Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Sealed Bids to sell Home
Old 06-29-2015, 06:00 PM   #1
Thinks s/he gets paid by the post
RockyMtn's Avatar
 
Join Date: Jul 2009
Location: North Scottsdale
Posts: 1,234
Sealed Bids to sell Home

We are wrapping up a remodel project here in Scottsdale and will soon be ready to put our existing house on the market. We have had five individuals express interest in purchasing our current home prior to it being listed.

We intend to let all five take a look at the place and then if there is enough interest in purchasing we would like to avoid a realtor and just go through a sealed bid process where people put in a "best and last" bid. We will set a minimum price for the property. Will then hire a lawyer to draw up sales contracts, etc.

Anyone else do this? Am I missing anything?
__________________

__________________
FIRE'D in July 2009 at 51...Never look back!
RockyMtn is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-29-2015, 06:30 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,474
Wouldn't you be better off to try to facilitate a bidding war rather than best and last?
__________________

__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 06-29-2015, 06:32 PM   #3
Thinks s/he gets paid by the post
MooreBonds's Avatar
 
Join Date: Aug 2004
Location: St. Louis
Posts: 2,091
Quote:
Originally Posted by RockyMtn View Post
We are wrapping up a remodel project here in Scottsdale and will soon be ready to put our existing house on the market. We have had five individuals express interest in purchasing our current home prior to it being listed.

We intend to let all five take a look at the place and then if there is enough interest in purchasing we would like to avoid a realtor and just go through a sealed bid process where people put in a "best and last" bid. We will set a minimum price for the property. Will then hire a lawyer to draw up sales contracts, etc.

Anyone else do this? Am I missing anything?
Have only purchased my first home, so haven't gained direct experience in selling.....however, if I were looking to sell without a realtor, I would want to establish what I thought was a 'fair market price' that I would have listed at with a realtor. That way, all bidders would know that they aren't going to try and get it for some ridiculous lowball price. How does your "minimum" price compare to what you think you could reasonably expect to get with a realtor after having it on the market for a few months?

Also, you can also gauge their interest by seeing how many are still interested after you mention what you expect a house like yours to fetch on the open market. If 3 of the 5 say "ahh....well, what you expect to get is a little out of our price range", then you know you are really only dealing with 2 serious bidders ahead of time.

I'd rather find that out than trying a sealed bid and finding 2 low-ball offers and 3 mediocre offers.

However, if you are in a very hot seller's market, then your results could obviously differ by using a sealed bid format.

One other thing is figure out how you would weigh conditions of offers, and (if possible) tell the bidders how you would score it. If someone has the highest bid, but it's contingent on them selling their house first, how would you value it compared to someone who's, say, 5% lower but has cash in hand and can close in 30 days? Would you require all bidders to have the same earnest money deposit? Bidders might be willing to be more aggressive if they know ahead of time what their bid stipulations might be worth to you.

Also, are the bids all going to be opened in front of them? Or just you see the results?
__________________
Dryer sheets Schmyer sheets
MooreBonds is offline   Reply With Quote
Old 06-29-2015, 06:33 PM   #4
gone traveling
 
Join Date: Oct 2007
Posts: 1,135
We did something similar with my moms house. Worked well. Took the top bid. Buyer paid cash. Sold in as-is condition so no need for inspection or real estate broker fees.
__________________
papadad111 is offline   Reply With Quote
Old 06-29-2015, 06:54 PM   #5
Thinks s/he gets paid by the post
RockyMtn's Avatar
 
Join Date: Jul 2009
Location: North Scottsdale
Posts: 1,234
I know the value of the house and would set the minimum accordingly. There is not a single other property available in the neighborhood (44 home subdivision) at this time but there are several recent comps that I can use to set the price. All interested parties would be aware that there are four others interested in the property. That is about as far as I can go in creating a bidding war. Don't want to go several rounds as these people are acquaintances.


