Price Coaching For Bidding Wars
In the previous post I mentioned that when I represent sellers, I give price coaching to agents during a bidding war.
What is price coaching? It is giving hints about the competing bids.
Let’s use the Manzanita case for an example.
Once a highest-and-best offer came in above $700,000, I started telling the other agents that it would take more than $700,000 to win. It gives others a number to shoot at, rather than the guessing game that feels like a black hole.
I was also very specific that we were not going to let this linger, that we would select a winner on Monday afternoon, which we did.
Putting parameters around the game helps bidders decide their fate. It is much easier for buyers to say “yes” or “no” to going over $700,000, then to just let them wander around, price-wise.
Once we had three people willing to go above $700,000, I kept giving hints until all bidders said that they had reached their maximum.
This is the opposite of what most agents do. Most agents will put a note in the MLS that says, “there are multiple offers, send in your best offer”. They also make it clear that they aren’t going to tell you how many offers there are, what price it will take to win, or even what their process is to select the winner. This is the sealed-bid method.
The sealed-bid process encourages bidders to offer less than their valuation of the item, because everyone wants a deal, and there is no fear of loss to push them to their maximum.
My method creates the closest thing to an auction/open bidding, which is the most effective way to find top dollar.
There are no rules or guidelines on how agents are supposed to handle a bidding war, so every seller and agent are their own. Get good help!