closing the deal guide
Sold‐In‐A‐Week Home Selling System Module 4 The Final Negotiation Table of Contents What to do if a buyer places to low of an offer at the open house. .................................................2 How to get buyers to place their highest offer at the open house if your area won’t let you negotiate back and forth with multiple offers (like in Canada).........................................................3 The Final Negotiation With The Buyers .............................................................................................. 4 Final Round Robin Bidding Process................................................................................................. 5 The Final Bidding in depth ................................................................................................................... 9 How to Increase Buyers Offers ......................................................................................................... 11 Importance of Getting Bids and Jumping on the Top Bidder While They’re Hot ...........................13 How to raise the offers if there’s no one to work them against and you’re still lower than the reserve price ................................................................................................................................... 14 What you may need to do if you can’t get the offers up to the reserve price and the seller won’t come down .......................................................................................................................... 15 Once the house is bid off on Sunday Night what happens? ........................................................16 Make sure the buyer who is the highest and best offer can buy the home .............................. 16 What you should do if the buyer who made the best offer can’t buy the home.......................16 What Happens If You Don't Get Your Reserve Price at the Sale? .................................................. 17 The Main Reason Homes Don’t Meet Their Reserve Price ......................................................... 17 What We Do If Your Reserve Is Not Met ...................................................................................... 17
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What to do if a buyer places to low of an offer at the open house. At the open house you want as many buyers as possible to make an offer. Regardless of how low the buyers offer is let them make it. I have had buyers who were skeptical make a offer of a few grand who ended up buying the home. You want to have the social proof that a lot of buyers are getting involved and making offers. Also you need someone to work the real buyers price up. If you only let the really motivated buyers get involved you may leave a lot of money on the table. So get as many buyers to make an offer as you can. I will have someone put down a $100 dollars if that’s all they will do. I just want people involved. I know I can work them up from there. When a buyer is willing to make an offer (of any amount) it’s because they have an interest in the home. So moral of the story is to get the buyers to make a offer no matter how low it is. Once they have made an offer they have an attachment to the home and are likely to go higher. Also the more offers you get the more likely you are to get higher offers. It’s the saying “people want what they can’t have” or “people want what everybody else does because it’s the in thing” so the more buyers involved the higher they will most likely go to make sure they get your home.
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How to get buyers to place their highest offer at the open house if your area won’t let you negotiate back and forth with multiple offers (like in Canada) In some markets you’re not allowed to work offers against each other and tell the other buyers what the other offers are, like Canada. It’s not everywhere but if you’re in a market with this rule this section is important, if not feel free to skip it. When buyers are make an offer at the open house tell them they need to make their best and highest offer right then. Or if there not sure how high they are willing to go you can have them make a starting offer and call you back to raise it latter once they’ve had a chance to think it over. After the open house is over hopefully you will have an offer that is high enough and satisfactory for the homeowner. If you don’t here’s what you can do. Call the buyers back one at a time and let them know their offer did not meet the sellers reserve and see if they will come up. Start with the buyers who you feel are the most motivated and wor k your way down the list. Once you get a buyer with a satisfactory offer you can stop. In a sense you can still get the buyers offer up but they just negotiate with the seller rather than the buyer. You never have to tell the buyers what the other offer are to work them up this way. Plus it’s a great way to create scarcity because the buyers won’t know what the other offers are. They have to raise their offers blindly and you may actually get more money this way verses having the buyers going up slowly.
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The Final Negotiation With The Buyers How to Handle Bids from Buyers And Negotiate For the Most Money What we have found that getting buyers falls in two very important areas: 1. Handling the phone calls from buyers off the advertising and/or the signs calls. 2. Keeping track of the people who call and following up with them to remind them of the auction, or that you are in fact selling the home this weekend. Why? I am not exactly sure. It’s so easy, anybody can accomplish this. You are not cold calling the buyers, or harassing them when you call. They want you to call them to facilitate the bids. Doing an auction is not some big sales pitch where you have to “Sell” something. It’s like talking to your friends. These are the people who are looking for a home in your area, and they are just as scared of the process as you are! In fact, one of the biggest factors of success with this auction system is that the buyers LOVE it. It’s like a big party, and they get to buy a home for a good price! Those buyers are going to have the same questions that your mother or family had after you bought the home you are selling. They are easy to talk with, and it builds up your confidence for hosting the open house. Also you can point the buyers, who call to your website, to any detailed information they might ask for. Keep track of each buyer!! That is very important. When you are on the phone with them, be sure to get their name, phone number, and E-mail. This is of major importance. Let me break down the bidding process that you give out to the buyers. Script for answering the phone when the buyers call:
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(Buyer) Hi, I am calling about the home advertised: (Seller/You) Great, thanks for calling. Like the ad said, we are having an auction here this weekend and we are starting the bids at ($97,500.) My name is , what is yours? What is your E‐mail? What is your Phone Number? Great. What questions did you have about the home? (Then go on to answer their questions.)
Final Round Robin Bidding Process How the Bidding Process Works Here’s what you say to the buyers to get them to place a bid.
Getting involved in the bidding process is simple. You DON’T have to be pre‐approved for a loan and the bid can be withdrawn at anytime. To get involved, simply leave your contact information with the open house host, along with the best phone number to be reached at when the final bidding begins (please ask host for date and times). This portion is very important. Why, because we don’t care upfront if they can get financed. We simply care on raising our price to a fair price, and then we determine on Monday if they are qualified. Most good buyers won’t bid unless they feel confident they can get a loan. If the buyer is not preapproved on Monday, then we move forward with the second best bidder and so on.
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Here’s how the final Round Robin Bidding process works. We will conduct several rounds in this manner until there is only one bidder left. We call the top bidder and let them know the bidding has begun. Then we call the other bidders, one after the other. Here are the options the bidders have when we contact them. Each time the bidder receives a call, they have one of two options: 1. The bidder can raise their current bid above the highest bidder by at least $500 to stay in the bidding. 2. Or, they can retire from the bidding process.
