Everyone’s asking the question – who has the answer?
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!
Hat tip to Bill W.
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.
This article is from November:
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:
For those who like the videos, here is the full collection:
I’m off to play golf with Kayla – she extended her stay for another week! I’ll comment more later.
It never fails – go golfing and sell a house!
I only golf 2-3x per year – we should go more often!
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 you treat people right, they don’t cancel.
Get Good Help – Hire Jim the Realtor!
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 closing on Monday – more stories to come!
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.
Here’s where I described how it went down:
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!
We had a huge turnout at the open house yesterday – more than 100 people showed up, which made me think I should include Friday open houses for every listing!
We’ve already received two written offers, and there should be a few more by the end of today. I plan to conduct my slow-motion auction to determine the winner.
You gotta love when this happens – the house right behind us just listed:
It happened again yesterday. I got the Dear John letter from a listing agent.
This one was somewhat unusual though. I always ask a listing agent how they will handle multiple offers, and 100% of the time it’s some version of spreading them out on the coffee table and picking the winner.
But when I asked this agent, she flipped it back on me and asked, “Well, how do you handle them?”
I responded, “I call back every agent and tell them the price to beat, and mention that they are going to lose if they don’t beat it.” It gives every buyer a fair chance to determine their own fate.
The listing agent responded, “Oh that’s how I do it too!”
What? I’ve never heard that before. Thankfully, my buyers liked the home enough to pursue it, and we submitted an offer that was $22,000 over the list price, with the normal concessions. It’s an offer that should be considered as a contender.
You can guess what happened. The usual five days go by, and yesterday I got an email from the listing agent who said that because she received offers that were higher, they selected a better deal.
Someone asked the question, “Does the realtors’ blundering incompetence with handling multiple offers actually feed the frenzy? Do their Dear John letters ramp up the intensity?
I thought about that one for a while.
I am a competitor at heart. I was lucky to be on some great sports teams when I was a kid, and learned the difference the hard way. Some teams have great players but don’t win. Other teams have a few talented players but are winners because they are scrappy and determined.
Think of the Padres. Even though they have finally had some great players, they aren’t very close to winning anything yet. During the last half of the season, they mailed it in, and lost a lot of games to inferior teams.
If we lost a game because of a bad call by the umpire, or an honest mistake by a player, we would be frustrated but could shrug it off.
But if we lost a game that was very competitive and everyone played their heart out, it would motivate us the most to learn from it, and never let it happen again. It’s the killer instinct, and it comes from honestly played, head-to-head battles.
I think homebuyers today who get burned repeatedly by agents who don’t give them a chance to compete fairly with the other bidders are being dumbed down. They get numb to losing, and while it might cause them to offer a little more next time, their building resentment keeps them from throwing everything in.
Open bidding gives homebuyers the opportunity to go higher than they ever thought they would.
That’s top dollar, and that’s what I do.