I’ve pitched Robert Reffkin a couple of times about auctions. Even though he is the Compass CEO and running an operation of 30,000 agents and employees, he replies to every email!
He said they are working on the things that agents ask about the most. Apparently, he’s getting more inquiries because Compass has partnered with Paramount Realty USA, a national auction house!
I doubt I’ll be using their service, but it is fantastic to see autions becoming more mainstream. Hopefully they will be the primary way we sell homes some day. They wash out all the agent shenanigans and deliver the pure and most transparent way to sell a home.
Here are slides from their pitch:
Having buyers complete their home inspections prior to the auction would eliminate most of the problems we encounter now during escrow. Currently, the contingency of home inspection can screw up a sale in two different ways. 1) Buyers find unknown surprises and use them to their advantage to work over the sellers (again), and 2) Buyers aren’t as committed to closing the deal because they know they have contingencies that give them the ability to walk away, no charge. Auctions would wipe out all of the above.
But my favorite thing about the auction format is that it gives everyone a fair shot at buying the home, which isn’t guaranteed today…unless you list your home with me. I received four offers on my latest listing, and we have a winner:
Textbook example of how to run an auction – hit ’em fast and furious in the beginning to get bidders to jump, and hope for the best. It worked beautifully too, because I’m not sure there was more than one bidder. P.S. Carson Palmer was the buyer – he built a big bomber on the lot, and then got the last laugh when he sold it for $18,000,000 in 2018:
P.S. The buyer paid the 10% commission – purchase price was $4,400,000.
It would have been a good idea to launch the auction format on an industry-wide basis during the frenzy. But how about now? They are still a good idea because auctions bring transparency and certainty to the home-buying process, which buyers would appreciate and make them more likely to engage. Excerpts from article linked below:
If a home has been listed for a long time without much interest, it may be overpriced, according to Mr. Lesnock. During the pandemic, heightened demand has created bidding wars among buyers, with some prime properties selling within days of listing. If a residence isn’t getting any traction in one of the hottest real estate markets of the modern era, there’s a problem.
“Why is it not selling? It’s the windiest day on record, why is this kite not flying, right? That’s the way to think about it,” Mr. Lesnock explained.
The auction process also allows more transparency, according to Mr. Pchelintsev. Both buyers and sellers can follow the bids, either at a live auction or, increasingly, online.
“You get a notification on your phone. Someone just made a bid bigger than you, and you go, ‘how dare you?’” he said. “You go on and place a bigger bid and now you’re basically, apart from trying to get this amazing house, you’re also In sort of a little bit of a competition.”
That competition can help drive up the price of the property, according to Randy Haddaway, CEO and founder of Naples, Florida-based Elite Auctions.
“Sellers get more through this process than they would otherwise,” he said. “You get a group of millionaires competing against each other—and none of them are used to losing. They don’t want to walk away and that drives up prices.”
Mr. Lesnock agreed. “If you do [an auction] correctly, it will generate fair market or better prices.”
The network insinuates that auctions are giving houses away, but the initial prices seem ridiculous:
Dr. Alex Khadavi, a celebrity skin doctor in Los Angeles, was hoping for a quick sale and big payday when he finally completed a 21,000-square-foot mansion that took seven years and tens of millions of dollars to develop.
But a little over a year after he listed it for sale — with a price tag featuring a string of lucky 7s at $87,777,777 — the doctor’s dreams of cashing out are being crushed by a mountain of debt, unpaid contractor bills, bankruptcy court proceedings and trouble with the law.
Now he’s running low on luck, money and time.
Khadavi, who filed for Chapter 11 bankruptcy protection about two weeks after putting the home on the market, hasn’t lost his sense of humor, though.
“The home is sandwiched between billionaires, and I’m the poorest guy on the block,” he told CNBC with a laugh.
Instead of pushing a Code of Ethics that is 109 years old and is unenforceable, the National Association of Realtors should do the same thing and require a similar bill of rights.
Besides, once you ban blind bidding, then open auctions would evolve naturally!
I had a good conversation this week with the people at Doorsey, and they are well on their way to providing a sharp and effective online home auction platform that could change how homes are sold. If/when Zillow buys them and provides online auctions nationwide, agents will be wondering what happened.
Doorsey, an online real estate platform founded by a group of Spokane entrepreneurs, launched this week and secured $4.1 million in a seed funding round.
Founded by Jordan Allen, Nick McLain and Matt Melville, Doorsey is an online bidding platform they say takes the guesswork out of buying a home by providing real estate agents with real-time home prices and upfront sales terms and disclosures.
“Today’s home-buying offer process is rife with frustrations for all parties,” Allen said in a statement. “Buyers and their agents want to know whether their offer can win. Sellers and their agents want to know they’re getting the best offers. And agents want to close more deals in less time.
