According to comScore, online sales so far this holiday season (November 1 - present) have risen over 16% against last year’s figures from the same time. Housing prices are also accelerating month-over-month and are predicted to reach pre-recession prices by mid-2015 (cnbc.com). With the average online purchase sitting at $180.94 (as of this year’s second quarter), selling real estate online seems like an unlikely scenario.
However, heavyweights in the online real estate auction space such as auction.com and homesearch.com are thinking otherwise. Both companies use an online auction model to sell homes to investors and would-be investors online; however, during this holiday season, both seem to be testing ways to give online home buying more mass market appeal.
Are we witnessing the marriage of e-retailing to real estate?
One example suggests the answer to this is yes. Homesearch recently brought on a new CEO, Kal Raman whose background as an eBay/Groupon executive may foreshadow where the industry’s headed. Earlier this month, Homesearch joined the Cyber Monday craze by launching what seemed to be the industry’s first Cyber Monday sale packed with discounts and buyer incentives on homes. These properties were auctioned online through Homesearch’s typical online auction process.
Their most recent promotion though consists of a “buy it now” price, similar to that of eBay, so instead of actually bidding for a home through an online auction, consumers will call Homesearch to receive a price via telephone. If a consumer likes the price and the extra incentives offered, they can purchase the property before it goes to auction (Homesearch handles much of the downstream closing process already). As eBay’s strategy made clear, there are masses of people who are uncomfortable joining an online auction but who react very well to bargain-basement fixed prices.
Given that Homesearch continues to grow their network of real estate agents and broker partners, is it a stretch to imagine the day when an agent shows homes in the neighborhood and then takes their client online to purchase?
In a space where nothing like this has been tested before it’s hard to know for certain how successful Homesearch and others will be trying to scale mass-market retailing strategies to real estate. However, if they’re really able to go the retail merchandising route and apply discounts of 20%-50% off the list price of homes for sale, I can see how people might be inspired to buy their next home online.