We will offer the home to the highest/best bidder at his or her highest bid price. If the highest/best bidder does not meet the conditions of the terms-of-sale, or fails to provide pre-qualification or pre-approval that they can get financing within a reasonable time frame, then the home will immediately be offered to the next highest/best bidder at his or her final bid price. This is an open bidding process and we will tell anyone what the highest bid is at any time. Every bidder will have the opportunity to top the current bid until highest & best bidder is established. The sellers have sole and absolute discretion on whether to accept the highest and best bid. If the bid meets the reserve, or is acceptable to the seller, then the highest/best bidder gets the home at his or her highest bid price. This “Round-Robin” is very important and it’s easy to do. You simply call each bidder and handle it this way: (Buyer) Hello. (Seller or Agent) Hi, is available? You placed a bid at my home this weekend, and I am calling all the interested bidders back until there is one high bid left and no other bidder wishes to increase above that bid. The highest bid at this moment is
. What do you want to increase your bid to?
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It’s truly that simple, and you call each and every bidder until you get the highest and best bid. When I handle bids, I lay out all the bidding sheets on the desk, and each time I call a bidder, I pull that sheet. Then I take a red pen and write down the increased bid. When a bidder drops out, I set them aside and keep calling.
TIP: Don’t worry about the “Low” bids, or even bids that are for a penny. Any bid works, we have had bidder start at $10.00 and end up as the winning bidder. Most sellers think, I only want the best buyers though my home, why? The best buyer is the one who is going to buy it for the most amount of $$, nothing more nothing less.
Usually, the top 3-4 bidders jump to the top real quick, and then it’s a back and forth between them.
So we recommend REALLY, REALLY, REALLY, push for bids, even if they are only $10. We use that as credablity factor to the bid calls to all the bidders. Ask yourself, which sounds better. “We had 3 bids on the home” or “We had 23 bids” it simple, if the buyers feel that they might LOSE the chance at buying the home they step it up! If you where a buyer and your wife loved the home, and then they heard you had 23 buyers interested you would pay more?
TIP: The reason for doing the bidding over the phone is that you can push the buyers to increase their bid while you are on the phone with them. For example: Do you really want to lose this home over $500? It’s perfect for you!
IMPORTANT TIP: Once you have had all
So this is very important and the MOST important part of the bid and hosting the open house!
the bidders drop out and you have the highest and best bid, DON’T jump and call them and scream “You won”!! Why? Because the bidder who just lost might change their mind and call you back and say “Can I increase my offer” and you just threw a can of worms into the entire process! So WAIT 10-15 Min before you call the winning bidder to give them the good news. The next highest bidder is going to be thinking about the house and buying it. A lot of the time they will call you back and up their bid. If you’ve already called the high bidder and finalized the sale, you can’t go back and sell the home to the other bidder. It’s not just because of ethics or being a person of your word (I’m not going to get into all that right here). Whether you think that’s important, it is likely to turn the high bidder off, and they will think you are dishonest and won’t want to deal with you again - Whereas, if you handle everything properly, and the high bidder falls thru later, you can go back to the original buyer and sell the house to them for their high bid.
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Bidding Rules This is a sale with an Undisclosed Minimum Reserve. All bids placed at the open house are not legally binding and can be withdrawn at any time. After the final bidding process is over, a winning bidder will be determined. They will fill out an agreement with the price and terms agreed upon on the Monday after the open house. If the highest and best bidder does not meet the conditions of the terms-of-sale, or is unable to get financing to purchase the home, then the home will immediately be offered to the next highest/best bidder at his or her final bid price. This is a sale with an Undisclosed Minimum Reserve. The homeowners have the right to decide not to execute a contract (acceptable to the owner) at any time before an agreement has been signed. Owner may or may not accept offers below the set Reserve price. Back-up purchase agreements will be taken.
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The Final Bidding in depth This is a transcription of Chris talking in detail about the final bidding and how it works.
Audio Transcript 3: Final Bidding in Depth We’re going to go into a little more depth in here about how to do the final bidding. That’s probably one of the most important components of the process. Maybe it’s a little bit nerve racking, but I’ve done 8 of them in a 2 hour period. It’s just cranking to get all of them accomplished. What I’ll do is, each one of the properties, I’ll get their bid sheets in – and you can either type it out when you print the bid sheets out or you can write in the top with a magic marker the sellers’ names. So if you’re bidding off on a Sunday night 2 or 3 properties, that’s if you have a team, you’re pretty hectic. What I do is I lay out all the bids on my desk and I make sure on the top of each one of them I know which house it is. I do one house at a time. It’s pretty hard to do multiple homes at the same time. I get a legal pad and put the seller’s name on top. This is simple. There’s nothing fancy or elaborate about it. Then I start pounding out the phone calls. I say, “Hey, I’m calling about the bid you made on the home today we had on 123 Primrose Lane. The highest bid we have on it right now is $125,000, where do you want to go from here?” And then they increase their bids, and back and forth, but the key is it’s really simple. It’s not complicated. Anybody can do it. If you’re used to handling multiple offers, or not even multiple offers – if you can call up a buyer and say, “Hey, the highest bid is $223,000, do you want to step up?” That’s really what it comes down to. One more thing in the final bidding is that you need to be the expert. You need push, push for that extra money. If someone says, “Nah, I’m not going to increase the bid.” You say, “Do you really want to miss out on that home? Do you remember how nice that place was? It was a 3 bedroom, 2 bath – your kids loved the backyard!” Start selling the emotional appeal . That sometimes can get them to increase their bid. It’s all about staying in the game. That’s why we do the bidding over the phone – to keep the buyers in the game, to keep them involved with the process. You can keep pushing
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it up, pushing it up, pushing it up because you’re going to be the seller’s hero. Then when we get down to the last 2 or 3 bids we’re going back and forth. Sometimes I’ll use this script, and again it’s at your discretion: “Hey, I got the sellers right here. They have given me a one time opportunity right now on the phone to be extremely aggressive with you. Just give me an extra $500. Let me call the other
one back. This is your chance tonight to get the home.”
