Bidding for 4-Bedroom, 2-Bath Home Starts at a Penny

March 12, 2012 -- A 4-bedroom, 2-bath Arizona home with wood-burning fireplace, appraised at $125,000, is being auctioned for bids of a penny each, in what the promoter believes is the first auction of its kind on the Internet.

Penny auctions for electronic and other kinds of consumer goods are already common. But this appears to be the first such auction for real estate.

Bidding opened last week.

An open-house on Sunday sent offers skyrocketing from Friday's high of 5 cents to today's 15 cents.

Todd Talbot, creator and owner of website iBidForAcent.com, describes the 1,749 square foot property as a completely remodeled, " turn-key" home, just waiting for the winning bidder to move in. He bought it at foreclosure in January for $81,000, then put in $20,000 of improvements. The home has new carpet in the bedrooms and living room, new paint, new fixtures, and, in the kitchen, new cabinets, granite counter tops and appliances. It sits on a corner lot at 6214 West Acoma Drive in Glendale, Ariz..

Asked if he isn't a little disappointed that the high bid is 15 cents, Talbot says, "Well, it's early in the process." Bidding closes tomorrow at 5 p.m. Arizona time. Most of the action, he says, will come late. "We have people signing up to bid from all over the country."

At 5 p.m. tomorrow, he explains, "Open bidding will end, and 20-second extended bidding will begin. At that point a 20-second timer clock will start a countdown. If someone bids during that time, the clock automatically re-sets for another 20 seconds. This will happen until no one bids during the 20-second period." The auction is then over, and the last registered bidder will be the winner.

There's a reserve price of $2,750 on the home (meaning that's the minimum for which it can sell). Talbot expects the winning bid could as little as $5,000.

Because of the reserve, he says, "I was a little afraid nobody would bid." So, he initiated some incentives. The person who places the highest number of bids during the reserve period automatically gets $15,000; the person with the second highest number gets $5,000.

Talbot also makes money by selling bid packs, in increments of $60 to $6,000 which are used to make the bids on the site. ABC News wrote about these so-called penny auction for smaller-priced items back in August.

For this house, every time a bidder bids, he pays a fee of 60 cents.

If this first auction proves to be a success, Talbot says he's considering expanding into other cities, including Dallas and Las Vegas.