My goal here is to basically save the $32k in realtor fees.
__________________
FIRE'D in July 2009 at 51...Never look back!
RockyMtn is online now   Reply With Quote
Old 06-29-2015, 07:11 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,327
Sometimes houses locally will sell for much more than 6% over asking price or recent comps. It depends on how hot your market is but sometimes a wider pool of buyers might make more than what is lost in commission fees. I am not a fan of high commission fees, but that is the reality of what I see happening in our neighborhood, especially in spring.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
daylatedollarshort is offline   Reply With Quote
Old 06-30-2015, 07:55 AM   #7
Thinks s/he gets paid by the post
sengsational's Avatar
 
Join Date: Oct 2010
Posts: 3,849
Sealed bid or open, it would seem to me that each of the group could get upset with the others. If the highest bid is not as credible as the next, you might get in hot water by not accepting the highest bid (it's up to you which to accept). But if my place had 5 people who were ready, willing and able to buy for at least my "reserve" price, I would go with a sealed bid, if only because trying to manage an open bidding situation with that many bidders can be really messy.
__________________
sengsational is offline   Reply With Quote
Old 06-30-2015, 08:07 AM   #8
Full time employment: Posting here.
 
Join Date: Nov 2008
Posts: 728
I'd ask for a 10k deposit and a guarantee of cash or financing proof along with the bid. And, your State may require an inspection along with the tranfer of title. Your lawyer can tell you what you need along with the bid. Myself? I'd pay a realtor a 1% commission to handle all if YOU give him/her a qualified buyer. It would be worth it to me to get rid of the hassle. I bought an empty lot this way......but I paid a realtor 1% to negotiate with a "flaky" seller. She did a great job and I saved a lot of pain and money.
__________________
jerome len is offline   Reply With Quote
Old 06-30-2015, 08:14 AM   #9
Thinks s/he gets paid by the post
photoguy's Avatar
 
Join Date: Jun 2010
Posts: 2,301
Quote:
Originally Posted by daylatedollarshort View Post
Sometimes houses locally will sell for much more than 6% over asking price or recent comps. It depends on how hot your market is but sometimes a wider pool of buyers might make more than what is lost in commission fees. I am not a fan of high commission fees, but that is the reality of what I see happening in our neighborhood, especially in spring.
+1

In a hot market I also wouldn't be surprised if you could negotiate down the commission to 4-5% level. Especially for a house that will sell in a few days.
__________________
photoguy is offline   Reply With Quote
Old 06-30-2015, 08:24 AM   #10
Thinks s/he gets paid by the post
 
Join Date: Nov 2006
Posts: 2,268
Quote:
Originally Posted by photoguy View Post
+1

In a hot market I also wouldn't be surprised if you could negotiate down the commission to 4-5% level. Especially for a house that will sell in a few days.
We just sold our house and I tried that. My agent agreed to a 5% commission. I assumed that this meant 2% for her and 3% for the other agent, but thats not the way it works. Its 2.5% for each agent. Because of that a lot of buyers' agents wont even show the house to their client because they dont want to give up 0.5% commission. Now, if I was the buyer and I saw the house and was interested but my agent didn't want to show me the house because of a lower commission, I would find a new agent....but thats me.

In our case, our house was listed on the MLS as a reduced commission. The first person who looked at the house made a great offer (5% over list) which we accepted. But then the agent called and asked if we would pay the additional commission. Why would we do that? We declined.

The agent called back and said that her buyer didnt have the money to pay the additional commission and that if we didnt pay it, her buyer was going to pull the offer. Something smelled fishy there to me. I dont know if the agent and buyer are good friends and the buyer agreed to not buy the house if we didnt pay the full commission, or if the agent was willing to lie to the buyer and say we didnt accept the offer, or what. We went ahead and agreed to pay the extra commission because the offer had other details in it that was really going to help us with our situation.

