database.

These two networks have been the key to researcher’s success with more complicated dishes where you can’t necessarily see every ingredient. Of course, the tech team hasn’t stepped foot in the kitchen yet, so the jury is still out.

This sounds neat and all, but why should you care if the computer is learning how to cook?

Research projects like this one carry AI technology a long way. As the AI gets smarter and expands its limits, researchers are able to conceptualize new ways to put the technology to use in our everyday lives. For now, AI like this is saving you the trouble of typing out your entire credit card number, but someday it could analyze images on a much grander scale.

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Tech News

Xiaomi accidentally sent security video from one home to another

(TECH NEWS) Xiaomi finds out that while modern smart and security devices have helped us all, but there are still plenty of flaws and openings for security breeches.

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Xiaomi home device

The reason for setting up security cameras around your home is so the photos can get streamed to your neighbor’s device, right?

Okay, that’s obviously not why most (if any) of us get security cameras, but unfortunately, that scenario of the leaked images isn’t a hypothetical. Xiaomi cameras have been streaming photos to the wrong Google Home devices. This was first reported on Reddit, with user Dio-V posting a video of it happening on their device.

Xiaomi is a Chinese electronics company that has only recently started to gain traction in the U.S. markets. While their smartphones still remain abroad, two of Xiaomi’s security cameras are sold through mainstream companies like Wal-Mart and Amazon for as low as $40. Their affordable prices have made the products even more popular and Xiaomi’s presence has grown, both nationally and abroad.

To be fair, when the leaked photos surfaced, both Google and Xiaomi responded quickly. Google cut off access to Xiaomi devices until the problem was resolved to ensure it wouldn’t happen again. Meanwhile, Xiaomi worked to identify and fix the issue, which was caused by a cache update, and has since been fixed.

But the incident still raises questions about smart security devices in the first place.

Any smart device is going to be inherently vulnerable due to the internet connection. Whether it’s hackers, governments, or the tech companies themselves, there are plenty of people who can fairly easily gain access to the very things that are supposed to keep your home secure.

Of course, unlike these risks, which involve people actively trying to access your data, this most recent incident with Xiaomi and Google shows that your intimate details might even be shared to strangers who aren’t even trying to break into your system. Unfortunately, bugs are inevitable when it comes to keeping technology up to date, so it’s fairly likely something like this could happen again in the future.

That’s right, your child’s room might be streamed to a total stranger by complete accident.

Granted, Xiaomi’s integration mistake only affected a fraction of their users and many risks are likely to decrease as time goes on. Still, as it stands now, your smart security devices might provide a facade of safety, but there are plenty of risks involved.

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