Selling houses online

The Australian property auction, a collaboration between the Sydney Morning Herald and McGrath Partners, will put a Sydney terrace house on the block, and allow users from around the globe to enter the bidding via the Internet. Bidders will also be able to watch the proceedings using Web video and take a virtual walkthrough of the house using Apple's QuickTime VR technology. The auction is set for March 7.

The event is a novelty that will push the boundaries of what's possible with electronic commerce. But observers say the online auction industry is already a phenomenon.

Online auction sites really took off over the holiday season.

"In 1997, auctions burst onto the scene as a potentially major force," said analyst Vernon Keenan with Zona Research Inc. "Together, Onsale and eBay (the two largest online auction houses) both got close to a quarter of a billion dollars in goods transacted, and I'm looking for this to turn into a billion-dollar industry in 1998."

Online auction houses let users buy all kinds of items, either retail consumer goods or "collectibles" put up for sale by the owners. eBay, which specializes in collectibles, said memorabilia from the movie "Titanic" is currently popular, along with arts-and-crafts items, autographed comic books, lunch boxes, and Native Americana.

Onsale also enables user-to-user transactions through its auction site, but most of its business comes from computer goods and consumer electronics, which can be inventory Onsale is reselling, or items sold on consignment. Last year, Onsale, a publicly traded company, reported $115.9 million in gross merchandise sales with revenues of $89 million; the company has more than 400,000 registered bidders.

Observers see auctions as a potential killer app for the Internet, mainly because consumers enjoy using them on several levels.

"It's a couple of things. It appeals to male hunter-gatherer instincts. Not only do you have the thrill of finding something you want to buy on the Net, you get to fight for it and win it," said Keenan.

The Australian auction will be more elaborate than sites such as Onsale and eBay. Users will be able to do a virtual "walk-through" of the house before the sale, and will have to register beforehand in order to bid. People in the non-virtual world will also get in on the bidding, and the auction will be Webcast live.