[5-DayForum] harsh reality - Position Clarification
Bill Effros
bill at effros.com
Mon Sep 3 10:30:28 EDT 2007
Harlin,
Home sales have always been an exception to the price tag approach, and
it is perfectly legal to take either more or less than the amount stated
on the price tag. (The same is true for automobiles and stock.)
In fact, except for government regulated items, everyone knows that some
people pay more and some pay less for the same items with price tags on
them. The price of gasoline changes every day, and some people sell it
for more, others for less. Hertz and Avis pay less for gas than you or
I. "The price on the tag is $$$ but I'll give you 10% off..."
Priceline. etc.
I think reserves hurt individual home sellers, regardless of whether
they are stated or not. I think home sellers who believe they can fool
the market are going to hurt themselves. I urge those people to sell
their homes using some other method, and if they succeed, I'm happy for
them. But if they already know they can't sell for the amount they want
to get, and won't sell unless they get an amount that nobody can get at
the present time--don't think the 5-Day Method will change the market;
and don't hurt other 5-Day Sellers by refusing to honor the stated
premise of your 5-Day advertising.
Bill Effros
Bill Effros
Harlin Seritt wrote:
> I have to say I totally agree with you Nick. There is nothing illegal
> that I can think of with this approach even here in the U.S.
> Unfortunately though, most Americans are not money-shrewd or hardcore
> capitalists like other ones are. I believe most Americans are very
> used to the price tag way of dealing. Many of us here will find
> something besides a fixed-price an affront and start accusing others
> of doing something dishonest if it even has the slightest appearance
> of impropriety. Toying with peoples' time and emotions will add to it.
>
> Though we are pretty much like anyone else in the world, Americans are
> polite in business and expect the same in return even if it's a bit
> over-the-top. A lot of this probably stems from bad feelings from bait
> and switch tactics that car and furniture salesmen did way back. As a
> result, bait and switching is illegal and anything that looks like it,
> people will assume it is. We had one person on here who was threatened
> with frivolous legal action because of their action. Sadly we are a
> very litigious society.
>
> I do believe though that as long as you are not harmed financially,
> you should not be allowed to sue. All
> investigations/inspections/shopping of products/services take a
> certain investment of the prospect's time. If a hidden reserve is not
> met, I really don't see how prospects are harmed -- though they may
> use their consumer rights -- freedom of the market -- to not do
> business with you. And this is the key. You have to weigh risk/rewards
> in all things. Though I fully agree with you, things are different
> here for better or for worse.
>
> Regards,
>
> Harlin
>
>
> */Nick Ellsmore <Nick at ellsmore.com>/* wrote:
>
> David
>
> I am from England and in England thousands of properties are sold
> via an auction each week. The starting price of most properties
> are way below the amount owed on the mortgage, and way below the
> reserve that the owner is willing to accept.
>
> Does the auctioneer tell people the starting price is below what
> is owed or what the owner is willing to accept -- NO!
>
> Do you as the bidder know that you are bidding below the price the
> owner is willing to accept -- NO!
>
> Is this unethical -- NO!
>
> That is what auctions are all about, people start off low and end
> up at a fair market value for the property. In England it is
> normally 85 -- 90% of the appraised value.
>
> What happens if the price does not reach the reserve? The
> auctioneer says "I am sorry this did not meet the reserve, you can
> talk to us after the auction and we will let you know what the
> reserve is"
>
> Just my 2 pence (oops sorry 2 cents) worth.
>
>
> ------------------------------------------------------------------------
> *From:* capndave2k at netscape.net [mailto:capndave2k at netscape.net]
> *Sent:* Saturday, September 01, 2007 6:48 PM
> *To:* 5-dayforum at mailman.howtosellyourhomein5days.com
> *Subject:* Re: [5-DayForum] harsh reality - Position Clarification
>
>
> Thanks for your input Bill,
>
> I'm certainly not trying to tap dance. I don't want to poison the
> process and my only concern with revealing the amount was not
> wanting to alienate buyers by having them think they had to start
> with that. I own this property and two in Las Vegas (which is
> where I actually live). It was purchased because at the time, I
> was working in the Phoenix area. My income is sufficient to
> continue making the payments, however I prefer to sell the house
> now at a loss rather than continue the carrying costs until prices
> improve.
