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Saturday Open House Report

Yesterday’s open house ended up being anti-climatic once a motivated buyer adopted the swamp-the-boat strategy, which I highly recommend. We had five offers by the end of Friday, and could have generated another 5-10 offers easily and probably ended up at, or close, to the same price. In all, we had over 200 people see the home over the two-day open house extravaganza…..in November.

The 2022 selling season is going to be bonkers:


Friday Open House Report

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:

https://www.compass.com/listing/1801-ratcliff-road-carlsbad-ca-92008/909359166289330529/

Blind Bidding vs. Open Bidding

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.

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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.

Bidding War! Part 5 – Beat This Price

You know there are agents out there thinking, “Jim, you sniveling little baby – why don’t you just get your buyers to offer more money so they can win the bidding war?”

First off, a bidding war is when participants are bidding against each other.

What is practiced around here is blind bidding, where buyers just guess at what offer might win.

Nobody wants to pay more than they have to, or more than they should. With no other influence, buyers will submit their bid based on the comps, or their comfort level.

But when presented with a price to beat, emotion takes over. With the fear of losing the property being a real possibility, buyers are much more likely to go higher than they originally thought, in order to win.

It becomes more about winning and losing, than paying a comfortable price.

There will be an occasional blind bid that swamps the boat, and produces a sales price that others wouldn’t have touched. But how do you know? You don’t.

Conducting an auction-like process where bidders are pitted against each other and know the number they have to beat is the most reliable way to reach top dollar.  The fear of loss is real, and motivates people to do things they wouldn’t have done on their own.

Yet, realtors around here won’t consider! Why not?

Most everyone thinks it’s against the rules, but this is in the contract:

Offers not necessarily confidential: Buyer is advised that seller or listing agent may disclose the existence, terms, or conditions of buyer’s offer unless all parties and their agent have signed a written confidentiality agreement. Whether any such information is actually disclosed depends on many factors, such as current market conditions, the prevailing practice in the real estate community, the listing agent’s marketing strategy and the instructions of the seller.

Agents can include the confidentiality agreement but it doesn’t mean anything unless all parties agree.

In my bidding war on Saturday, the agents were happy to participate.  They enjoyed the transparency, and the chance for their buyers to determine their own fate!

Bidding War! Part 4 – LMOTT

I mentioned the cash offer we made on Saturday on behalf of buyers hoping to purchase a home in Carlsbad. It finally came to a conclusion last night.

It went the same way all of the other multiple-offer situations have gone:

  • It dragged on for days.
  • Little or no communication.
  • No transparency about the process or how a buyer will be selected.
  • No open bidding.

After a day of being kept in the dark, I suggested to my buyers that we should improve our offer and just hope for the best. We submitted a new offer above the list price, 14-day closing, and free 30-day rentback. A worthy offer!

I got the call late yesterday – Sorry, we’ve gone in a different direction.

I appreciated the call because they usually come by text so the listing agent doesn’t have to offer any explanations. Because I had the agent on the phone, I pleaded with him to give me the winning sales price, which he did.

When I told my buyer about the winning bid, he said,

“I would have paid that.”

“IN FACT, I WOULD HAVE PAID MORE THAN THAT.”

It’s not just about treating all buyers and buyer-agents fairly (part of the Code of Ethics).

It’s about LEAVING MONEY ON THE TABLE, which is happening everywhere because listing agents are too lazy or inexperienced to conduct a proper bidding war. Even if you don’t have the guts to do open bidding like I do, then at least give every buyer a chance to make their highest-and-best offer, which used to be the standard up until this year.

Now, the listing agents only worry about grabbing their favorite offer, and going back to sleep.

Frenzy Season, 2022

The NFL added a 17th game this year, and pushed back the Super Bowl to the second weekend of February.

It will be about as long as buyers can wait, and the following weekend should be gang-busters.

If you’re not putting your home on the market in the next 2-3 weeks, then February 19th would be a good target date for listing your home for sale.

“Oh Jim, wouldn’t it be smarter to wait until momentum builds with other comps closing escrow, and then sell in April/May and pick up an extra 5%?”