Then we get to the final bid – and we talked about this in our bidding sheet – you don’t call the final bidder back until 10 or 15 minutes after you got there because that second bidder who bid against the first bidder – buyer bidder A, buyer bidder B – if buyer bidder B backs out and A wins, don’t call A immediately and say, “Hey, you won.” You got to give
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How to Increase Buyers Offers This is a transcription of a Chris explaining the best way to keep increasing the bids to get the highest possible offer Audio Clip 2: How Much to Increase the Bids Let’s talk a little bit here about how much we ask the buyers to increase their bid each time. It’s completely up to you and the ebb and flow of the auction – sometimes we push for $500, sometimes we push for a $1000. One of the things that I like using most of all is, “Hey, where do you want to go from here? The other bid is $140,000 – you’re not going to let him beat you – what do you want to do?” Sometimes these buyers without having a ton of experience will go, “Oh, I’ll go $145,000!” Then you call the other one back and go, “Hey, they really want this property. They want to kick you out of the game! So they’re going to just throw a huge offer across the bow and hopefully you’ll stop bidding. They threw out $145,000, so are you willing to step it up?” It’s all about driving that price up. There’s not a real exact science. You can get real studious and say, “Only $500,” and that’s great, however you want to handle it. It comes down to you and how the ebb and flow of the auction is going. There’s been times we’ve gone up a $100 a piece, and I’m on the phone for 45 minutes back and forth, back and forth, and I feel like a ping pong ball. Then there’s been times when we went from $225,000 to $250,000, to $275,000 to $300,000. It really depends on the ebb and flow of the auction. You’re going to have to use your discretion on how much you want to increase the bid each time, and how much you want to ask for. But I never go less than $500. At one time I did $100 – it was crazy and I wouldn’t do it again. Hope that helps
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them a little flexibility because buyer B might call you back and say, “Hey, you know what, I thought about it some more and I want to increase it.” Let’s say you’re at $140,000 and the seller’s reserve is $150,000. The seller says he’ll go to $145,000 but we’re done bidding. What I’ve done sometimes in the past is call that bidder back and say: “Hey, you won, but we’re not close enough. The seller’s reserve was $150,000 but I got him right here, right now. They’ve given me the authority just tonight, tonight alone to drop the price by $5,000 to $145,000. You’re at $140,000, why don’t you step it up? Let’s get this deal done. You love the house. You love the situation. This is your chance to buy this house.” Countless times I’ve gotten the buyers off the fence, up that extra little step, and gotten the home sold. I think that covers the final bidding. It’s a pretty simple process. Keep that in mind. No reason to freak out. The first time you do one you might be a little bit nervous but it’s a pretty simple process.
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Importance of Getting Bids and Jumping on the Top Bidder While They’re Hot Making a decision quickly can be crucial. When the bids come and the final auctioning is over, it’s important to put the deal together with the buyer quickly. If the top bids you get do not meet your reserve price, it is important to decide whether you are going to accept the last bidder’s bid or not. I have seen homeowners wait too long and lose the deal. Let me give you an example. We were auctioning a home out in the NW side of Gainesville. The seller had set a reserve price at $200,000. The top bid we had for that home was $192,000 cash. The home was worth $195,000 to $200,000 but that particular neighborhood was dropping on average $3,000 during the spring, which usually is the best time to be selling a home because that’s when the most buyers are buying. It was near the end of the spring buying season and the price would drop to the $192,000 within a month or two. They thought about accepting it but dragged their feet for over a week and the buyer walked away. At the time of this writing, the home is now worth less that the top bid we got at the auction and is still sitting (unsold) on the market. The whole reason for doing an auction is to give buyers perception that they're getting your home at a deal. When you don’t snatch up the buyers bid they normally feel they aren’t getting a deal and go look somewhere else. If that happens then the urgency of the auction is gone. If you don't accept a high bidder quickly, they may walk away and never end up buying. As a result you may end up selling your home for less money. That is a risk that you will have to take with this auction. This rarely happens and normally only happens with sellers who are not realistic about the market. The best way to approach this is to be ready to make a decision when the time comes that Sunday night or Monday when that bidder is the most excited about the home. The longer it takes for a decision to be made, the lower the chances you have of getting the buyer to buy at their final bid price. That's why it's so important to snatch the bid up quickly even if you feel you may get more if you wait. With this changing market it's in your best interest to know what your bottom
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line is and be ready to make the decision quickly when all those top bids come in. Rarely is this ever an issue with serious sellers. But when it does come up it's important to make a quick decisive decision so the whole entire auction is a success.
How to raise the offers if there’s no one to work them against and you’re still lower than the reserve price. There have been times when we had all the buyers drop off and the last buyer was still far from the reserve price the seller has set. What do you do if this happens to you? There are a few things you can do. First if you feel the sellers reserve is very competitive you can call up the buyer and tell them that they are the last buyer but that you have not yet met the sellers reserve. Then you can negotiate the buyer directly with the seller. First try to get the buyer up to the reserve price. If they won’t go up to it call the seller and try to get them down to the buyers top offer. Go back and forth negotiating between the two like you would on a normal deal you’re trying to put together. Just do it right away and try not to let it delay. The longer it takes to get it nailed down the less likely you are to put the deal together. If you get a deal put together in this senior have a contract between the buyer and seller signed as quickly as possible. If you can’t get the deal put together call back all the buyers who made an offer and let them know what the sellers reserve was and see if you can get any of them into a negotiation with the seller. If that doesn’t work cal all the buyers who left there contact info on the guest list and let them know that the home is still available. At times buyers may come through and are unable to make an offer at the open house. This way if there is a buyer who wanted it but couldn’t step up at the open house you’ll find them. If you can’t get any of the buyers to take the home after the sale then put it up for sale. I have had many homes sell within a week or two of the Sold-In-A-Week open house just from the buzz it created. Once we even had one of the top offers that dropped out early come back the following week and buy the home for above the sellers reserve and $20K more than the last high offer. So don’t give up without trying your options.
