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The future of home-buying is as simple as eBay auctions

Close up auctioneer hand, holding gavel, wooden hammer, and blur group of people in auction room, one man raising hand up for bidding. Product or project auction market concept background (Close up auctioneer hand, holding gavel, wooden hammer, and bl
Would you buy a house online? Source: Getty

Heading to auctions on a Saturday can be overwhelming, stressful and often an inconvenience when your prospective new home is a little out of the way.

But, three Aussies have set out to change that, and completely overhaul auctions in their traditional sense.

After being frustrated by the lack of transparency in the home-buying process due to private treaties between agents and vendors, two former real estate agents and a tech developer created Openn Negotiation - an online auction site.

What are private treaties?

When you make an offer to buy a home, a real estate agent will often tell you there are other offers, but they can’t actually disclose what the offers are due to the private treaty between the agent and the vendor.

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This leaves buyers not knowing whether the agent actually has other offers, and not knowing how much those offers are for.

“That's what we were trying to solve,” Openn’s co-founder and managing director, Peter Gibbons, told Yahoo Finance.

What’s Openn Negotiation?

Openn Negotiation’s site lists homes and allows people to register to bid for them, so long as they’ve signed legally binding contracts, much ike a normal auction.

The online auctions last for four weeks, and you can constantly monitor the price of the home online, which is made visible - unlike in a private treaty.

“Other bidders have signed fully legally binding contracts and so when it hits reserve, the person who ends up with the highest value will actually own the property,” Gibbons said.

“You can have great confidence bidding; that you're bidding against somebody real.”

Are people actually using it?

According to Gibbons, almost 1,700 properties have sold on Openn, to the amount of almost half a billion dollars.

“We've had over $6 billion dollars in bids. Around 15,000 registered users. It's really taken off.”

Based in Western Australia, Openn’s founder said most of the sales are based out of the state, but they’re also selling properties in New South Wales, Victoria and South Australia.

They’re also tackling the international market as well, which the founders say is designed to make it easy for Aussies to bid on international property and vice versa.

Are real estate agents still in the process?

“We made a really strategic decision when we commenced building this business that we keep agents absolutely essential to the sales process,” Gibbons said.

Agents still receive commission from their role too.

“We say agents are our ‘foot soldiers’ and the people who are promoting Openn so we've really looked up to them. They are still negotiating really hard.”

Can someone swoop in at the last minute to secure the winning bid?

Unlike an eBay auction where you can be left devastated by a final bid in the last 10 seconds, Openn’s imposed a ‘bidding clock’ on their auctions to avoid that happening.

“It’s a four-week auction,” Gibbons said.

“Right from the time the property is uploaded, bidders start registering their interests and registering their bid and signing their contracts.”

“And then there's a final bidding stage and in that final bidding stage it's generally where they sell, because that's got a time limit on it.”

“If somebody puts a bid in, in the last second, that bidding clock resets for another three minutes. So you can't bid out anybody.”

“The winner is the last unchallenged bid up to three minutes above the reserve.”

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