I have read that you have to qualify to be an auctioneer to conduct an auction…which seems kind of silly when you can put your house on ebay. IN any case, I came across this investors website who was using the first 4 days to market their house and the last day was used to show the house and take opening offers. Then, that night he called all the people who made offers and told them what the current highest offer is and asked if they wanted to increase their offer until everyone backed out except the highest bidder.
Its an auction of sorts, but not the traditional open auction…so can you do this without any license or certifications?
It’s actually a gray area and depends on the state you live in. If I were you I’d have a talk with your local attorney to see about the ramifications where you live. Or just hire an auctioneer and do it the conventional way.
It strictly depends on the state you live in and the laws there. I haven’t heard much about what licenses are required or if there are any. It seems to be a interesting new approach but will probably never catch one. The rush of the sail may seem to risky to many clients.
I’ve been to one of those locally before. I saw an ad about an auction in the paper on a newer million dollar house with the starting bid at $150K. I showed up to his open house and he explained to me he was the owner of the property (not a realtor or a licensed auctioneer) and had to move out of town and bought this book that he showed me called, I believe, how to sell your FISBO in five days or something like that. He told me what it appraised for and that he bought it for $650K two years ago and had all this work done on it and was being transferred to London. You walked around freely for his open house and wrote your bid on his spreadsheet with your contact info. He added that if you wrote your name, you’re under no obligation to buy it. No deposits and you could make the offer conditional on financing. Just put your name down. So, I wrote my bid for $150K. The next night, he called all the people who made offers and told them what the current highest offer is $360K and asked if I wanted to increase my offer and he would keep doing this until everyone backed out except the highest bidder. I didn’t raise my bid because I didn’t think I’d get a bargain because it wasn’t a real auction and he wasn’t obligated to sell it to the highest bidder if it wasn’t the price he expected, which I suspect was in the $750-$800K. Because he’s not obligated to sell it to the highest bidder, I think going to these auctions are a big waste of time.
What you describe is called a "Round Robin" and it is no different than having multiple offers and countering until you have the best offer.
We do these from time to time, but there are some things to do to insure you have a successful “Round Robin”!
First make sure your prospective buyers have a mortgage approval, if they don’t possess one as they view the property offer to help them obtain one and have a qualified mortgage lender in your team who will either be there at your open house’s or available to make appointments or have a open office.
Second have all your prospective buyers sign a guest book, which gives you additional buyers for a “Buyers List”!
Third when prospective buyers view your property have a “Offer Sheet” made up and available for these people to make there initial offer!
This “Offer Sheet” should have a space for Name, Address, Phone Number, E-mail Address, Fax Number, Work Number, Cell Number and the Offer Amount.
Paper clip there “Loan Approval” copy to the back of this sheet.
Fourth prepare a “Offer” terms and conditions sheet highlighting your expectations of “Buyer” to sign contract which you prepare within 24 hours of “Round Robin” close, open escrow at “xxx” and deposit $xxxx.xx dollars as earnest money to escrow, what you would like for a closing date, and any other pertinent conditions. Also include a list of upgrades and points to submit to there lenders appraiser.
When you make your calls make note of everyone’s offer as they are made, there have been many “Round Robins” that we have ended up selling the property to the second highest bidder as the best offer could not perform or had inspection or underwriting issues.
When you make your phone calls be friendly, prepare to discuss the fine points and positive reasons this house would make a great home, and generally be helpful and positive.