How To Manage a War - Posted by Miguel (N CA)
Posted by Miguel (N CA) on July 25, 2003 at 18:11:47:
On the most recent property I put up for sale, an unexpected bidding war broke out. This is the first time something like this has happened to me. I was unprepared but managed okay…well, I guess better than okay as the accepted offer was $10K over asking price.
My questions for the gang are: Could I/should I have done things differently? If so, then in what way? Was there anything “unethical” about the way things transpired?
S2, 3/1, 1200 sq. ft., $50K to sellers at closing. After fixing it up profits could be about $35K.
However, as I’m working the deal, I keep seeing the values of the houses in the area go up and up. Long story short, I figure I can get that same $35K right away just by cleaning it up and selling it as is and letting someone else do the fix up (I’m pretty slow on rehabs). Okay, fine. I’ll start it at $279,900 and see what happens. If I don’t get any interest in a week, I’ll just fix it up myself.
By the time I placed a one-day ad in the local paper’s Open House Directory and placed a sign out front (on a busy corner), I bumped up the price to $289,900.
This was on a Friday. The day before, my former business partner, after trying to get me to go down $10K, offered full price.
Okay, here’s the place where I need the input.
On Friday I started to get calls and I showed it a few times. One person would say ‘will you take $280K?’ and I would say ‘sorry, I already have a full price offer’. Then they would say ‘okay, I’ll offer $291K instead’. Then I would say I would decide in the next few days.
Then the next person would ask if I have had any offers. I would say yes. Then they would ask what’s the highest offer and I would just tell them. Then they would offer $1000 over that and ask when would I decide. In another day or so, I would say.
Right when I was ready to pick someone, someone else would call and beg to see the house right away and offer more.
This went on with 12 different buyers over the next 6 days. My wife and a real estate agent I know both said this was an unethical method of handling things.
I kinda didn’t see the problem with it, since I was being open and honest about things. I was constantly apologizing to everyone, trying to convince them I wasn’t trying to falsly drive up the price. Apparently there was way more interest in this thing than I could have imagined.
When my wife called one woman to tell her she had been outbid, she said we were being too greedy and hung up on her.
It was nice to have a house so desired, but it was still pretty stressful in trying to manage things.
The whole thing ended when I called one of the persons with a full price offer to tell her we wouldn’t accept hers if she didn’t go higher. She asked what the highest offer was (of course) and I told her $298K. She said she couldn’t budge and that was that.
She called back about an hour later to ask if I would immediately accept a $300K offer and I said yes. I called her lender to confirm her status and we signed that evening.
So, what do you think? I see ways that could have netted more AND less. What about the ethics angle?
I’m very pleased with the outcome, I think I just need to be better prepared/informed next time.
Thanks in advance for the input,
P.S. #1 Once again, I am so happy my wife speaks Spanish, as half the buyers didn’t speak any English.
P.S. #2 Part of the deal with the original sellers was that they could leave behind whatever they didn’t want and didn’t have to clean up anything (I like making those types of deals as there’s always cool stuff I can keep).
They ended up leaving tons of clothes, junky furniture, kitchen items, knick knacks, etc. Since the house was on a busy corner we decided to throw a lot of the junk out front for a three-day yard sale.
We ended up making about $1,100 on the stuff! And we were selling stuff cheap, too! No ad in the paper, either. Can you believe that?!