This IS a hot market. We accepted that offer 6 hours after the house hit the MLS.
__________________
utrecht is offline   Reply With Quote
Old 06-30-2015, 08:48 AM   #11
Thinks s/he gets paid by the post
photoguy's Avatar
 
Join Date: Jun 2010
Posts: 2,301
Quote:
Originally Posted by utrecht View Post
We just sold our house and I tried that. My agent agreed to a 5% commission. I assumed that this meant 2% for her and 3% for the other agent, but thats not the way it works. Its 2.5% for each agent.
I think it makes sense to specify the split as well. When we sold I think it was 2 (listing agent) and 2.5% (selling agent - who actually represents the buyer). There was less than 1 month inventory on the market so basically we had three agents "bidding" for our listing.

The agent we selected more than made back the reduced commission as our quick sale let him obtain some additional listings on our street.

Quote:
The agent called back and said that her buyer didnt have the money to pay the additional commission and that if we didnt pay it, her buyer was going to pull the offer. Something smelled fishy there to me. I dont know if the agent and buyer are good friends and the buyer agreed to not buy the house if we didnt pay the full commission, or if the agent was willing to lie to the buyer and say we didnt accept the offer, or what. We went ahead and agreed to pay the extra commission because the offer had other details in it that was really going to help us with our situation.
I agree, It doesn't sound to me like the agent has the best interest of their buyer at heart unless this was a negotiating ploy where the buyer gets a kickback from the agent (seems unlikely).
__________________
photoguy is offline   Reply With Quote
Old 06-30-2015, 12:10 PM   #12
Recycles dryer sheets
 
Join Date: Jul 2013
Posts: 389
I'd think you'd want as many interested buyers as possible. Why limit it to 5?

If looking to save on realtor fees, list it yourself.
__________________
mrfeh is offline   Reply With Quote
Old 06-30-2015, 12:22 PM   #13
Thinks s/he gets paid by the post
ivinsfan's Avatar
 
Join Date: Feb 2007
Posts: 2,201
Quote:
Originally Posted by mrfeh View Post
I'd think you'd want as many interested buyers as possible. Why limit it to 5?

If looking to save on realtor fees, list it yourself.
This worked for my sister who was buying in a hot market from a couple that was divorcing and had very little wiggle room. The buyers can all use realtors and your commission would be the 3% fee to the buyers agent. The agent works directly with you instead of another realtor, it's very doable. Some buyers just need hand holding, that's the way it is.
__________________
ivinsfan is offline   Reply With Quote
Old 06-30-2015, 12:34 PM   #14
Full time employment: Posting here.
 
Join Date: Sep 2007
Posts: 514
Quote:
Originally Posted by RockyMtn View Post
My goal here is to basically save the $32k in realtor fees.
Couldn't a buyer reasonably expect you to share those savings with him/her? After all, why should they pay the same price for your home as for a comparable, when the comparable is represented by a bonded professional who knows what they're doing?

That's the part that's always bothered me about FSBOs: the presumption that a realtor adds absolutely zero value, and thus the seller should get to keep the entire commission.
__________________
kombat is offline   Reply With Quote
Old 06-30-2015, 12:34 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,327
There are realtors in our area who will list in the MLS and help with paperwork for a flat fee. There is also Redfin, where sellers agents are full service but paid a salary not a commission.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
daylatedollarshort is offline   Reply With Quote
Old 06-30-2015, 12:39 PM   #16
Thinks s/he gets paid by the post
RockyMtn's Avatar
 
Join Date: Jul 2009
Location: North Scottsdale
Posts: 1,234
I would prefer a quick private sale as opposed to listing on mls. I would consider sharing some of my savings with a buyer if it is accomplished without using a realtor. If none of that works out I can always go the traditional route and list it with a realtor. I can't see as though I have anything to really lose giving it a try so long as I set the reserve price appropriately.
__________________
FIRE'D in July 2009 at 51...Never look back!
RockyMtn is online now   Reply With Quote
Old 06-30-2015, 12:48 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2013
Posts: 5,327
In Freakonomics the authors had a project that showed that realtors left their own houses on the market longer than clients' homes. The realtors benefited more from the higher prices when they were making money off the net sales price of their own houses and not just the sales commission.