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What you may need to do if you can’t get the offers up to the reserve price and the seller won’t come down. There have been times when I had a really good offer on the table and the seller wouldn ’t be realistic. After the open house and by hearing what all the buyers said I knew the homeowner wouldn’t get a better offer than the one we had. The seller was being unrealistic and needed to come to reality. What do you do in this situation? Well if you can’t get the homeowner realistic then you’re chances of selling the home are very slim. At this point it’s time to get really firm and have a “come to Jesus” talk with your seller. I see it this way. If you have the best offer you’re ever going to get and the seller won’t be realistic you have nothing to lose by being honest and blunt. What’s the worst that can happen? The seller gets bugged at you and you aren’t able to sell the home. Well wasn’t that where you started? You have nothing to lose but hopefully get them realistic and sell the home. Do what it takes to get them to reality. Plus it’s your job to sell the home and tell the homeowner what they should expect to get, right? In this situation I just tell the homeowner like it is. If they won’t be realistic after some reasoning I start getting very blunt. I may even tell them they’re crazy if they don’t accept the offer (if of course they are). Or ask them what they’re going to do if they don’t sell the home. I’ve even asked an older gentleman who was trying to sell his home to move closer to his family if he wanted to die living in this home and not be able to move close to his family. (By the way this guy ended up selling and thanking me in the end for being honest with him.) You don’t want to do this in a rude mean way. Be nice about it just firm. Kind of like a good friend would. You just need to be a really blunt honest expert who is looking out for their best interest. Sometimes you have to shake them and wake them up. There have been many times I’ve sold homes that would have sold sooner if the previous Realtor would have been more honest with the homeowner - Most of the times the home would have sold for tens of thousands of dollars more because the market was hotter. Do what’s in the best interest of the homeowner and tell them they need to wake up (if in fact they do need to).
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Once the house is bid off on Sunday Night what happens? First thing Monday morning while the buyer is still hot you want to meet (Buyer & Seller) and get the contract signed. After you have the contract signed, have the seller meet with a lender/mortgage broker you know and trust and get them approved. If they aren’t approved you will want to move on to the next highest bidder as long as they have made and acceptable offer and go thru the same proceedings with them..
Make sure the buyer who is the highest and best offer can buy the home. After you find the buyer who will pay the most you need to make sure they can get financing. Have a mortgage broker of banker make sure they can get approved. Even if the buyer has financing arranged with someone else. Make sure YOU know that they can get the loan. The last thing you want to do is have the deal fall apart because the buyer told you they were ok or had a pre-approval letter that was no good. This is why you should use someone you know or trust. Because you need to know for sure they are qualified. Let buyers know in the terms of sale that they are going to have to get approval from a financial company you know. This way everyone will be on the same page and there will be no surprises. What you should do if the buyer who made the best offer can’t buy the home. If the buyer who is the best offer can’t get financing or buy the home moves on to the next best offer. When you’re doing your final negotiation let the other top offers know that they will be able to get the home if the best offer can’t get financing or flacks out. Keep in touch with them during the closing process just on case anything goes wrong. You could also put together some back up offers if you really want to put the first buyers feet to the fire and make sure your deal is going to close. So if your buyer ever looks like they won’t be able to get the home get the other buyers back into the deal.
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What Happens If You Don't Get Your Reserve Price at the Sale? We have had a few times when buyers didn’t reach the seller’s reserve price. What happens when you don’t reach the reserve? A few things can happen and I’ll explain what your options are in a moment. Just in case you don’t know what a reserve price is…A reserve is the lowest price the seller is willing to accept at an auction.
The Main Reason Homes Don’t Meet Their Reserve Price What are the reasons sellers don’t get the reserve price for their home. There are a few reasons but the biggest one is… there was not enough interested “real” buyers to get the price up. This normally happens when the home is not presented in its best condition, and is unappealing to buyers (for a few examples on this read through the section on staging your home again). Buyers are buying on emotion. Yes, they want a deal, but if they don’t like your home they don’t even think about if it’s a deal or not. So make sure your home is in great showing condition when you have your open house with the auction. Plus, it’s only for two days versus the standard six months most home sellers have using a standard agent.
What We Do If Your Reserve Is Not Met If you don’t get your reserve price at the auction, we normally take the following steps. We start by calling all the buyers who bid and give them an opportunity to buy your home at your reserve price. We start with the buyers who bid the most and work our way down the list. The last few bidders are your best candidates for buying at your reserve price. After we make the call to the buyers to see if any will buy at your reserve price, you can decide to negotiate directly with the last bidders and accept a lower price than your original reserve. You can put the home up for sale “ For Sale by Owner” to see if one of the buyers from the auction comes back. Or you can list the home with us or another agent, and see if a buyer comes back from the auction, or an agent brings you a buyer.
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If the buyers decide they're not going to come up, you then have to decide if you're going to accept the top and highest bidder at their final price. If you feel the top bid that you received was fair or something you will feel comfortable with, it may be best to accept it, because you never know if the buyer is going to walk. Stories of what happened when we put the home on the market after the auction Normally the homes that don’t sell at auction sell shortly after. A lot of the buyers that go through the home during the auction open house come back to see if it sold. In one situation I had a buyer that made a bid on the home and was one of the top final bidders. The reserve was not met therefore it didn’t sell at the auction. The following week after the auction the buyer came back and paid $204,000 for the home when she stopped her bidding at $175,000 during the final bidding. This surprised us at first but this has not been the only time this has happened. So the long and short of it is that the auction creates a lot of interest in the homes.
