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.