How and Why a Highest Bidder Sale Can Work for YOU!
The HBS Method
A Highest Bidder Sale is different than a live auction where a licensed auctioneer uses outcry bidding. At a Highest Bidder Sale, the house for sale is open for inspection during specified hours for two days, usually over a weekend. During that time, and only during that time, you will be able to look the house over, review the inspection documents and bid on the property.
The starting bid on the house is usually much lower than comparable properties in the area. This gives buyers the opportunity to sometimes buy at a significant discount than market value. However, in some markets houses will sell for very close to market value.
There are two stages to the bidding process. First, is simply submitting a bid on the Bid Sheet. This gets your name in the running for the property and is not a commitment to buy If you name is not on the Bid Sheet, you will never make it to the second stage.
To bid on a property, you will write your name, phone number and bid amount on a BID SHEET which will be available during the entire Open House/Inspection period.
On the Bid Sheet, you’ll be able to see all the other bidders and their bid amount too. Don’t be alarmed if there are several other bidders. Just because someone puts their name on the bid sheet, it is not a commitment to buy.
At a Highest Bidder Sale, the advantage to bidders is they don’t have to make a hasty decision to buy. You will typically have 2 - 3 days to look the property over and make a decision about how much you are willing to bid to win the property. Once you enter a bid on the bid sheet you can change is as often as you like until the end of the open house.
At the end of the open house, each bidder will be called, starting with the highest bidder, to ask if they want to advance (increase) their bid. This is the second stage of bidding and called round-robin bidding.
Some bidders will drop out in the first round of bidding; others will advance their bid several times. The round-robin process could take several hours or a few days. At the end of the process, the house will be sold to the person with the highest bidder. The highest bidder will need to sign a contract within 24 hours and provide an earnest money deposit – the amount will be named in the terms of sale along with the other particulars about the transaction.
The highest bidder is given 30 days to obtain financing and close the transaction
Why The HBS Method Works for Everyone
In many parts of the United States, it is taking six months or longer to sell a house the traditional way by listing with a realtor or going the FSBO route. There are also a lot more houses for sale, more competition, than there was just a year ago so selling the traditional way is much more challenging.
Instead of just “listing” a house on MLS and sticking a sign in the yard, a highest bidder sale or auction relies on a massive marketing campaign to attract attention from buyers near and far away. A Highest Bidder Sales and Auctions works in good times and bad. A Highest Bidder Sale and Auctions works for all types of real estate.
Millions of properties were sold with the highest bidder sales method or a live Auction within the past year. It is quickly becoming the preferred method of selling all types of real estate. The Highest Bidder method is a Smart Way to Sell or Buy because:
- It involves about a week of hard work instead of potential months of sporadic selling visits.
- It encourages full disclosure between the homeowner and potential buyers.
- Sellers do not start high and slowly come down - Sellers start low and let the buyers’ market determine the top price.
- The sale is less costly for Sellers and Buyers because there is no real estate commission to pay. There are no broker fees paid from the sale price. This means a Seller can sell for less, and everyone comes out ahead. Additionally, the commission savings instantly adds to the substantial existing equity for the buyer.
- The HBS Method attracts a reasonably-sized buying pool during a concentrated timeframe so the property will sell for a price that is fair both to the buyer and to the seller.
- The sale process is entirely open. You do not bid against the Seller, but against other bidders.
- Placing a bid does not make you liable in any way. You are under no legal obligation as a result of the bidding process. You will have plenty of time to review the terms of sale, consult with others, inspect the home, and obtain any necessary mortgage.
- The closing process is the same as in conventional home sales.