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Let the bidding wars begin! Does it still happen in your market?

By David Elya

Real Estate Broker/Owner with BROOKVIEW REALTY

August 07, 2007 10:54 AM

Bidding wars on listings? Does it still happen?

I may have stumbled upon a new way to sell stagnant listings? I have this listing that was previously listed for $284,000, $279,900 and most recently for $259,900. The sellers never had an offer. The sellers paid for a bank appraisal just for kicks this week. Because of the declining market, it only appraised for $250,000.

The sellers stated they wanted to sell it and move on with their life. Their mortgage balance was under $125,000.

I suggested pricing it for a bargain price of $199,900. We mentioned in the MLS remarks that "The seller would take multiple offers for review until 09/02/07". It went on the MLS yesterday. Lo and behold, we received an offer for full price today.

The sellers replied with a, thanks, but no thanks. We told the buyers the sellers are not in a position to accept this offer at this early date and encouraged the buyer to submit an improved offer if they so choose.

It is kind of early to tell what will become of all this but I am encouraged by all the activity and interest.

So many times I have heard sellers say we can try listing it for "this price" but will come down to "this price".

Why not try suggesting an absurdly lower price and start the bidding wars?

Let the market move up the price, instead of down.

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Dan Forbes

Bradenton, FL

If it's listed in the MLS and you received a full price offer doesn't your listing agreement stipulate that a comission is due? If I were the buyer's agent I would be seeking a commission, unless there's more to your story.

Maybe your stipulation about taking offer for review is a protection?

Aug 07, 2007 11:07 AM

Gary Smith

Agent Marketing Today - Commerce Township, MI

David,

That would work as long as there's equity built up. Hope the offers improve

Aug 07, 2007 11:47 AM

David Elya

BROOKVIEW REALTY - Rochester, MI

ABR, CRS, e-PRO, GRI, SFR - Associate Broker

Dan,

Our MLS contract states:

COMMISSION AMOUNT AND OBLIGATION TO PAY: If a ready, willing and able purchaser is obtained by Broker, owner or anyone, during the term of this contract or any extension of this contract, owner(s) authorize, at the price and conditions herein named, or upon any other price, terms or exchange to which owner(s) consent, owner(s) agree to pay Broker _____ % of the selling price or _____ dollars as commission for services rendered. Owner(s) understand that a brokers compensation for services rendered in respect to any listing is solely a matter of negotiation between the broker and the owner(s) and is not fixed, controlled, recommended or maintained by any persons not a party to the listing agreement.

Does it mean that just because a buyer writes an offer the owner/seller has to pay a commission? I am not an attorney, but if the owner doesn't consent to the sale there would be NO sales price. No selling price in which to base a commission.

If the conditions state that "the seller will review all offers until a specific date", isn't that the sellers right?

I am interested in hearing from others.

What does your MLS listing agreement state?

Aug 07, 2007 01:26 PM

Pam Hofmann

Third Tennessee Realty & Associates, LLC - Crossville, TN

Your Crossville, Lake Tansi & Fairfield Glade Specialist

I think this might work, but I have a feeling you will have some agents really questioning why they are not

deserving a commission with a full price offer!!

Aug 07, 2007 01:29 PM

David Elya

BROOKVIEW REALTY - Rochester, MI

ABR, CRS, e-PRO, GRI, SFR - Associate Broker

Pam,

Thanks for your thoughts.

Does the buyer agent deserve a commission if all the terms are not met exactly? Example: the buyer offers full price but has contingencies like inspections, mortgage approval etc.

The buyer asks for a home warranty when none was offered on the listing ticket. How about including the appliances when none were staying on the listing ticket. Or how about offering the sellers 30 days possession after closing when the listing ticket stated 60 days?

Just wondering?

Aug 07, 2007 01:45 PM

Kris Wales

Keller Williams Realty - Lakeside Market Center - Macomb, MI

Real Estate Blog & Homes for Sale search site, Macomb County MI

I have to admit that is an innovative idea. However (don't I always have a however?) I think this will only aggravate buyers and their agents. (I know, I know, you work for the sellers :-)

Perhaps instead of wording it ""The seller would take multiple offers for review until 09/02/07" it would be beneficial to state "All offers presented will be decided upon on 09/02/07" (I'm drawing a blank as to Ocwens wording on muliple offer periods..but the same concept is what I'm getting at.) This way, buyers and agents will know that it *could* be sold at an above listing price.

