"set sale" or "Buyer ranged"

[adaran01]

Probably should have asked this question before signing up, but has anyone had any good or bad experience with these selling systems.
"set sale" or "Buyer ranged"
Basically the seller puts the house on the market for 30 days where people put in secret bids (like a tender) and the highest gets the house, after the 30 days. It actually made alot of sense to me, however what makes sense to me, may not make sense to the buyer.
The price is set via an independant valuer, and the range is either side of that price.
Is it a myth that a bank valuation is conservative, or can I be fairly confidant that I would at least get that price, if this market valuation comes in lower than the bank valuation should I be asking Questions on the "independance" of the Valuer.

I had 4 agents look at the house and explain how they would sell the house etc. They all tried avoiding the question of how much the house is worth, after asking each one about 4 times the same question the price ranged from $400K to $700K. It is a unique property, but thats a big price spread.

That is one of the reasons I chose this system, mainly because it puts the question of what the property is worth into the buyers hands. If I get 15 offers at 500K then I know that is what the house is worth.

 

[sbe]

Ultimately, it may depend on your timeframe to sell.

If you need the money (or closure or whatever) in a set timeframe, sems to be a variation of an auction. Longer running, but no playing off one vs another. Downside is always that the buyer willing to pay more missed the fimeframe you had....

Secret tenders like you mention are more typical of commercial tenders, than buying a residential house. Sometimes the emotion of competition can make people pay more than they would normally.

It would be interesting to see if anyone's had experience with this type of sales approach, and the types of outcomes they received.

I do like that it at least puts a deadline to things, and allows a wider range of people to see and 'bid'.

CHeerio

Simon.

 

[Aceyducey]

Sounds a bit like a Dutch auction....those Dutch - too clever for their own good!

Cheers,

Aceyducey

 

[Jacque]

Adran,
I looked at some properties that were selling by tender, and I didn't even bother putting a bid in, as I didn't want to waste my time waiting for the 30 days to expire. I mean, what if I waited and missed out on other opportunities in the meantime? From an investor's point of view, it isn't an attractive way to buy an IP. Well, not for little old impatient me, anyway

I don't like dutch auctions. I prefer a price or at least a price range, so that I can ascertain straight away whether or not I can afford the property and whether or not I want to pay that much for it.

The success on a system like this one really depends a lot on the selling talents of the agent, as it's him or her who is going to be asked by all the buyers, "Well, what's it worth? What bid should we put in to secure the property?" They don't want to waste their time but, at the same time, most are wary of agents "estimates" as history has shown that some agents lie about estimated prices (just read some of those sad auction stories in the newspapers every week).

If you have a highly unique property (and it sounds like it could be, judging from what you've said) then why not take it to auction instead? At least the buyers aren't waiting around for a month to find out if their bid was successful. It's all over in a few minutes
Good luck selling!

 

[pompey bentos]

Definately set sale.

An agent should set the price at what they believe the house is worth. If there is much interest in the property, then buyers can can submit higher offers. This is the foundation of a capitalist market. If the sellers want an auction, then have an auction. Buyers range is a waste of everyones time, it is a ploy of estate agencies to turn over property quickly. They convince vendors to submit a range of the lowest possible price to the highest, saying this will achieve the highest price in the shortest time.

In fact, most of the time, buyers want a price at the lower end of the range. And are not prepared to submit high offers. It traps vendors into a sale and is more convenient for the agent. A vendor in most cases will recieve a higher price at auction.

Dont be fooled, as an estate agent I have witnessed these crooked games.
Agents work for themselves, not the vendors.

 

[JamesGG]

Tsk tsk, there's that nasty generalisation again...

Buyer ranges need to be no more than 10% of the lowest value in the range, ie: $200-220k. It's almost impossible for an agent to know exactly what a property is worth, all they can do is give their estimate.

With the new legislation that came in at the start of Feb, came new authority forms, with new Estimate of Selling price forms. These should be filled in by the agent, before you sign anything, showing comparable properties and what they sold/selling for.

And obviously PB, buyers want to pay as little as they can, and will submit offers at the lower end of the range. Vendors will always want an offer at the higher end of the range, and that's why we have agents, as it's our negotiating skills that will determine where the price is set.

As to which is better? Depends on the what the vendor wants. If their asking price is unrealistic, then a range is better as it will help draw buyers to the property and perhaps lead to a sale somewhere between the vendor's request and market value. However, If the vendor's asking price is similar to the agent's estimate, then a set price will work fine.

J.

 

[mitch]

Gday Pompey Bentos,

"We mock what we dont understand"

Someone very wise may have once said this but l heard Chevy Chase say it in "Spys like us ".

A buyers enquiry range in whatever form you want to use it is an invertation to inspect a property if you are looking to buy in that price range. Just offer what the property is worth to you , investers dont like it much as they buy with a calculator more than their heart.lf you , as an agent ,are not getting good results for your vendor with a range , then you are doing it wrong.

ln most cases an auction will not extract the most a purchaser is prepared to pay . How ?

The last two bidders at an auction are bill and ben
Bills limit is 500k and Bens is 550k.

Once the bidding hits 501k bill is out and if the property is on the market then Ben just bought and saved 49k which means the vendor just lost 49k. thats a very Jenman opinion but its a fact.