Sure, if you’re a gambler.

What could go wrong:

  • A couple of neighborhood fixers sell for less.
  • Another sells to an ibuyer based on those prices.
  • Another is getting divorced and quick-sells their house based on those new comps.

If you get submarined by other sales nearby, then you’ll just be happy to get what you could have gotten in February. The worst part will be your spouse telling you repeatedly, “I told you we should have sold sooner”.

Yes, the frenzy will last into 2022, and you will sell for a ton of money no matter what. But I’ve gotten more inquiries this month about selling a home than any month this year – people are preparing to go!

Bidding War! Part 3 – Auction

You say ‘full transparency’ and blah, blah, Jim – what do you mean?  What happened? Give us the dets!!

We received two cash offers during the open house on Saturday, one from the first people who saw it on Friday, and the other from a buyer who attended the open house – which was a quick turnaround because I told her that we already had a cash offer.

Each buyer had their own agent, and the terms were similar.  It was going to come down to price.

They are called ‘bidding wars’ in this business, but the way the vast majority of agents handle them, it’s really just a collection of offers.  The listing agent might use a spreadsheet to organize them, but in the end, they are presented to the sellers who then just picks a winner – usually after the listing agent chimes in with their preference.

It’s not right that the listing agents get to play God and decide the outcome.  I want the market to decide it, because that’s what is fair to all buyers, all buyer-agents, and especially the sellers.

Plus, I don’t want to delay the outcome for hours or days and risk that the buyers might cool off – which is what usually happens as listing agents let days go by after their first offer is received, thinking it might get better, later.

I started my bidding war as soon as I got in my car to leave the open house.

I called the agent for the first buyer and told him he’d been outbid, THEN I TOLD HIM BY HOW MUCH, and asked if he wanted to go higher.

He called back in ten minutes with his new bid.

I went back to the agent for the second buyer and told her that SHE HAD BEEN OUTBID BY X AMOUNT, and asked if they wanted to improve their offer.

My slow-motion auction lasted until one of the buyers ran out of gas about 90 minutes later.

It worked great, and maybe even better than a live auction because bidders don’t feel rushed to make an instant decision.  They were able to confer with their agent and make a deliberate new bid.

Both buyers had a fair and clear chance to purchase the home, which is missing with the Offer Collection method. When listing agents just pick their favorite offer, instead of requesting higher bids, it leaves money on the table and it makes the remaining buyers wonder what happened – most of which would have made a better offer, if they were only given the chance.

Get Good Help!

 

Bidding War! Part 2

The seller of our new listing in Encinitas Ranch has been discussing a move for six months.  He contributed his decision to sell now primarily to what he read here on the blog.

Specifically, that what appears to be a frenzy slowdown is NOT reflective of the market normalizing – instead, it’s due to just the opposite; a continuing decline of inventory.

What’s my #1 tip for sellers? Sell when everyone else isn’t!

The Encinitas market is starved for higher-end luxury homes, especially those sexy, turn-key ready homes that can be occupied within 30 days (a dearth made worse by most listing agents demanding 60-days free rent after closing for their sellers).

We thought if we went on the market in October and appeal to the buyers who wanted to close and occupy by Thanksgiving, we’d have a special niche all to ourselves.

But we had work to do to maximize the appeal, so we spent the last two months and $50,000 to get the home in tip-top condition. By yesterday, it was perfect – thank you Donna!

What happened next wasn’t luck or happenstance.

It was a planned strategy to maximize the opportunity for buyers to not only purchase a home yesterday, but to also have the process be a fair and clear competition utilizing full transparency. I made sure that everyone knew the rules of engagement, and how to win.

Today, I get to go back in the jungle.

We made a cash offer with different clients yesterday who are hoping to buy a home in Carlsbad, and got the usual routine. Agent doesn’t answer his phone, doesn’t call back, doesn’t acknowledge receipt of the offer until today and leaves a cryptic email suggesting that he might have multiple offers but no other game plan on how the winner will be determined. You know, the normal way agents handle their business.

Full transparency is the best way to achieve top dollar, and you can only find it here!

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