[5-DayForum] Start Round Robin With High Bidder
Bill Effros
bill at effros.com
Sun Sep 2 12:07:38 EDT 2007
Sandra,
If you think of a typical outcry auction, the auctioneer never says
"what's the least anyone will give me?"
The auctioneer always says "the high bid is $$$, will anyone give me more?"
When you conduct a round-robin you move from an open bidding sheet to a
round-robin bidding system. The first thing you must do is determine
what is your high bid.
You don't know the high bidders. You don't know if the high bidders
bought another home over the weekend. You don't know if the high
bidders' telephone number works. You don't know if the high bidders are
going to be there.
The first thing you do is call the high bidders to find out if they are
still prepared to honor the high bid. Then you completely explain how
the round-robin will work, how many other people are in the running, and
how long you think it will be before you call the high bidders a second
time. (Figure 5 minutes per bidder.)
Then you explain to the high bidders that they can top their own high
bid at this point, or they can wait until everyone else has bid before
they decide what they want to do. This is an enormous advantage,
because the high bidder is both the first and the last bidder in the
first round of the round robin. No one else gets two shots at the apple
without topping the high bid.
Sometimes, after listening to the entire situation, the high bidder
decides to raise the initial bid immediately.
Let's say the high bidder is prepared to pay a maximum of $99,500, and
the high bid on the initial bidding sheet is $98,000. The next bit is
97,500 -- and there are four people at that level. The next bid is
$97,000, and there are three people at that level.
Everyone understands the home is worth somewhere around $100,000.
Everyone understands someone is going to top the $98,000 bid. Somebody
is going to bid $98,500. And somebody else is going to bid $99,000.
And somebody else is going to bid $99,500. So the high bidder would not
get the home, because by the time the round-robin gets back to the high
bidder the bid will be above where the high bidders prepared to go.
The smart bid for the high bidder is $99,500. That is the most they are
prepared to pay, and, if they don't raise to that level initially, they
won't get another chance until after someone else has already bid that
amount.
Some high bidders increase their bid initially. Others don't. You're
just the referee. You discuss the bid with the high bidder, and allow
them to make their decision. No matter what they decide, you call the
second high bidder next, and go through the same explanations all over
again. Is the phone number good? Are they there? Are they still
interested in your home? Are they prepared to honor their bid? Do they
understand how the round-robin works?
You then go all the way down the list from the top to the bottom
eliminating those who won't top the high bid until you have just a
single high bidder, with no one willing to top the high bid. You
explain to the top three where they are, and get all the information
from the top one so you can get your settlement moving first thing
Monday morning.
I've had a lot of trouble explaining this. Does this make any sense to you?
Bill Effros
Sandra Diggs wrote:
> Hello All:
>
> I never understood why you start the round robin with the high
> bidder. What do you say to the high bidder?
>
> If figure if you started with the low bidder, you'd inform them of the
> highest bid and ask if they wanted to proceed any further. Please
> explain. Thanks and
>
> Regards,
> Sandra
>
> */Bill Effros <bill at effros.com>/* wrote:
>
> Start with the high bid. Then go to the next high, and the
> next. Keep the bidders in the same order, removing those who
> don't top the high bid.
>
> Bill Effros
>
> Scott Ames wrote:
>> The version of the book I have never says which to start with, it
>> just says call all the bidders, explain the terms, and get their
>> bid or let them drop out.
>>
>> */Saltonfishing at aol.com/* wrote:
>>
>> Help,
>> a little unclear how to proceed on the second round. do we
>> start with the high bidder or start with the low bidder and
>> ask them to top the high bid?
>> jim
>>
>>
>>
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