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Check List For Tracking The Closing We put a checklist together to track the closing after we find a buyer. This makes the closing process easier. Feel free to use it in your business if you like.
You can find this form in a printable format online on the membership site. Filed under: SIAW Home-selling System Module #3/ Closing The Deal Title: Check List to Successful Sale
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What to do if a buyer places to low of an offer at the open house. At the open house you want as many buyers as possible to make an offer. Regardless of how low the buyers offer is let them make it. I have had buyers who were skeptical make a offer of a few grand who ended up buying the home. You want to have the social proof that a lot of buyers are getting involved and making offers. Also you need someone to work the real buyers price up. If you only let the really motivated buyers get involved you may leave a lot of money on the table. So get as many buyers to make an offer as you can. I will have someone put down a $100 dollars if that’s all they will do. I just want people involved. I know I can work them up from there. When a buyer is willing to make an offer (of any amount) it’s because they have an interest in the home. So moral of the story is to get the buyers to make a offer no matter how low it is. Once they have made an offer they have an attachment to the home and are likely to go higher. Also the more offers you get the more likely you are to get higher offers. It’s the saying “people want what they can’t have” or “people want what everybody else does because it’s the in thing” so the more buyers involved the higher they will most likely go to make sure they get your home.
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How to get buyers to place their highest offer at the open house if your area won’t let you negotiate back and forth with multiple offers (like in Canada) In some markets you’re not allowed to work offers against each other and tell the other buyers what the other offers are, like Canada. It’s not everywhere but if you’re in a market with this rule this section is important, if not feel free to skip it. When buyers are make an offer at the open house tell them they need to make their best and highest offer right then. Or if there not sure how high they are willing to go you can have them make a starting offer and call you back to raise it latter once they’ve had a chance to think it over. After the open house is over hopefully you will have an offer that is high enough and satisfactory for the homeowner. If you don’t here’s what you can do. Call the buyers back one at a time and let them know their offer did not meet the sellers reserve and see if they will come up. Start with the buyers who you feel are the most motivated and wor k your way down the list. Once you get a buyer with a satisfactory offer you can stop. In a sense you can still get the buyers offer up but they just negotiate with the seller rather than the buyer. You never have to tell the buyers what the other offer are to work them up this way. Plus it’s a great way to create scarcity because the buyers won’t know what the other offers are. They have to raise their offers blindly and you may actually get more money this way verses having the buyers going up slowly.
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The Final Negotiation With The Buyers How to Handle Bids from Buyers And Negotiate For the Most Money What we have found that getting buyers falls in two very important areas: 1. Handling the phone calls from buyers off the advertising and/or the signs calls. 2. Keeping track of the people who call and following up with them to remind them of the auction, or that you are in fact selling the home this weekend. Why? I am not exactly sure. It’s so easy, anybody can accomplish this. You are not cold calling the buyers, or harassing them when you call. They want you to call them to facilitate the bids. Doing an auction is not some big sales pitch where you have to “Sell” something. It’s like talking to your friends. These are the people who are looking for a home in your area, and they are just as scared of the process as you are! In fact, one of the biggest factors of success with this auction system is that the buyers LOVE it. It’s like a big party, and they get to buy a home for a good price! Those buyers are going to have the same questions that your mother or family had after you bought the home you are selling. They are easy to talk with, and it builds up your confidence for hosting the open house. Also you can point the buyers, who call to your website, to any detailed information they might ask for. Keep track of each buyer!! That is very important. When you are on the phone with them, be sure to get their name, phone number, and E-mail. This is of major importance. Let me break down the bidding process that you give out to the buyers. Script for answering the phone when the buyers call:
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(Buyer) Hi, I am calling about the home advertised: (Seller/You) Great, thanks for calling. Like the ad said, we are having an auction here this weekend and we are starting the bids at ($97,500.) My name is , what is yours? What is your E‐mail? What is your Phone Number? Great. What questions did you have about the home? (Then go on to answer their questions.)
Final Round Robin Bidding Process How the Bidding Process Works Here’s what you say to the buyers to get them to place a bid.
Getting involved in the bidding process is simple. You DON’T have to be pre‐approved for a loan and the bid can be withdrawn at anytime. To get involved, simply leave your contact information with the open house host, along with the best phone number to be reached at when the final bidding begins (please ask host for date and times). This portion is very important. Why, because we don’t care upfront if they can get financed. We simply care on raising our price to a fair price, and then we determine on Monday if they are qualified. Most good buyers won’t bid unless they feel confident they can get a loan. If the buyer is not preapproved on Monday, then we move forward with the second best bidder and so on.
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Here’s how the final Round Robin Bidding process works. We will conduct several rounds in this manner until there is only one bidder left. We call the top bidder and let them know the bidding has begun. Then we call the other bidders, one after the other. Here are the options the bidders have when we contact them. Each time the bidder receives a call, they have one of two options: 1. The bidder can raise their current bid above the highest bidder by at least $500 to stay in the bidding. 2. Or, they can retire from the bidding process.
