[5-DayForum] harsh reality

Sat Sep 1 09:07:34 EDT 2007

David,
  May I ask where you are in AZ? We are in AZ also and would love to see a sale before we do ours.
  Gale

capndave2k at netscape.net wrote:

Mark,

I've looked at most of these posts too.  Here's what I plan to do with my sale in Arizona next weekend (9/8-9).  I will advertize exactly as Bill describes in the book because I believe him when he says that modifying the format of the advertising will reduce the price as well as having an "undisclosed reserve" that you tell buyers about.  

Now, that having been said, When I'm asked the question about what is the minimum I will take, my response will be something like the following:

"As long as the high bid will satisy the leinholders and transfer costs, we will sell the property.  I am not in control of the third parties.  That having been said, we put a substantial down payment on this property when it was purchased so there shouldn't be any problem with the high bidder satisfying that requirement.  In the unlikely event that the high bid doesn't satisfy that requirement. I will provide documentation ot the high bidder of the amounts owed and work with them at their option to complete the sale." 

Everything in the foregoing is true.  The house was not purchased on a 100% or even a 90%LTV and I will accept any offer that covers the loans and closing costs.  If the high bid is below the amount owed I have no problem at that time disclosing the amounts (I can document from the statements from the mortgage holders).  This home was purchased in 2006 and I'm expecting to take a capital loss on it,  (although I'll be thrilled if that doesn't happen).  I'm not in distress here and the loans are current so I don't expect the mortgage holders to accept a short sale.

Does that work for you ethically?  Bill, what do you think?  Comments anyone?

Thanks in advance for your responses.

David Cron

-----Original Message-----
From: Mark Conway <sanford5daysale at yahoo.com>
To: 5-Day Forum <5-dayforum at mailman.howtosellyourhomein5days.com>
Sent: Fri, 31 Aug 2007 6:20 am
Subject: [5-DayForum] harsh reality

    #AOLMsgPart_3_cd91e55e-e74d-48b1-94c0-25fc8fe2bd2e       Folks, I'm going to stir the pot a bit with this note. You've been warned.

  The forum has become pretty discouraging reading for me. It seems common for people to run 5-Day Sales with an undisclosed reserve, a bidding threshold below which they will not sell their home. In and of itself, I don't see this as a problem. It's the real world. Homeowners have mortgages for which the banks hold them financially responsible. What I find disturbing is when I see a 5-Day Seller making a conscious decision not to inform prospective buyers of the existence of the undisclosed reserve at the outset. It's a deceptive practice. It's misleading to bidders who believe their bids are taken seriously, not conditionally, by the seller.

  Sure, many 5-Day Sellers list a rule that says that bids aren't binding on the buyer or seller until a contract is signed. It's a comfortable escape clause that, as much as anything, can be a platform for negotiation. As much discussion as there is about this issue, however, that rule ought to be in over-sized type, bold, underlined and listed as the very first rule on the Bidding Rules document so bidders fully understand how seriously the seller takes this provision. List the rule that way and see what kind of questions it prompts from potential bidders. It's better that discussion happens before and not after bidding.

  Clearly stating the minimum bid that will be accepted is one approach that has been mentioned in the Forum. That seems straightforwardly honest to me. Phrases like "Highest/Best Bidder" and "Best Reasonable Offer" are just seller's weasel words used to ease the seller's conscience and reduce his or her anxiety while still concealing the complete truth from prospective buyers.

  When a seller has a "hidden" undisclosed reserve and a prospective buyer comes to inspect a 5-Day Seller's home and asks the seller, "What's the minimum amount you'll take for your home?", the seller's answer will be indicative of his or her character. One answer could be, "I can't tell you what the reserve is." That's evasive but truthful. Denying the existence of the undisclosed reserve at that point would be lying. Period. Rationalization doesn't change that.

  There's a fair amount of talk on the Forum about having to make that difficult phone call after the round-robin bidding is over to tell the highest bidder that the seller is reneging on the commitment to sell the home to the highest bidder. That phone call is difficult because the seller has been disingenuous with the bidders. That's a seller's conscience kicking in, albeit too late.

  5-Day Sellers who want their bidders and prospective buyers to treat them with integrity should be modeling that behavior themselves. What goes around, comes around. If a 5-Day Seller is not truly prepared to take the highest bid, then they should NEVER make that claim.

  Here's to 5-Day Sales run in a manner that respects the integrity of buyers and sellers.

  Mark Conway

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