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Here’s another example of a Highest Bidder Sale
Mary Jane has been trying to sell her house for almost a year. She had it listed with one real estate agent for 6 months but only had 2 showings. Then she listed with another agent for 6 months but still no reasonable offers.
The house is in a great location but it could use a little TLC. It was priced below market to compensate for the needed paint, carpet and bathroom upgrades needed. Fixed up, the house is worth $275,000. It has been on the market for $250,000 for 6 months then $225,000 for six months.
Using the traditional listing methods, it just was not getting enough people to see it to get any interest. Mary Jane did get one low ball offer from an investor for $150,000 but she turned it down. She knew there had to be a better way to sell her house so she could make more money.
Then Mary Jane got a postcard from Susan about selling her house in 7 days. Mary Jane thought it was too good to be true but it did not hurt to meet with Susan to learn more.
Susan explained the Highest Bidder Sale (HBS) method to Mary Jane. She discussed how getting 200 to 300 or more people to a two day open house would give the house the exposure it needed to get the price up. A HBS creates excitement and a sense of urgency for buyers.
Mary Jane agreed that a Highest Bidder Sale may be just what she needed to get her house sold. She really had nothing to lose to give it a try. If it did not work, she planned to reduce the price then list with a 3rd real estate agent or maybe she would just try to sell it herself to save the commission.
Susan explained that she would need to get a contract to buy the house before she could do a Highest Bidder Sale. They agreed on a price of $199,000 and that they would split the proceeds over that amount. Susan explained that if it sold for $225,000, Mary Jane would get $199,000 plus $13,000 — or $212,000 (minus any prorated taxes). This was more than she would have made if it sold for $225,000 then she had to pay a 6% realtor commission.
Susan could make $13,000 for doing all the marketing then doing about 8 hours of work at an open house. Not bad! That’s about $1625 an hour.
Susan advertised the starting bid at $178,500. Potential buyers POURED in to the open house. 250 people on Saturday. 300 people on Sunday. She got 35 bidders and most were cash buyers.
THEN THE FUN BEGAN!
Susan called each bidder, starting with the highest bidder, to tell them what the high bid was and ask if they wanted to increase their bid. The minimum increment was $2000. The bids went up and up. Finally after 2 hours of calling all bidders, the highest bidder was at $249,000 cash. And the second highest bidder was at $239,000 cash. The third highest bidder was at $238,000 who needed to get financing.
The result was that Mary Jane got her house sold in 7 days. She made $224,000 with no real estate commissions to pay.
Susan made $25,000 PLUS she got 2 other people in the neighborhood who asked her to do a Highest Bidder Sale for their house AND she built a huge buyer’s list of 300 buyers.
NOT BAD FOR A WEEKEND!
That’s how a typical Highest Bidder Sale works.
You let the market determine what the price of the property should be. If you have a low starting bid price, it attracts a lot of potential bidders/buyers. The volume of people who show up at the house at the same time, creates competition and a sense of urgency which helps the price go up and up.
Highest Bidder Sales work with any kind of real estate in any price range.
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