We will offer the home to the highest/best bidder at his or her highest bid price. If the highest/best bidder does not meet the conditions of the terms-of-sale, or fails to provide pre-qualification or pre-approval that they can get financing within a reasonable time frame, then the home will immediately be offered to the next highest/best bidder at his or her final bid price. This is an open bidding process and we will tell anyone what the highest bid is at any time. Every bidder will have the opportunity to top the current bid until highest & best bidder is established. The sellers have sole and absolute discretion on whether to accept the highest and best bid. If the bid meets the reserve, or is acceptable to the seller, then the highest/best bidder gets the home at his or her highest bid price. This “Round-Robin” is very important and it’s easy to do. You simply call each bidder and handle it this way: (Buyer) Hello. (Seller or Agent) Hi, is available? You placed a bid at my home this weekend, and I am calling all the interested bidders back until there is one high bid left and no other bidder wishes to increase above that bid. The highest bid at this moment is
. What do you want to increase your bid to?
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It’s truly that simple, and you call each and every bidder until you get the highest and best bid. When I handle bids, I lay out all the bidding sheets on the desk, and each time I call a bidder, I pull that sheet. Then I take a red pen and write down the increased bid. When a bidder drops out, I set them aside and keep calling.
TIP: Don’t worry about the “Low” bids, or even bids that are for a penny. Any bid works, we have had bidder start at $10.00 and end up as the winning bidder. Most sellers think, I only want the best buyers though my home, why? The best buyer is the one who is going to buy it for the most amount of $$, nothing more nothing less.
Usually, the top 3-4 bidders jump to the top real quick, and then it’s a back and forth between them.
So we recommend REALLY, REALLY, REALLY, push for bids, even if they are only $10. We use that as credablity factor to the bid calls to all the bidders. Ask yourself, which sounds better. “We had 3 bids on the home” or “We had 23 bids” it simple, if the buyers feel that they might LOSE the chance at buying the home they step it up! If you where a buyer and your wife loved the home, and then they heard you had 23 buyers interested you would pay more?
TIP: The reason for doing the bidding over the phone is that you can push the buyers to increase their bid while you are on the phone with them. For example: Do you really want to lose this home over $500? It’s perfect for you!
IMPORTANT TIP: Once you have had all
So this is very important and the MOST important part of the bid and hosting the open house!
the bidders drop out and you have the highest and best bid, DON’T jump and call them and scream “You won”!! Why? Because the bidder who just lost might change their mind and call you back and say “Can I increase my offer” and you just threw a can of worms into the entire process! So WAIT 10-15 Min before you call the winning bidder to give them the good news. The next highest bidder is going to be thinking about the house and buying it. A lot of the time they will call you back and up their bid. If you’ve already called the high bidder and finalized the sale, you can’t go back and sell the home to the other bidder. It’s not just because of ethics or being a person of your word (I’m not going to get into all that right here). Whether you think that’s important, it is likely to turn the high bidder off, and they will think you are dishonest and won’t want to deal with you again - Whereas, if you handle everything properly, and the high bidder falls thru later, you can go back to the original buyer and sell the house to them for their high bid.
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Bidding Rules This is a sale with an Undisclosed Minimum Reserve. All bids placed at the open house are not legally binding and can be withdrawn at any time. After the final bidding process is over, a winning bidder will be determined. They will fill out an agreement with the price and terms agreed upon on the Monday after the open house. If the highest and best bidder does not meet the conditions of the terms-of-sale, or is unable to get financing to purchase the home, then the home will immediately be offered to the next highest/best bidder at his or her final bid price. This is a sale with an Undisclosed Minimum Reserve. The homeowners have the right to decide not to execute a contract (acceptable to the owner) at any time before an agreement has been signed. Owner may or may not accept offers below the set Reserve price. Back-up purchase agreements will be taken.
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The Final Bidding in depth This is a transcription of Chris talking in detail about the final bidding and how it works.
Audio Transcript 3: Final Bidding in Depth We’re going to go into a little more depth in here about how to do the final bidding. That’s probably one of the most important components of the process. Maybe it’s a little bit nerve racking, but I’ve done 8 of them in a 2 hour period. It’s just cranking to get all of them accomplished. What I’ll do is, each one of the properties, I’ll get their bid sheets in – and you can either type it out when you print the bid sheets out or you can write in the top with a magic marker the sellers’ names. So if you’re bidding off on a Sunday night 2 or 3 properties, that’s if you have a team, you’re pretty hectic. What I do is I lay out all the bids on my desk and I make sure on the top of each one of them I know which house it is. I do one house at a time. It’s pretty hard to do multiple homes at the same time. I get a legal pad and put the seller’s name on top. This is simple. There’s nothing fancy or elaborate about it. Then I start pounding out the phone calls. I say, “Hey, I’m calling about the bid you made on the home today we had on 123 Primrose Lane. The highest bid we have on it right now is $125,000, where do you want to go from here?” And then they increase their bids, and back and forth, but the key is it’s really simple. It’s not complicated. Anybody can do it. If you’re used to handling multiple offers, or not even multiple offers – if you can call up a buyer and say, “Hey, the highest bid is $223,000, do you want to step up?” That’s really what it comes down to. One more thing in the final bidding is that you need to be the expert. You need push, push for that extra money. If someone says, “Nah, I’m not going to increase the bid.” You say, “Do you really want to miss out on that home? Do you remember how nice that place was? It was a 3 bedroom, 2 bath – your kids loved the backyard!” Start selling the emotional appeal . That sometimes can get them to increase their bid. It’s all about staying in the game. That’s why we do the bidding over the phone – to keep the buyers in the game, to keep them involved with the process. You can keep pushing
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it up, pushing it up, pushing it up because you’re going to be the seller’s hero. Then when we get down to the last 2 or 3 bids we’re going back and forth. Sometimes I’ll use this script, and again it’s at your discretion: “Hey, I got the sellers right here. They have given me a one time opportunity right now on the phone to be extremely aggressive with you. Just give me an extra $500. Let me call the other
one back. This is your chance tonight to get the home.”
