With no real surge in inventory (yet), we are entering the hyper-frenzy phase now.
It’s an environment where most listing agents are ill-equipped to handle the pressure because they’ve never done this before. The only time we’ve been close to having insanity like this was at the bottom in 2009 when the bank-owned properties were getting 10-30 offers on every property.
How many REO listing agents are left, besides me? Yep, I can’t think of any either.
As a result, sellers are leaving money on the table all over the county. Why? Because inexperienced agents get inundated with requests and offers, and instead of handling them professionally, they just shut it down instead. Examples from this week:
- They stop answering the phone, or returning calls/texts.
- They direct you to automated services.
- They mark the listing as pending or withdrawn before accepting an offer.
- They accept an offer before showing appointments are completed.
Basically, they blow you off.
While they may think that it is their prerogative, they aren’t upholding their fiduciary duty to their seller by limiting the showings. Furthermore, they have an obligation to their fellow agents to allow them the opportunity to sell the listing. Yes, broker cooperation includes letting every agent have a chance to sell your listing – it’s how the system works. You sell my listings, and I sell yours.
It’s gotten so bad that another agent was joking with me that when he sees a hot new listing come up, he just books the first appointment available, and then looks for a buyer.
If we are going to abandon the traditions, let’s take it a step further to solve all the problems at once.
There have been misguided attempts previously that have probably sent us backwards, so there’s work to do to convince people. But auctions are the answer.
Conducting a live auction where all participants can witness the process (to keep it honest), and let the transparency drive the Fear Of Losing is the most effective way to get buyers to pay top dollar.
Will the jacked-up Covid-19 era finally cause auctions to emerge as the answer?
It doesn’t have to be anything fancy – this one worked great:
Will auctions be implemented by the old guard? It’s doubtful. While the hottest bidding wars are primarily on the lower-end properties (under $2,000,000), we can learn a lot from an auction company who only works the higher-end. They have a designated showing period where buyers are welcome to tour the home with their inspectors, then attend the live auction where a lucky bidder will likely buy a house that day.
Think of their benefits:
- Showing dates and times arranged in advance.
- Day of sale (Auction date) set in advance
- 10% commissions (known as ‘premiums’ which sounds friendlier)
- Commissions are PAID BY BUYER and tacked onto the winning bid.
Sellers and agents will love that program, and we’ve already seen buyers be ready, willing, and able to pay 10%+ over list price these days – so they end up in the same place anyway.
The industry should convert to this auction format today and solve everything!