>
>
> David
>
>
> -----Original Message-----
> From: Bill Effros <bill at effros.com>
> To: How To Sell Your Home in 5-Days
> <5-dayforum at mailman.howtosellyourhomein5days.com>
> Sent: Sat, 1 Sep 2007 9:17 am
> Subject: Re: [5-DayForum] harsh reality - Position Clarification
> David,
>
> No.
>
> Don't get involved in any of that stuff with anybody. Just tell
> everybody the unvarnished truth. If somebody asks the amount of
> your mortgage, tell them. (It's all public knowledge anyhow, even
> if sellers don't realize it.) If they ask if you're really going
> to sell it to the high bidder, explain just why you are going to
> exactly that.
>
> If you are going to lose money, tell the buyers who ask that you
> already know you are going to lose money, the only thing you don't
> know is "how much" and everybody is going to know that very soon.
>
> Tap dancing is just a distraction. You are not judgment proof.
> Your lenders are going to make you pay back every cent, and you
> know it. If your home is worth less than your mortgage just throw
> your buyer into the same room as your banker and let them work
> something out. If they can't, then the buyer won't buy, but it
> won't be because you were not prepared to sell to the high bidder.
>
> Then what will you do? You can either find another buyer and see
> if the bank will take less the second time around, or chip in some
> money to make the first deal go through. You can't seriously
> believe you will get substantially more in the near term while you
> continue to pay carrying costs.
>
> I was doing publicity in Arizona 4 months ago when half the people
> I spoke with knew there was a problem with home prices and the
> other half insisted things were still selling like gangbusters.
> Now I read in the newspaper that everyone knows prices are
> tanking, just like they did in Florida, 4 months earlier.
>
> Continue to tap into this Forum from time to time for a current
> reading of housing markets all over the country. 5-Day Sellers
> know the score 6 months ahead of the general public whether prices
> are going up, down, or stagnating. I think you are doing the
> right thing, and I think you will get as much as it is possible to
> get and lose the least it is possible to lose if you follow the
> 5-Day Method to the letter and get out of your situation as soon
> as you can.
>
> Bill Effros
>
>
>
> capndave2k at netscape.net <mailto:capndave2k at netscape.net> wrote:
> Since I originally posed this question, I've been reading more of
> what Bill says.
>
> I should clarify that I personally have no undisclosed reserve.
> There are factors that are out of my control (The mortgage and
> 2nd). I'm committed to selling on that weekend even though I
> could potentially loose all of my initial investment. My view is
> that the loss will be made up within 18 months by the cash I will
> keep in my pocket every month.
>
> So the question is, do I answer the question as I've suggested
> below? I think I'm being truthful and I'm not holding anything
> back but I don't want to limit the potential buyer pool by
> poisioning the bidder pool into thinking that I won't sell the
> place. I will!
>
> David Cron
>
>
>
> -----Original Message-----
> From: capndave2k at netscape.net <mailto:capndave2k at netscape.net>
> To: 5-dayforum at mailman.howtosellyourhomein5days.com
> <mailto:5-dayforum at mailman.howtosellyourhomein5days.com>
> Sent: Fri, 31 Aug 2007 12:56 pm
> Subject: Re: [5-DayForum] harsh reality
>
> 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
> <mailto:sanford5daysale at yahoo.com>>
> To: 5-Day Forum <5-dayforum at mailman.howtosellyourhomein5days.com
> <mailto:5-dayforum at mailman.howtosellyourhomein5days.com>>
> Sent: Fri, 31 Aug 2007 6:20 am
> Subject: [5-DayForum] harsh reality
> 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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