Homes for sale by Internet auction could be the next big thing.

While online home auctions have had limited success in the past, it's a whole new era. Giants such as eBay are advancing the idea of online peer-to-peer home auctions. Others are heralding the concept as the natural progression of open homebuying information now taken for granted by Internet buyers. But what about sellers and buyers who want the advantages of an open auction format, but with representation?

Real estate entrepreneur Gary Keller, cofounder of the Keller Williams Realty franchise, believes he has the answer. He has created an online auction licensing company for brokers called homesbyAuction.com. Keller is test-piloting homesbyauction.com in Texas, where an El Paso launch in May sold four out of six featured Keller Williams' listings.

"We had 100 buyers through the preview open house period," says Toni Stewart, vice president of marketing for Keller Williams Realty. "We sold 60 percent of the homes which is significant because these were homes that had been on the market for a long time, and they sold for fair market value."

So what stimulated buyers to buy? According to Stewart, buyers liked several points:

1. They can view the homes during open houses for several consecutive weekends.

2. The houses are closed to contracts and negotiations until the auction period ends, giving all buyers equal opportunity to bid.

3. Sellers get the home inspected in advance and include the results in a full disclosure.

4. Terms are preset, so all the buyer has to do is consider price.

5. Buyers can be represented by the agent of their choice from any brokerage. (Auction buyer's agents go through special free training by homesbyauction.com.)

The timing could be right for buyers in other ways. As the nation slowly turns toward a buyers' market, the online auction could give additional exposure to homes that might otherwise languish in the MLS. But homesbyauction.com plans to avoid any comparisons of auctions as fire sales.

"We encourage selecting the hottest properties," says Stewart. "And these are not FHA or HUD properties, so this isn't a concept for depressed markets only. Austin, where our June auction is planned, certainly isn't depressed.

"Historically, fine art is sold at auction and we researched that when it is conducted properly, it can work in a hot market," she says.

The process also benefits sellers, elaborates David Tennant, vice president of business development. "Clearly the consumer wants Realtor representation. Eighty to 87 percent of homes are sold through a Realtor, and our auction system provides a sense of security that can't be experienced otherwise."

But the main reason sellers benefit in a hot market is that they have a cooling off period that could ultimately net them more money for their homes. "We've all heard those nightmare stories where a home sells in two hours and then a week later a similar home down the street goes for $50,000 more," explains Stewart. "Since the home can't be sold in the preview period, they have a chance to be exposed to more buyers."

According to Tennant and Stewart, competing brokerages and agents like the concept, too. In hot sellers' markets, homes are often sold before they are listed in the MLS. With the auction format, the agents have the opportunity to tell their buyers and prepare them to buy via auction. It levels the competitive playing field for co-brokers in a way that benefits sellers, listing agents, and buyers.

That's why homesbyauction.com could work as a licensing tool.

"Keller Williams is the guinea pig," says Tennant, "but at our training sessions, there are always a number of agents present from other brokerages."

But despite a more favorable business climate, homesbyauction.com may still have some challenges ahead. The company is currently offering the auction software and agent training free of charge to Keller Williams' brokers as a value-add-on for their full price brokerage services. Sellers and buyers are also not charged for using the service. Without a business model, how will homesbyauction.com survive? If it can pay for itself by helping Realtors retain their full commissions, it will be invaluable to Realtors.

Responds Stewart, "We are already hearing from sellers that they feel much better about hiring a Realtor and paying their full commission because they can see how much work is involved up front. A lot of the training involves working with sellers to help them prepare their home for auction, so they are seeing a lot more of the listing agent."

"We aren't going to sit back and wait for technology companies to keep Realtors involved in the transaction," says Tennant who is working on a business model. An announcement is forthcoming, he adds.

homesbyauction.com is currently available in about 50 major markets across the United States.