Then we get to the final bid – and we talked about this in our bidding sheet – you don’t call the final bidder back until 10 or 15 minutes after you got there because that second bidder who bid against the first bidder – buyer bidder A, buyer bidder B – if buyer bidder B backs out and A wins, don’t call A immediately and say, “Hey, you won.” You got to give
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How to Increase Buyers Offers This is a transcription of a Chris explaining the best way to keep increasing the bids to get the highest possible offer Audio Clip 2: How Much to Increase the Bids Let’s talk a little bit here about how much we ask the buyers to increase their bid each time. It’s completely up to you and the ebb and flow of the auction – sometimes we push for $500, sometimes we push for a $1000. One of the things that I like using most of all is, “Hey, where do you want to go from here? The other bid is $140,000 – you’re not going to let him beat you – what do you want to do?” Sometimes these buyers without having a ton of experience will go, “Oh, I’ll go $145,000!” Then you call the other one back and go, “Hey, they really want this property. They want to kick you out of the game! So they’re going to just throw a huge offer across the bow and hopefully you’ll stop bidding. They threw out $145,000, so are you willing to step it up?” It’s all about driving that price up. There’s not a real exact science. You can get real studious and say, “Only $500,” and that’s great, however you want to handle it. It comes down to you and how the ebb and flow of the auction is going. There’s been times we’ve gone up a $100 a piece, and I’m on the phone for 45 minutes back and forth, back and forth, and I feel like a ping pong ball. Then there’s been times when we went from $225,000 to $250,000, to $275,000 to $300,000. It really depends on the ebb and flow of the auction. You’re going to have to use your discretion on how much you want to increase the bid each time, and how much you want to ask for. But I never go less than $500. At one time I did $100 – it was crazy and I wouldn’t do it again. Hope that helps
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them a little flexibility because buyer B might call you back and say, “Hey, you know what, I thought about it some more and I want to increase it.” Let’s say you’re at $140,000 and the seller’s reserve is $150,000. The seller says he’ll go to $145,000 but we’re done bidding. What I’ve done sometimes in the past is call that bidder back and say: “Hey, you won, but we’re not close enough. The seller’s reserve was $150,000 but I got him right here, right now. They’ve given me the authority just tonight, tonight alone to drop the price by $5,000 to $145,000. You’re at $140,000, why don’t you step it up? Let’s get this deal done. You love the house. You love the situation. This is your chance to buy this house.” Countless times I’ve gotten the buyers off the fence, up that extra little step, and gotten the home sold. I think that covers the final bidding. It’s a pretty simple process. Keep that in mind. No reason to freak out. The first time you do one you might be a little bit nervous but it’s a pretty simple process.
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Importance of Getting Bids and Jumping on the Top Bidder While They’re Hot Making a decision quickly can be crucial. When the bids come and the final auctioning is over, it’s important to put the deal together with the buyer quickly. If the top bids you get do not meet your reserve price, it is important to decide whether you are going to accept the last bidder’s bid or not. I have seen homeowners wait too long and lose the deal. Let me give you an example. We were auctioning a home out in the NW side of Gainesville. The seller had set a reserve price at $200,000. The top bid we had for that home was $192,000 cash. The home was worth $195,000 to $200,000 but that particular neighborhood was dropping on average $3,000 during the spring, which usually is the best time to be selling a home because that’s when the most buyers are buying. It was near the end of the spring buying season and the price would drop to the $192,000 within a month or two. They thought about accepting it but dragged their feet for over a week and the buyer walked away. At the time of this writing, the home is now worth less that the top bid we got at the auction and is still sitting (unsold) on the market. The whole reason for doing an auction is to give buyers perception that they're getting your home at a deal. When you don’t snatch up the buyers bid they normally feel they aren’t getting a deal and go look somewhere else. If that happens then the urgency of the auction is gone. If you don't accept a high bidder quickly, they may walk away and never end up buying. As a result you may end up selling your home for less money. That is a risk that you will have to take with this auction. This rarely happens and normally only happens with sellers who are not realistic about the market. The best way to approach this is to be ready to make a decision when the time comes that Sunday night or Monday when that bidder is the most excited about the home. The longer it takes for a decision to be made, the lower the chances you have of getting the buyer to buy at their final bid price. That's why it's so important to snatch the bid up quickly even if you feel you may get more if you wait. With this changing market it's in your best interest to know what your bottom
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line is and be ready to make the decision quickly when all those top bids come in. Rarely is this ever an issue with serious sellers. But when it does come up it's important to make a quick decisive decision so the whole entire auction is a success.
How to raise the offers if there’s no one to work them against and you’re still lower than the reserve price. There have been times when we had all the buyers drop off and the last buyer was still far from the reserve price the seller has set. What do you do if this happens to you? There are a few things you can do. First if you feel the sellers reserve is very competitive you can call up the buyer and tell them that they are the last buyer but that you have not yet met the sellers reserve. Then you can negotiate the buyer directly with the seller. First try to get the buyer up to the reserve price. If they won’t go up to it call the seller and try to get them down to the buyers top offer. Go back and forth negotiating between the two like you would on a normal deal you’re trying to put together. Just do it right away and try not to let it delay. The longer it takes to get it nailed down the less likely you are to put the deal together. If you get a deal put together in this senior have a contract between the buyer and seller signed as quickly as possible. If you can’t get the deal put together call back all the buyers who made an offer and let them know what the sellers reserve was and see if you can get any of them into a negotiation with the seller. If that doesn’t work cal all the buyers who left there contact info on the guest list and let them know that the home is still available. At times buyers may come through and are unable to make an offer at the open house. This way if there is a buyer who wanted it but couldn’t step up at the open house you’ll find them. If you can’t get any of the buyers to take the home after the sale then put it up for sale. I have had many homes sell within a week or two of the Sold-In-A-Week open house just from the buzz it created. Once we even had one of the top offers that dropped out early come back the following week and buy the home for above the sellers reserve and $20K more than the last high offer. So don’t give up without trying your options.
