Transparency in Bidding Wars? What a Concept

By
Real Estate Agent with Evers & Company Real Estate, Inc. AB95346
http://actvra.in/4XYD

Let me just start by saying that I hate bidding wars, whether I’m representing a buyer or a seller.  And one reason is that the entire process is so prone to shenanigans. 

In my area, a listing will typically come on the market on a Thursday or Friday, and the price is often a little below market value.  The MRIS information will let  everyone know that they will look at contracts, usually Tuesday or Wednesday of the following week.  

As soon as I walk in the door, I have a pretty good idea of how it will all go down.  Assuming the place is well-located, professionally staged, in decent condition and priced on the nose, a bidding war is a distinct possibility.

I’ll show it on Day One.  And if the buyers like it a lot, I’ll try a pre-emptive offer (also known as the “bully offer”) that’s clean and generally too good to pass up.  And it will have a deadline, usually requiring an answer by the next morning.  And it very often works.  

But what if it doesn't?

Often, we have a Plan B, and we're off to the next place.  But if not, and if the buyers really want the house, we have to wait until whatever date the listing agent has set for the contract presentation to the sellers.  

Our listing agreements have a section where the seller says either yes or no to whether or not to authorize the listing agent to disclose whether or not there are any offers on the property.  Why?  Because there are many buyers (and buyers' agents) who would rather eat lie bugs than endure another bidding war.

But what if you knew what the other offers were?  Your buyers could make a considered decision about whether or not to jump into the fray.  If they wind up agreeing to something crazy to get a house, at least they will base their decision on something other that speculation.  And they won't decide to pass on a house because they assume it will go for way over asking in a bidding war.

Today, Inman's Teke Wiggin has an article, "Should real estate agents use ‘transparent bidding?"  And it's got examples of how it can actually be done.  

Bidding wars are likely to be a big part of the market for as long as we have a shortage of inventory in so many of our markets. And I guess the question is, what is the best way to make the law of supply and demand work for home buyers and sellers.

 

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Rainmaker
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Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Specializing in Brookside, Waldo, Prairie Village

Personally I don't like bidding wars--when representing either buyer or seller. But you are correct--when not enough inventory that does happen, esp in the desireable neighborhoods and for the updated properties.

Dec 11, 2016 03:12 PM #96
Rainmaker
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Todd & Devona Garrigus
Garrigus Real Estate - Beaumont, CA
Broker / REALTORS®

I really like reading your post Patricia Kennedy . The comparison of your market and the contracts we have out here in California are intriguing. I can really see both sides of the argument of bidding transparency. The way your contracts option to disclose seems to be the likelier answer to this question.

Dec 12, 2016 08:53 AM #97
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Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Ronald, I'm sure you're right!  There are buyers, sellers and agents who will game any system one can think up.

Dec 12, 2016 01:06 PM #98
Rainer
391,699
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

Depending on the location and configuration, inventory could be a challenge but serious buyers won't buy at any price to secure a property because they can and should walk away. That said, making  a series of offers to buy isn't a strategy that I would ever encourage. Make an offer based on solid information, if rejected, it's next.

Dec 13, 2016 07:55 AM #99
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Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

M.C., There is a lot of great stuff on Inman.  And a subscription is included in our local Board dues.

Dec 13, 2016 12:39 PM #100
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Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Georgie, if you Google the title, it may get you in the back door.  (try Transparency in bidding wars and it will probably come up)

Dec 13, 2016 12:39 PM #101
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Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Scott, I had to laugh, because some of our sellers get upset at a price above asking as evidence that the listing agent under priced it - it was obviously worth more!

Dec 13, 2016 12:40 PM #102
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Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Anne, some dear friends of mine bought a house in your area a few years ago, and they couldn’t believe the practices out there. They thought DC was bad!

Dec 13, 2016 12:41 PM #103
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Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Nasif, as Ronald Reagan would say, we need to trust but verify.

Dec 13, 2016 12:41 PM #104
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Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Lou, Barbara Todaro is always right on point!

Dec 13, 2016 12:41 PM #105
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Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Rajeev, I will definitely watch the report.  

Sometimes the underpricing strategy doesn't work, and agents can end up with very angry sellers.

Dec 13, 2016 12:45 PM #106
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Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Leanne, that's a fast way for a listing agent to ruin his or her reputation.

Dec 13, 2016 12:47 PM #107
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Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Amy, our area is prone to bidding wars and has a lot of lawyers!  Most of us try hard to do it right.  But transparency would help.

Dec 13, 2016 12:48 PM #108
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Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Wanda, I think the winners often wake up a few days after the big win wondering what they were thinking.  Now they're thinking "Get me out of this!"

Dec 13, 2016 12:50 PM #109
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Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Mary, I've seen some pretty smug listing agents have to eat crow when things fall apart!

Dec 13, 2016 12:52 PM #110
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Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Todd and Devona, I've seen a lot of buyers just say no to a multiple situation, only to learn it sold for a good deal less than they were willing to pay.  I think some more transparency would keep them in the game for a longer time.

Dec 13, 2016 12:54 PM #111
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Patricia Kennedy
Evers & Company Real Estate, Inc. - Washington, DC
For Your Home in the Capital

Kimo, maybe I'm old-fashioned, but I think it's best to price a home at market value and then not play games.  Buyers aren't stupid.  Well, most of them aren't

Dec 13, 2016 12:56 PM #112
Rainmaker
427,568
Thomas J. Nelson, Realtor, CRS
Big Block Realty - La Jolla, CA
Co-Host of Mail-Right's: Real Estate Agent Podcast

I did a post on this earlier this year, Haus.com, a company I Beta Tested for and have used in a live escrow, has provided a transparent platform I see some value in. Haus Post

Dec 31, 2016 02:26 PM #113
Rainer
421,179
Richard Bazinet /MBA
AZuRE Team - Realty ONE Group - Scottsdale, AZ
Phoenix Scottsdale Real Estate

That's a profound post Patricia. The essence of negotiating real estate. It can distinguish between the pros and the master at negotiating and the less savvy, the less experienced. A game? Perhaps.

Jan 07, 2017 07:21 AM #114
Rainer
421,179
Richard Bazinet /MBA
AZuRE Team - Realty ONE Group - Scottsdale, AZ
Phoenix Scottsdale Real Estate

By the way, your link to the Inman News article goes to a blank page in my case. I have a subscription and I looked it up... FYI

Jan 07, 2017 07:29 AM #115
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