I'm interested to see how this turns out. Please keep us updated.

Aug 08, 2007 12:04 AM

David Elya

BROOKVIEW REALTY - Rochester, MI

ABR, CRS, e-PRO, GRI, SFR - Associate Broker

Kris,

Thanks for your words.

But by wording it your way, the seller could not choose an offer earlier than 09/02/07.

That's not what the seller wanted. They wanted the option to "take" an offer before and up to 09/02/07.

Aug 08, 2007 12:27 AM

Dan Forbes

Bradenton, FL

You wrote that your listing agreement says the seller is obligated to pay the commission if an offer is presented, "at the price and conditions herein named." I believe a commission would be due if the offer is full price unless the listing agreements spells out other conditions like: AS is, close in 30 days, Cash, etc.

I would just encourage you to be careful with this strategy.

Aug 08, 2007 12:30 AM

Kris Wales

Keller Williams Realty - Lakeside Market Center - Macomb, MI

Real Estate Blog & Homes for Sale search site, Macomb County MI

I understand that Dave, perhaps my thoughts didn't come across well. I simply thought it would be wise for your sellers to do it the other way, as I believe it would cause less frustration all the way around. I hope this works out for them and they don't end up without any acceptable offer (acceptable to them) and having a house on the market after that date with agents that won't show it again.

Aug 08, 2007 12:50 AM

Rosemary Brooks

BMC Real Estate - 209-910-3706 - Stockton, CA

The Mother & Daughter Realty Team

I am checking back to see how this sale came out??? I just submitted an offer on a REO and the property had been out there for months. The listing agent came back that the bank had received another offer almost the same as our and now the banks wanted us to "bid" and they would take the best offer! How frustrating is that when there probably was not another offer, they just wanted us to slim down on what we are asking for. We gave them the offering price but asked for a credit for closing back to the buyer.

Dec 12, 2007 06:40 AM

David Elya

BROOKVIEW REALTY - Rochester, MI

ABR, CRS, e-PRO, GRI, SFR - Associate Broker

Hello Rosemary,

Well to make a long story short, the property did not sell. There were many offers (4-6). Most were under asking price. The seller chose NOT to sell. There were two which were over asking ($20k) but one buyer weaseled out because of marital problems, the other didn't have the money :(

We will re-try in the spring to see what happens.

Dave Elya

Dec 12, 2007 07:22 AM

Rosemary Brooks

BMC Real Estate - 209-910-3706 - Stockton, CA

The Mother & Daughter Realty Team

David good luck. I am doing some catching up on subjects and this one I am in the middle of the bidding war deal and I hate it. I think its a game that does not fit in this market.

Dec 12, 2007 07:32 AM

Dick & Sandy Beals

Wilmington Real Estate 4U Wilmington, NC - Wilmington, NC

David, refer it off to an auctioneer, let them worry about the language, bidding wars, and you make sure you receive 30% or so of the selling commission.

Dick Beals

Dec 12, 2007 10:53 AM

Jeffrey Dolfinger

24/7 Realty Inc. - Poughkeepsie, NY

NRBA Member

I did the same thing here in NY and gots lots of action but nothing much higher than the listing price. I do not think you would hit 250k starting at 199k, nor do i think you would owe a comission. Another broker tried to pull that trick on me I gave her the address for the court and my lawyers numbers. Anothing ever happened and the comission was over 17k. NY real estate law states that all contracts covering real estate must be in writing or are not enforceable per se. So unless a formal contract was signed between the parties no commission would be due here in NY.

Dec 12, 2007 11:38 AM

Terry & Bonnie Westbrook

Westbrook Realty Broker-Owner - Grand Rapids, MI

Westbrook Realty - Grand Rapids Forest Hills MI Re

Not everyone has the option to do this but it may be a good way to generate activity. Very similar to an auction with a reserve. Good luck keep us posted on the results.

Dec 14, 2007 07:50 AM