Your last two sentences make me think you are the type of Agent that should change crowds , l dont think your mixing with the right people

Regards Mitch

 

[paulie]

Note Of Caution With Buyer Enquiry Ranges In Wa

Whilst I am not a full bottle of the why's and where fores, it seems the legal department of REBA (REBA is WA's real estate governing body) is issueing guidelines for agents to only use buyer inquiry ranges when the owner is actually prepared to accept an offer at the low end of a buyer inquiry range.

REBA outlined a case currently in court where buyer A placed a written offer on the property for the low end asking price, the offer was declined or countered, and the property did not sell to Buyer A, and was subsquently taken of the market. Buyer A is now sueing for losses/damages from both the agent and the owner of the property and seems to stand a strong case of winning (something to do with the Consumer Protection Code).

So whilst I do not understand the full legalities of the situation it is clear that for the time being any one choosing to sell property in WA should be careful about price ranging.

If any one knows further details either about this case or the guidelines for selling in WA in a price range I'd love to hear it.

 

[Lissy]

My personal feeling is that buyer ranges etc border on false advertising. Perhaps that's the issue in WA.
If I went into a shop and wanted to buy a jumper, and the price tag said $5-15, and I offered $5 and was told it wouldn't sell for less than $10, consumer authorities would be down on that shop like a ton of bricks for false advertising. I think this has a specific name, it happens at certain sales where a shop will advertise a product at an incredibly low price to get people in the door, but only has one (if any) available.
I think that if a vendor has a price range of $210-250k on a property, but knocks back an offer of $220k, then it's false advertising. If the vendor's not willing to accept $210k, that price shouldn't be on the property.
But maybe I'm just a logical investor talking!

 

[simonjulie]

Hi All
What some agents are doing quite successfilly in the ACT is a stratergy something like this:
Advertise the property(full discription) for exibition with no price for the first week or two. This will establish market feedback (Canberrans are usually educated buyers) so they will tell you what they think the property is worth to them. Following on from this a price range or set price for the property is the go. It all depends on how motivated the seller is.
I reckon it's a no fuss good idea. If the property is still sitting there after another three weeks there is only one of two things to be that could be wrong. Either the price/price range is not meeting the market or there has not been enough exposer of property to the market.
It's all pretty straight forward.
Kind regards
Simon

 

[Kenny]

Hello,

I had a quick look around and found that this is called the "Pilling system". Here's a link to a real estate site that explains it in their unbiased way

http://www2.elders.com.au/elders/branch/br451/news.html?branch_id=451#646

I hope this helps a little.

My own thoughts are that:

1. Are you tied to the final highest offer like in an auction? If not, then consider what are one is trying to achieve by stretching out the process and potentially turning away investors? If you are committed to the highest blind offer by the set date, then did you have a say in it's determination (not just decided by an independent valuer)? My first worry was what if the vendor had to achieve a certain amount for some reason (mortgage etc).

2. At the end of the day, the skill and committment of the agent is paramount. Regardless of the system of sale used, it would be prudent to be confident with the agent's ability to get the best price within the time agreed upon. On the other hand, be wary of the agent that turns their attention to forcing down the expectations of the vendor, especially later in the selling period. I suspect I'm not alone in having experienced an agent attempt to persuade the vendor that their expectations, (probably influenced initially by the agent themselves) are now unrealistic (insert reasons here)and that the latest offer is in their best interests to accept.

3. Lastly, a price range to me with my Investor Hat on would suggest that the vendor might accept the lower of the scale if the circumstances were conducive. For instance, if time was an issue, then a short settlement and a lower offer may appeal.

I apologise for the long winded ramble. At the end of the day as a vendor, do you want people who have no realistic chance of offering an acceptable price being drawn into inspecting the property, whilst time and opportunity sensitive investors are discouraged by the vagaries of the system?

Regards,

Kenny

[Ready to be shot down]

 

[JFEWSTER]

Kenny

Spot on!

There is no way that the "Piling" system will work in a buyers market.

Recently I placed an offer at the higher range of the "buyer inquiry range" only to be told that the offer had ben rejected.

The offer was placed at the first open.

No doubt the agent wanted to milk it for all it was worth.

Two months later the agent phoned us back to see if we were still interested and we told him to shove it. We had moved on. Not sure what the property sold for but we were offended by the whole process.

We felt that there was the possibility of the agent playing us up against other "pretend offers". An auction would have felt more honest!

 

[Waverlybay]

Hi

I sold a unit in sydney in december 2004 - during the softest period of the RE calendar - using a set sale method. I was fortunate to have an outstanding tenant who kept the place immaculate and who was extremely co operative with allowing both open and out-of-open inspections. The agent appointed for the sale was also outstanding - ethical, hardworking and clearly working in the interest of the vendor. She continues to sell properties in this so called "buyers" market for outstanding prices.

The close date for the offers was a day in the first week of dec. 3 offers came - with the successful offer in excess of the price range (and hence in excess of our expectation). If this was a normal auction .. .the final buyer would have paid significantly less (being nearer to the second highest offer). There were apparently 3 other investors waiting to see . .. if the property would sell by the close date.

All three offers were investors - so that pretty much debunks the theory that investors dont go for this method of sale. The agent made it clear that offers pre-final closing date would be considered.

But i was fortunate - decent unit that was renovated, outstanding tenant and RE agent - all coming together to make this set sale method work.

WB