By Jasmine Viel
Buying a home in Los Angeles is like playing a game of roulette, as many of you already know, you pick a number, price, and just hope it’s the right one. A Pasadena real estate firm is looking to change the game, if you will. They have created the first of its kind; an online auction. Could this be the future of real estate? The firm called Deasy Penner Podley created plumBid. We saw the whole process work from the beginning to the end as both buyers and the seller tried it out for their very first time.
It’s a countdown Michael Alatorre and his wife, Andrea, will never forget. After a decade in their dream home, the retired Baldwin Hills couple found themselves in a posh Pasadena real estate office seconds away from selling their house to the highest bidder.
“I don’t think I’ve had my heart beat this hard just watching a clock count down,” remarked Michael.
We’ll get back to whether the Alatorre’s got what they were hoping for in the end. Let’s start with how they got here. They became real estate agent Scott Lander’s first clients to list their home through the new auction platform. Lander is with the Deasy Penner Podley real estate firm. George Penner is the chief executive officer. He launched plumBid two years ago.
“PlumBid grew out of a concept to increase the level of transparency,” explained George.
Think of it like ebay. When the day arrives to sell a home, qualified buyers have an hour and a half to make as many offers as they want. They can see what other people are bidding and also what is most important to the seller, like an all cash offer, the length of escrow, and/or waiving the inspection report.
“Unlike the traditional world, all of the inspection reports, the disclosures, the owner’s information, it’s all provided up front,” added George.
“We both kind of looked at each other, just like, where was this when we were trying to buy this ten years ago?” asked Michael.
The Alatorre’s mid century modern home in Baldwin Hills was the latest house to go on the plumBid auction block for 1.1 million. For the dozens of potential buyers who made their way through the open house last month, the concept was strange and new.
“It’s like ebay for buying a home, so we like that,” remarked one potential buyer.
The open house is packed with potential buyers. In just a few short weeks some of them could become part of that intense buyer friendly bidding war.
So back to the day of the auction in Pasadena. Galen Lorem is the Caltech grad and now chief economist who came up with the algorithms and the patent pending technology behind plumBid.
“Six minutes in and we’ve already had five people bid,” remarked Galen.
He explains how a person’s bid includes more than just the actual offer price for the house.
“For example, if our bidder was to waive the inspection contingency, that would improve their bid by $52,000,” added Galen.
Unlike ebay, if someone places a bid in the last few seconds the clock will reset for five minutes until no more offers are made. And that’s exactly what happened to the Alatorres. Their auction went into overtime again and again. The price of their house kept going up. Until finally the final offer and countdown. The winning bid: $1,758,700 all cash, 15 day escrow, no inspection.
The buyers, Architects Steve and Victoria Burns from West LA, said they liked the process and would do it all over again.
“I think auctions are definitely the future of real estate,” said Steve.
“We’ve tried to go for a number of houses that slipped through our fingers. And so this was very democratic and we really loved that part,” added Victoria.
The Alatorres say they took a chance and it payed off.
“We are happy to hand over the keys to people who we know would appreciate the house that we have lived in,” concluded Michael.
Now this house sold for 62% over asking. That’s not normal. This house was a hot listing in an even hotter neighborhood. The average plumBid home has sold for 29% over the opening bid. Also, the winning buyers do have to cover the cost of the auction, which is just under 2% of the purchase price.