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What you may need to do if you can’t get the offers up to the reserve price and the seller won’t come down. There have been times when I had a really good offer on the table and the seller wouldn ’t be realistic. After the open house and by hearing what all the buyers said I knew the homeowner wouldn’t get a better offer than the one we had. The seller was being unrealistic and needed to come to reality. What do you do in this situation? Well if you can’t get the homeowner realistic then you’re chances of selling the home are very slim. At this point it’s time to get really firm and have a “come to Jesus” talk with your seller. I see it this way. If you have the best offer you’re ever going to get and the seller won’t be realistic you have nothing to lose by being honest and blunt. What’s the worst that can happen? The seller gets bugged at you and you aren’t able to sell the home. Well wasn’t that where you started? You have nothing to lose but hopefully get them realistic and sell the home. Do what it takes to get them to reality. Plus it’s your job to sell the home and tell the homeowner what they should expect to get, right? In this situation I just tell the homeowner like it is. If they won’t be realistic after some reasoning I start getting very blunt. I may even tell them they’re crazy if they don’t accept the offer (if of course they are). Or ask them what they’re going to do if they don’t sell the home. I’ve even asked an older gentleman who was trying to sell his home to move closer to his family if he wanted to die living in this home and not be able to move close to his family. (By the way this guy ended up selling and thanking me in the end for being honest with him.) You don’t want to do this in a rude mean way. Be nice about it just firm. Kind of like a good friend would. You just need to be a really blunt honest expert who is looking out for their best interest. Sometimes you have to shake them and wake them up. There have been many times I’ve sold homes that would have sold sooner if the previous Realtor would have been more honest with the homeowner - Most of the times the home would have sold for tens of thousands of dollars more because the market was hotter. Do what’s in the best interest of the homeowner and tell them they need to wake up (if in fact they do need to).
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Once the house is bid off on Sunday Night what happens? First thing Monday morning while the buyer is still hot you want to meet (Buyer & Seller) and get the contract signed. After you have the contract signed, have the seller meet with a lender/mortgage broker you know and trust and get them approved. If they aren’t approved you will want to move on to the next highest bidder as long as they have made and acceptable offer and go thru the same proceedings with them..
Make sure the buyer who is the highest and best offer can buy the home. After you find the buyer who will pay the most you need to make sure they can get financing. Have a mortgage broker of banker make sure they can get approved. Even if the buyer has financing arranged with someone else. Make sure YOU know that they can get the loan. The last thing you want to do is have the deal fall apart because the buyer told you they were ok or had a pre-approval letter that was no good. This is why you should use someone you know or trust. Because you need to know for sure they are qualified. Let buyers know in the terms of sale that they are going to have to get approval from a financial company you know. This way everyone will be on the same page and there will be no surprises. What you should do if the buyer who made the best offer can’t buy the home. If the buyer who is the best offer can’t get financing or buy the home moves on to the next best offer. When you’re doing your final negotiation let the other top offers know that they will be able to get the home if the best offer can’t get financing or flacks out. Keep in touch with them during the closing process just on case anything goes wrong. You could also put together some back up offers if you really want to put the first buyers feet to the fire and make sure your deal is going to close. So if your buyer ever looks like they won’t be able to get the home get the other buyers back into the deal.
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What Happens If You Don't Get Your Reserve Price at the Sale? We have had a few times when buyers didn’t reach the seller’s reserve price. What happens when you don’t reach the reserve? A few things can happen and I’ll explain what your options are in a moment. Just in case you don’t know what a reserve price is…A reserve is the lowest price the seller is willing to accept at an auction.
The Main Reason Homes Don’t Meet Their Reserve Price What are the reasons sellers don’t get the reserve price for their home. There are a few reasons but the biggest one is… there was not enough interested “real” buyers to get the price up. This normally happens when the home is not presented in its best condition, and is unappealing to buyers (for a few examples on this read through the section on staging your home again). Buyers are buying on emotion. Yes, they want a deal, but if they don’t like your home they don’t even think about if it’s a deal or not. So make sure your home is in great showing condition when you have your open house with the auction. Plus, it’s only for two days versus the standard six months most home sellers have using a standard agent.
What We Do If Your Reserve Is Not Met If you don’t get your reserve price at the auction, we normally take the following steps. We start by calling all the buyers who bid and give them an opportunity to buy your home at your reserve price. We start with the buyers who bid the most and work our way down the list. The last few bidders are your best candidates for buying at your reserve price. After we make the call to the buyers to see if any will buy at your reserve price, you can decide to negotiate directly with the last bidders and accept a lower price than your original reserve. You can put the home up for sale “ For Sale by Owner” to see if one of the buyers from the auction comes back. Or you can list the home with us or another agent, and see if a buyer comes back from the auction, or an agent brings you a buyer.
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If the buyers decide they're not going to come up, you then have to decide if you're going to accept the top and highest bidder at their final price. If you feel the top bid that you received was fair or something you will feel comfortable with, it may be best to accept it, because you never know if the buyer is going to walk. Stories of what happened when we put the home on the market after the auction Normally the homes that don’t sell at auction sell shortly after. A lot of the buyers that go through the home during the auction open house come back to see if it sold. In one situation I had a buyer that made a bid on the home and was one of the top final bidders. The reserve was not met therefore it didn’t sell at the auction. The following week after the auction the buyer came back and paid $204,000 for the home when she stopped her bidding at $175,000 during the final bidding. This surprised us at first but this has not been the only time this has happened. So the long and short of it is that the auction creates a lot of interest in the homes.
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Check List For Tracking The Closing We put a checklist together to track the closing after we find a buyer. This makes the closing process easier. Feel free to use it in your business if you like.
You can find this form in a printable format online on the membership site. Filed under: SIAW Home-selling System Module #3/ Closing The Deal Title: Check List to Successful Sale
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