Around here homes will sell in one week. Doesn't that just mean the realtors are pricing the houses too low? I have never understood that as a selling point for a realtor. I could sell my house this afternoon if I sold it for $1. I think when we sell we might use the flat fee MLS people and hold out for top dollar if we are in no rush to sell.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
daylatedollarshort is offline   Reply With Quote
Old 06-30-2015, 12:52 PM   #18
Thinks s/he gets paid by the post
 
Join Date: Jun 2004
Location: No. California
Posts: 1,601
I have heard of people accepting all bids until a specific date/time and then opening and reviewing them all at the same time. That does not limit how many offers and does not put one earlier than another. I like your suggestion of requiring 10K earnest money; it should eliminate the less serious buyers.
__________________
KB is offline   Reply With Quote
Old 06-30-2015, 12:53 PM   #19
Thinks s/he gets paid by the post
ivinsfan's Avatar
 
Join Date: Feb 2007
Posts: 2,201
Quote:
Originally Posted by RockyMtn View Post
I would prefer a quick private sale as opposed to listing on mls. I would consider sharing some of my savings with a buyer if it is accomplished without using a realtor. If none of that works out I can always go the traditional route and list it with a realtor. I can't see as though I have anything to really lose giving it a try so long as I set the reserve price appropriately.
It's your house, but you said you are going to set a "minimum" price, can you be sure your "minimum" is neither too high or too low? Are you happy with a minumum price? Also, someone working without a realtor on a private sale is not a sure thing for a "quick sale". Most buyers realtors will have done some prevetting and mortgage approval to be sure they aren't wasting their time with a buyer. If you are going to share the savings, why don't you save yourself some hassle and go FSBO?
__________________
ivinsfan is offline   Reply With Quote
Old 06-30-2015, 01:26 PM   #20
Thinks s/he gets paid by the post
RockyMtn's Avatar
 
Join Date: Jul 2009
Location: North Scottsdale
Posts: 1,234
Quote:
Originally Posted by ivinsfan View Post
It's your house, but you said you are going to set a "minimum" price, can you be sure your "minimum" is neither too high or too low? Are you happy with a minumum price? Also, someone working without a realtor on a private sale is not a sure thing for a "quick sale". Most buyers realtors will have done some prevetting and mortgage approval to be sure they aren't wasting their time with a buyer. If you are going to share the savings, why don't you save yourself some hassle and go FSBO?
Have done FSBO before and all of the showings are a hassle. I know the value of the house based on recent comps (44 homes in subdivision that are all basically exact same sf and floor plans). I will be happy with my reserve price as it will be set such that I will still be ahead of what I would clear with a realtor commission involved.

I am looking for quick sale (will require significant earnest money as part of the bid) and low hassle level (showings, etc). Seems to me the sealed bid with reserve price provides for that. If it works fine, if not what have I lost?

Thanks to all for their comments/suggestions. The bidding will start in September and will let you know how it goes.
__________________

__________________
FIRE'D in July 2009 at 51...Never look back!
RockyMtn is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Should I sell cabin (2nd home) in '12 or '13? kat FIRE and Money 15 08-28-2011 06:04 PM
Signed, Sealed, Delivered, & Gave Notice! Budman Hi, I am... 42 06-04-2009 12:46 AM
Sell or Rent Second Home? Dog FIRE and Money 11 06-28-2007 12:06 PM
'Signed, Sealed, Delivered, Itís Yours' Marshac FIRE and Money 11 09-22-2006 05:00 PM
Sell her home and rent? HBH FIRE and Money 4 05-21-2006 04:46 PM

 

 
All times are GMT -6. The time now is 02:12 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.