“Doorsey solves this by allowing sellers to define upfront what it takes to win, so that buyers can compete on a level playing field and sellers can find the right buyers.”
The co-founders sought input from the local real estate community and subsequently evolved the online platform into Doorsey, which provides buyers with such things as access to home-inspection reports, sale contingencies, photos, a 3D virtual tour via Matterport and a community forum for interacting with sellers and neighbors.
Buyers can also schedule showings and view desired closing dates on the platform.
Doorsey’s listings are posted on the Spokane Multiple Listing Service and distributed through national real estate websites, including Zillow, Trulia, Redfin and Realtor.com.
Doorsey has obtained $4.1 million in seed funding – an early stage of capital investment in startups – allowing it to build-out its product, hire more employees and expand to key markets nationwide within two years, according to the company.
The funding round was led by 166 2nd Financial Services with participation from Agya Ventures, Liquid 2 Ventures and SRM Development, among other investors.
Former NFL quarterback Joe Montana is a managing partner of San Francisco-based Liquid 2 Ventures, while 166 2nd Financial Services is led by former WeWork CEO and co-founder Adam Neumann.
Rob Hahn and I had a conversation about the state of buyer agency – which might only interest realtors, if anybody – but we also got into the idea of home auctions too:
Every other agent would have recommended that their seller sign the $1,950,000, which is a whopping $155,000 over list price. Who wouldn’t be happy with that?
My thought? We have five strong offers over list. At least one buyer will probably go higher.
Because I know how to properly handle a bidding war, we gave EVERY buyer a chance to submit their highest-and-best offer (unlike the Redfin agent who told me she only counters the serious offers after I submitted an offer that was $250,000 over list).
Guess who won.
That’s right, the $1,850,000 buyer won it with their highest-and-best offer of $2,100,000:
Word on the street is that Lennar may attempt to sell their new San Marcos homes by utilizing the auction format. They don’t have anything on their website yet, and it may be a bit clumsy to roll out so we may not hear much about it until they complete a few.
They have 700+ people on their interest list, and they have grouped them into sets of 25. Why discriminate? Let all 700+ people have a crack at buying every house!
Hopefully the selling of homes by auctions will become more popular in 2022!
On February 27, 2019, our seller purchased 1463 Paseo de las Flores for $1,950,000. At the time, it was one of the top four highest-priced sales EVER in Encinitas Ranch, with two of the higher sales being $1,970,000 and $1,975,000 (plus a $2,100,000 back in 2005).
I have always kept an eye on a house further down the fairway because its first owner was Jill Kammerude, a close friend and fellow realtor. We had shared her Padres season tickets from 1998 to 2009 when she unfortunately passed away.
Her 4,612sf house on the golf course had sold again on April 8th of this year for $2,405,000:
I had been to this house a few times, and though it had more of the older look, it was comparable to the home we sold on Paseo de las Flores. I sent the link to my client, and congratulated him on picking up a cool $500,000 in appreciation in just two years.
I asked if he would consider moving, to which he said, ‘Maybe’.
We began talking regularly about where to move, taxes, repairs, etc., and in mid-September he committed to selling. We began our 6-week tune-up, and on October 21st, we hit the open market listed for $3,395,000, because there had been a flurry of $3,000,000+ sales nearby.
I told the story previously……that I had received two solid cash offers during the open house, and was telling attendees that I was going to sell it that day. Both buyers were anxious, so once I left the open house, it was time to determine the winner.
I do take pride in utilizing sophisticated high-tech tools, and this day was no exception.
I pulled out my Super-Duper Bidding-War Bonanza sheet, and went to work:
I went back and forth between the agents on the phone, telling them the price to beat – and they filed the bids above. Buyer #1 delivered the knockout blow with their $3,760,000, and we had a winner – and Buyer #2 went right over to Lynwood and bought it instead.
How I handled the communication was critical – it takes more than a fancy notepad.
In particular, because we did the bidding verbally on the phone, I had to get the buyers to commit to their price in writing before they cooled off – which I did, and it closed today for $3,760,000.
Keeping the buyers happy for a month, helping the seller move, and delivering the house in excellent condition was all part of the process too. Thank you Donna!
It would have been easy to discard the first cash offer of $3,395,000 because the buyers saw the house via FaceTime, and instead taken the $3,500,000 cash offer from the buyer who saw it in person. Almost all other agents would have done so. But with me at the helm, my seller made an extra $260,000.
It sold for $700,000 more than the model-match that sold on October 25th, one block over.
It sold for $992,100 more than the zestimate!
It sold for $1,360,000 more than its approximate value in April, which is a 56% pop in six months!
It sold for $1,810,000 more than the seller paid, which is a 93% return in 32 months!
