Those are the same issues with the traditional way as well.
Thatâs exactly right. People often assume listing agents will take care of sellers. But reality is the polar opposite. They will screw sellers to make a few more Kâs. Doing business out in the open is good for sellers and buyers both.
Buyers submit their offers to the listing agents, not to sellers directly. And LA has big power whether to even present any particular offer, and even if offer is presented, agents can still spin things to make offers more, or less attractive.
Ironic, one party thinks buyers overpay and another sees the downside of sellers not getting paid enough.
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This is similar to how it is done in Norway. In Norway, the bidding all takes place via text message! You can sit at the pub drinking a beer whilst bidding on a flat. Every time there is a new high bid it is broadcast to all of the potential bidders. In order to be a potential bidder, you must have all of the pre-approvals in place.
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Pre approval is okâŚBut what if the place doesnât appraise?..Too many issues with financed deals falling thruâŚWhat about inspections?..Cash and close that day, like at the courthouse. âŚotherwise too many problems. âŚ
You can plan the rules to accommodate all the predictable issues. For me the hardest part about putting together an offer is the price. The auction allows for price discovery quickly and more transparently.
There are people that ask how can we get it done and those that say itâs not possible.
Sellers will often pick an all cash deal over a financed oneâŚHow will an auction be able to screen that nuanceâŚMight have to come up will special financial requirements just for auctions. .At the courthouse you have to show the auctioneers your cashiers checksâŚ
Not appraising is scary for seller, but how often does it really happen? And how often does the buyer just kick in more cash? In other words, how many deals does it really sink?
But again, appraisal issues come up all the time with the old way of selling houses. Not unique to the open bidding format.
The only downside I see is that open bidding only cares about one thing: price. So maybe seller would like to sell to someone with 50% down at a slightly lower price, vs a FHA buyer only bringing in 3% but at an unrealistic price.
The way to work around it is pre-screening. Have buyers submit offers as usual but use open bidding as the 2nd round. You already weeded out the weak buyers and let the strong ones fight it out in open bidding.
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That is the way it is nowâŚSellers ask for your highest and best bid in the second round from the strongest first round bids
The problem with the current way is, there is no 3rd, 4th or 5th round. In open bidding you just let the strong buyers outbid each other til exhaustion.
What? Come on, 2 rounds is enough and fair. You have already submitted an initial blind offer that was close to the pin (by chance) and now you are in the Finals. Thatâs it. You want the house, now is to put up or shut up.
An efficient market assumes that all participants are equally informed. There is a reduction of information and certainty in a closed bid and when you donât know what the rules of engagement are ahead of time.
SFDB, you want people to put up or shut up in the second blind round. People generally donât want to just pay more for the sake of paying more. It doesnât mean they arenât willing to pay more when the playing ground is level. I have a rule of not bidding against myself.
Iâd love to hear how other folks put together a price for a home they want to buy.
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Well, like I said, I think if you made the next round off of a blind bid youâve come close enough to the pin obviously. The sellerâs pin. How many more rounds do you need then?
My statement was more around the irony of expecting others to put up or shut up with the value take on food quality 
.
Anyways, my strategy is to bid enough to be in the game, but never against myself. The problem here is the lack of information when bidding and having different proxies that can filter the information in ways they see fit. Of course if you think you are clever enough or you have the inside track, most people will take advantage. There are incentive misalignments today with double ended deals, with pocket deals, etc. A more open process can minimize them.
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Sorry, didnât mean to be so cut and dryâŚbut I do feel like if you got the call that hey you are a finalist that should mean you just need to sharpen your pencil in my mind one more time if you really want it. Again, the clock is ticking for everyone. The seller obviously likes/accepts that your offer is close enough or a decent enough backup offer. So, should there really be a whole lot more to negotiate at that point in your and @manchâs minds that would warrant several more rounds worth? I am just not seeing how it would play out that way (in the real world).
I only need 2 rounds as seller. One closed bid round to weed out the weak buyers and the tire kickers, one open round for the strong buyers to fight it out. May the best bid win. Simple. Whatâs not to like?
Right, but earlier you made it sound like you wanted more rounds:
My point is that one open bidding round is equivalent to having many closed bid rounds. In open bidding you have the back and forth up bidding. You canât have that in close bidding without going to 3rd, 4th or even many more rounds, and nobody will do that.
So sellers may end up leaving money on the table with close bidding.
I am not sure about that. Because it is closed (and imperfect) I do think buyers overshoot then (because of the unknown pin) so that âextraâ money is not left on the table but actually realized by the seller.