Originally posted by Ivan Jouikov:
The idea is simple:
1) Get a quality property under contract. Explain your intentions to the seller and tell them you'll get them their asking price.
2) Get it to cleanest sell-able condition with minimalistic staging
3) Put out an ad that next Saturday and Sunday there will be open house with open auction and the place will be sold to the highest bidder on Sunday evening. "The bidding starts at <60% FMV>"
4) After you get some bids on Sunday and the open house is over, you start going through the bidder list and calling everyone bu the highest bidder offering them to outbid the highest bidder.
5) You repeat step #4 until you bid up the price as high as you can.
As I said previously, these steps are a variation on Bill's method. This one strikes me as having some devious or less than ethical elements. Bill's is forthright upfront, and transparent.
Originally posted by Ivan Jouikov:
6) Meet with highest bidder and take a non-refundable deposit (specify this as a "condition" of the bid auction).
7) Close.
The idea here is if the highest bidder flakes out, you still have a list of other bidders, everyone just $500 or so lower than the highest bidder.
In real experience, (easy to go to the forum and read some) IF you get enough people there, you make it clear that EVERYONE will be called. In my own experience, I had about 20 bids, 2 at $5, 1 at $10, and several at over $90K. The remaining were from $68K to about 87.
The bid sheets are open for everyone to see and read, to see what others were bidding. Transparency is key.
Those originally at over 90 dropped out on the first go-round. They were investors, and would not pay more than what they could rent it for and make a positive cash flow.
The other group--all were required to make the next bid 500 more than the previous one, also dropped out on the first go round. 3 bidders went several more rounds, and they were all the lowest original bidders. So the idea that all the lower bids are 500 less than the highest is just incorrect. Only one is likely to be, and the others may be several thousand lower.
Though AZ law says that if it's not otherwise stated, every auction has a minimum reserve. Nonetheless, I put it in all my advertising that there was a minimum, and would not tell anyone what it was.
Originally posted by Ivan Jouikov:
Also, if the highest bid doesn't match your minimal price to make a profit - well, you're under no obligation to "sell to the highest bidder" (even though that's what your ad promises? bait and switch?), so you can just walk away from the whole thing.
Well, you make it absolutely clear that either the buyer OR seller can withdraw at any time, no one is obligated, until the final papers are signed. ALL the information sheets also had THAT info on them, in a separate paragraph, and bidders were TOLD that.
Things that can help - get comps in advance and have them available at the open house, as well as pre-sale inspection report.
The presale inspection is so that people have a much better idea of the condition of the house so they can be more confident in their bidding, that they are getting a certain quality. As far as the comps, Bill says no, but in the forum, others have recommended it.
Originally posted by Ivan Jouikov:
Additional streams of income:
1) Have mortgage broker present at open house (and charge them "$5000"%) to pre-approve those who want it (but don't make that a requirement to bid).
2) Sell the bidder list to other investors
Bill not only says no to both, but IIRC, to be sure to tell people that their contact information will NOT be given out or sold to anyone.
Originally posted by Ivan Jouikov:
I have not seen any such ads in my area and I'm wondering if it's because this system is not effective or is it because nobody is utilizing it?
Any thoughts?
I don't recall where you are--city/state, but a couple of people just had successful sales, and a couple of people did not. They described their experiences on the forum, go read them.
So far, I have used limited advertising, but still have had only one call.
I'm really hoping the people who saw it today will make an acceptable offer.
Ofgift
edited to add:
One other thing:
I do not say "will be sold to highest bidder on sunday night"
I change the word "sold" to "offered" and that is what is on my print ads. I WILL offer it to the highest bidder. ...if there's a sale. If I don't get the required number of calls, I will cancel it.