I had mentioned in the comments section that I showed a house on Labor Day that was priced at $2,195,000. The temperature was so hot that I literally said to my buyers that no agents would be working on the holiday, let alone writing offers, so we should have an easy path to escrow. We wrote a full-price offer and expected the seller to sign it on Tuesday.
Donna suggested that I call the listing agent to see if there were any other offers. I shrugged it off, thinking there weren’t going to be any other offers – heck, the market is dying a slow death, right?
So Donna called, and found out that there was an offer, and it was over list price.
By late Tuesday, there were SEVEN offers.
It felt like 2021 all over again as the listing agent gathered the highest-and-best offers from the contestants. Yesterday, she revealed that the decision was going to be between my buyers and one other, and that we were in second place.
We had bumped our offer to $2,450,000, and that wasn’t enough to win? Wow!
I asked her to tell me the number to beat…..and she did, and sent me the document to prove it (snip above).
Ultimately my buyers decided not to go higher. But I complimented the agent for her transparency, and told her that I wish every listing agent would do that. I guess it’s possible with blind bidding that a buyer might go wild, but we were already 12% over the list price in a non-frenzy environment. It’s much more likely that my buyers would go higher if they had a number to hit, and be able to say yes or no, rather than having to grope around in the dark trying to guess what it would take to win.
Congratulations to the seller and listing agent, and bravo – job well done.
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.
People say to me, “I bet you’re loving this market”, expecting that realtors are raking it up these days.
I lost 50+ bidding wars with buyers this year who lost out to others who insanely overpaid with no regard for the comps, or because listing agents were too lazy to give everyone a fair chance. Neither of those are healthy for the market in general, yet no change is on the horizon for 2022.
I found myself in two more bidding wars this week!
The two properties weren’t the superior buys in top condition – instead, both were very average and priced with no regard for the comps. Yet they both had multiple offers over list price during the week between Christmas and New Years?
This is my 698th blog post of 2021, and the best way to review the year is to scroll through the highlights and lowlights here:
Because I wanted to make the competitive bidding all about price, I was willing to live with the other terms in each buyer’s offer.
The winners included a $50,000 good-faith deposit in their full-price offer – which was a little light. Typically, the deposit is 3%, which would have been $101,850. But every buyer can blow out of escrow during their contingency period, regardless of their deposit amount, and once they do release all contingencies, they must be satisfied enough that they intend to close.
I’m not going to give them a reason to walk away from $50,000, so it would take a catastrophic event for them to cancel after releasing all contingencies. Would they walk away from $50,000, but not $101,850? It’s possible, but if it’s a catastrophic event, then the extra $50,000 probably wouldn’t matter.
When you treat people right, they don’t cancel.
We spent the six weeks preparing the home to be spectacular, which included repairing the water leak that happened right as we got started. The master shower faucet leaked inside the wall, and it went straight down to the family room fireplace and TV niche. We had our mold remediation guy handle the re-construction, plus did a mold test that came back clear. Everything gets disclosed to the buyers, so you might as well do it right the first time.
The buyers reviewed the information, and were satisfied.
When you treat people right, they don’t cancel.
The house is 18 years old. When the seller bought it, the home inspection noted that the HVAC was nearing the end of its useful life, and that there were several fogged windows. We expected that the home inspection by these buyers would reveal the same.
Buyer’s remorse is real, and it gets magnified in a bidding war. When paying above the list price, it is natural for buyers to want to claw back some of it. We expect it, and are prepared for it.
The previous seller gave us a credit for the fogged windows, so it was just a matter of getting them done, and we knew the approximate cost of a new furnace and air conditioner.
We discussed whether we should replace the HVAC and windows in advance, but decided against it – and left them for the buyers to claw-back instead. Once requested, we were happy to oblige – unlike most agents who want to start World War 3 over every repair request.
When my listing of 1463 Paseo de las Flores hit the open market on October 18th, there had been three other properties that were providing guidance on price.
The monster 7,277sf home at 519 Samuel had been in escrow for almost two months, and 628 Lynwood had been languishing unsold for 110 days. On September 27th, a model-match to my listing, 820 Jensen, came on the market at $2,899,999, which was devastatingly-low compared to our anticipated list price of $3,395,000. I called the owner/agent to suggest that she may want to raise her price, and sent her the six comps that were outside Encinitas Ranch but all over $3,000,000.
Her response? “We’re comfortable with our price”.
I called her a couple of weeks later right before we went on the market to inquire about her sales price.
Her response? “You’ll see it in the MLS when it closes”. Great, thanks.
(The eventual buyer’s agent told me that she received four offers – three at her list price, plus his cash offer at $3,060,000. The sellers took his cash offer.)
I was undeterred, and we hit the market at our $3,395,000 on a Thursday afternoon.
The next day at noon was the first showing, done virtually by an assistant.
Any buyer who responds that quickly must be highly motivated, so I didn’t hold it against them that the principal agent didn’t come or that it was a virtual showing. It would be hypocritical for me to have an objection since I’ve sold multiple houses virtually.
They made a full-price cash offer by the time I got to open house at noon on Saturday.
Greg and I entertained a big crowd at the open house, and one of the first attendees was a woman who brought her mom and her best friend, which I took as a good sign. She mentioned that she knew the previous owners, and had been to dinner parties at the house! They stayed for an hour, during which I told her that I had received a full-price cash offer.
Before the open house was finished, I received her cash offer for $3,500,000.
Every other agent would have taken her offer.
It was a whopping $105,000 higher than the first offer, she was charming, and she had spent serious time inside the house. It would look like a no-brainer choice to every other agent.
But I’m not like every other agent.
I called the first agent as I was leaving the open house, and told him I had received the $3,500,000 cash offer. I asked if he wanted to beat it, and if so, that I would go back to the second buyer and give her the same chance to beat his. We would go back and forth until a buyer prevailed.
We went five rounds before the second buyer passed at paying $3,800,000, and – armed with this insider information – she ran over to Lynwood and bought that house instead for $3,550,000 and a 10-day escrow. It still shows as a pending listing today, but I know what happened because the listing agent is advertising his good fortune all over Facebook.
The sellers of 820 Jensen? They were the buyers of Samuel, and they paid full price, $3,599,000.
We are wrapping up our sale in Encinitas Ranch, so I thought it would be a good time to comment more on the unconventional and remarkably transparent open-bidding process I employed to determine the winner.
Because nobody else does open bidding, some may question it’s merits. Here is why it is so much better than the current blind-bidding used throughout the nation:
Every buyer has a fair chance to win.
Buyers know when losing is imminent, and can raise their offer.
Buyers determine their own fate.
Winners are determined promptly – within hours.
In the end, everyone feels like it was a fair and honest selection method.
Compare my method to the features of blind-bidding:
There’s no specific process.
How the winner will be determined is unknown.
Buyers don’t know anything about the competition – if any.
It always drags on for days with no communication.
Losers walk away feeling like something is wrong with realtors and process.
The messy non-transparency of blind-bidding makes you want to go take a shower.
Unlike the black hole that is usually presented by listing agents, I explain rules of engagement in advance to the agents involved – specifically, that they will always have a fair chance to win, which is welcomed!
Will I change the real estate world with my method?
Maybe – if enough sellers list their home with me. I’m available – contact me today and we’ll get started!