In an announcement that is sure to spark the home fires at homebid.com’s headquarters, the company announced Tuesday that it has received a $25 million (US$) infusion from three venture capital firms.
The world’s first online real estate auction company said that Chase Capital Partners, Accel Partners and Canaan Partners all ponied up the money, which the company’s president and CEO said would be earmarked towards increasing market awareness of homebid’s services.
“This cash infusion will give homebid.com the ability to build a highly sustainable business,” said homebid.com president and CEO Kevin M. Hickey.
Homebid.com’s First Auction
The company, headquartered in Scottsdale, Arizona and founded in 1998, conducted its first auction in January. Working with the U.S. Department of Housing and Urban Development, homebid.com offered 146 properties in the Hartford, Connecticut-area. Of those, 137 were sold during the three-day online auction. The company said the net result was that the cumulative sales were at 136% above the reserve price and 97% of the appraised value.
Touting the ease and convenience of online real estate auctions, homebid.com executives said the Hartford auction took place during a snow and ice storm in the region, weather that would have significantly impacted attendance at a traditional on-site auction. However, 3000 bidders flooded the company’s Web site at the height of the storm, proving that Mother Nature is no match for cyberspace commerce.
The company intends to hold its next online auction in June. That auction will feature homes and condominiums in the Phoenix, Arizona-area. It is working with Scient Technologies, an e-business firm, to build its next generation real estate marketplace.
Shifting Real Estate Landscape?
While adherents say the online auction signals a shift in the way the real estate industry will conduct business, others are not so sure. Jim Cosgrove, a broker with Newcastle Square Realty in Newcastle, Maine feels that the traditional “kicking the tires” method will never vanish.
“I can see how the online auction could work for lower-priced properties in high-density areas,” Cosgrove told the E-Commerce Times, ”but in the higher-priced markets will always be the domain of traditional brokers. There’s a lot to say for the services we provide and I don’t think they can be duplicated online.”
Cosgrove says that in the last year or two some 20-30% of his business is generated from online inquiries. Buyers are more sophisticated, he said, and so too are real estate brokers and their Web sites. However, he added that his buyers will still tend to travel to the coast of Maine and look at properties in person.
Homebid.com was founded last year by Scottsdale-based Larry Latham Auctioneers, one of the United States’ largest real estate auctioneers. The company says it has auctioned off over 100,000 properties with a cumulative value of $5 billion (US$) since 1978.