[5-DayForum] Contingency buyers

[Bill Effros]

Karen,

Picking up from the bottom of my reply to Ola, everyone in every home 
sale has contingencies; both the buyer and the seller.  Don't state 
yours, and don't ask buyers to state theirs until after the Round 
Robin.  Getting involved with contingencies serves only to lower the 
final bid price, and that is exactly what you don't want to do.

Followed exactly, the 5-Day Method will consistently identify the best 
buyers for your home in the current market, and the high end of the 
current market valuation of your home.  Do nothing during the 5-Day 
period to lower this valuation.  The 5-Day Method, properly employed, 
will deliver buyers and fair market prices--no more, no less.  All 
contingencies, on both sides of the table must be resolved before a sale 
can be consummated.

 The key to 5-Day Sales is believing you can get the highest possible 
bid in the current market by exactly following the methodology developed 
over 15 years.  "The advertised price is 50% of what I believe is the 
current value of my home, and I will offer my home to the high bidder 
Sunday night, no matter what the high bid is."

You use Wednesday to Friday to determine if you can figure out the right 
places to advertise, and if your current market valuation is in the 
right ballpark.

If you get at least 25 responses by Friday Night, and if you are 
convinced you will get the highest bid possible on the day you have 
selected for your Round Robin, you open your home for inspection and 
initial bidding Saturday and Sunday, and on Sunday night, you run your 
Round-Robin, and you really do offer your home to the high bidder--no 
matter what!  No weaseling.  No contingencies.  No nothing.

And if on Friday night, you are not prepared to go through with your 
sale on Sunday night, you pull the plug.  You call everyone back, and 
tell them you have changed your mind, or you are postponing, or you 
can't afford to take the high bid, or whatever.  But you do it before 
the inspection, before the bidding, before the Round Robin.  This is 
your "point of no-return".

Now, let's be sure we all understand that "offering your home to the 
high bidder" is never the end of the process.  If you offer your home to 
your brother for $12, and think you can then walk away from your home 
and your problems, that's not going to happen.  The bank must approve, 
the town must approve, people who have worked on your home must approve, 
title companies must approve, etc. etc.  The decision to "sell" your 
home to the high bidder is the beginning, not the end of the process.

So let's say you bought your home for $250,000; you have mortgages on 
your home for $250,000; you run a 5-Day Sale and the high bid is $200,000.

I say you offer your home to the high bidder for $200,000 and tell the 
high bidder you've got some things you've got to work out.  You've got 
some contingencies.  If you believe in the 5-Day Method, and you believe 
you used it properly--then your home is probably worth $200,000 no 
matter what method you use to try to sell it.  You are going to have to 
work out your problems sooner or later.  Sooner is better -- that's why 
you used the 5-Day Method in the first place.

If the high bidder then speaks of contingencies, you decide at that 
point whether you are willing to continue working with the high bidder 
or not.  You've got contingencies of your own -- in fact, at this point 
of a home sale, everyone has contingencies, and the "contract" and 
"settlement" are where you identify and work out these contingencies in 
all home sales.  If you can't resolve all contingencies with the high 
bidder, you can walk away from the whole 5-Day experience, or you can 
start working through contingencies with lower bidders.

The whole country is discovering people have mortgaged their homes for 
more than they are worth, based on appraisals that were too high.  
Nobody can get as much for their home now as they thought they would be 
able to get based on earlier evaluations by appraisers, government 
taxing agencies, banks, brokers, analysts, etc. etc.  Everyone is in the 
same boat.

The country is trying to figure out how to deal with it.

Predictably, we have decided that Inflation is better than Recession, 
and we can expect inflation to take hold and reverse the downward home 
valuations.  This will take place over time, and you will be able to see 
it simply by following the fortunes of people on this Forum.  In 
inflationary times, people get more than 100% of their current market 
valuations, in recessionary times people get less than 100% of their 
current market valuations.

So if you can afford to wait, and you can't get what you need, this is a 
good time to not sell your home--whether you use the 5-Day Method or not.

If you run a 5-Day sale and get less than you need, you will have to see 
if you can find a deal with your buyer, your bank, your spouse, and 
whoever else is involved. 

But don't mess up your 5-Day Sale by weaseling, or by warning potential 
high bidders that their high bids may not be accepted unless they 
pre-qualify in some way that ultimately will make no difference anyhow.

5-Day Sales are the best current appraisal you can get.  If you can't 
afford to sell your home for what you can get in the current market, 
don't go through with the Inspection, Bidding, and Round-Robin.  Stop on 
Friday night.  Figure out what you are going to do.  You have already 
spoken with the 3 most likely buyers for your home, see if you can 
identify them and work with them through some other mechanism than a 
5-Day Sale.

If you do go through with the Inspection, Bidding and Round-Robin, then 
do what you said you were going to do.  Offer your home to the high 
bidder.  See if you can work out a sale.  Don't lower your final bid by 
throwing in all kinds of contingencies of your own prior to learning the 
high bid and current market valuation.

Bill Effros

karen kanatzar wrote:
> This is another situation that is still fuzzy to me.
> Do you tell bidders from the get-go that they must not
> have any contingencies, other than the normal
> inspections? (They have to be pre-qualified or cash
> buyers) Should this be made clear in the hand-outs
> they receive at the open house as well as what is
> explained when people call for information?
>
> __________________________________________________
> Do You Yahoo!?
> Tired of spam?  Yahoo! Mail has the best spam protection around 
> http://mail.yahoo.com 
> _______________________________________________
> 5-DayForum mailing list
> 5-DayForum at mailman.howtosellyourhomein5days.com
> http://mailman.howtosellyourhomein5days.com/mailman/listinfo.cgi/5-dayforum
>
>