WatchInstead of buyers searching for a house, maybe sellers should search for a buyer.
New feature on Patrick.net: anyone can now anonymously say how much they might be willing to pay for a house, how big it should be, and what zip code they want, using this link (which is also in the Patrick.net header above):
The buyer's anonymous bid then goes into a list of buyers, here:
Sellers can scan this list of buyers to see how much people are offering in their area. If a seller sees a bid he likes, he can reply with a specific address, promising that he would accept the buyer's offer amount. The reply gets posted in public in the forum, and the buyer gets notified of it.
The advantage to the seller would be not having to pay any commission, or stage the house, or even announce that his house is for sale before that. By making a comment on a buyer's offer, the seller's property will definitely be viewed by at least one interested buyer, and probably more.
The advantge to the buyer would be not having to pay any commssion or to deal with fake bidding wars. Buyers could see what other buyers are willing to offer in the area to get a more honest idea of the market.
As an added incentive to post an offer, you will automatically get notified of property for sale on Craigslist that meets your requirements.
Edited on 13 Sept to explain what I actually created.
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Looked at your search and been houseshopping. The biggest problem for me as a buyer is the sellers/agents who waste my time. Don't disclose serious flaws like mold, water damage, overstated square footae, sinking foundations, etc. I think buyers need an opportunity to share this info w/each other in a clean, organized manner. I know people can try to shoot other buyers out of bidding, but there's got to be a way to do this.
Also, I think you need more data points - lot size, garage size, proximity to busy street/freeway, whether energy-hog systems have been updated (windows, HVAC, etc.), whether expensive-to-replace systems are at the end of their usable life (roof, HVAC). I could say I'll pay $1 million for a 2-BR house over 1k sq. ft. - but it would be a waste of everyone's time if the sellers take that to mean I'll pay that for a house with mold, leaking roof, all original 1950 fixtures, next to freeway. I can paint and replace a stove, but there's a value difference between move-in-ready and tear-down-ready (but you COULD fix it up if you wanted). Most of the languishing inventory is priced the same as neighborhood sales, but it would cost 40% more to get it to comparable CONDITION, let alone desirability.
Those are the variables that affect value, but NAR likes to keep things opaque to protect their monopoly. Put real transparency into the market and you'd rake in buyers.
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46 male
Menlo Park, CA
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Ah, that's the the forum is for! If you search for any address in America, it should pop up on its own page, and you can say anything you want about it, as long as it's true or just your opinion.
I can't make a simple search function that would let you know if there is mold or water damage, etc, but the first person who actually looks at the house could document that damage on the forum for other readers to see, to save them time. All the seller replies to bids go on the forum under that property address, so you should see the offer to sell right on the same page with the user comments.
How to get everyone to comment about specific houses on the forum is the hard part. I don't want to drive away sellers with harsh comments about a house either. I just want them to be honest.
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46 male
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OK, most of the problems leoj707 found have been fixed. You can edit or de-activate your own bids, and not anyone else's.
Please try it again, and try to break it. Any way you can break it is something I must fix.
I will allow search for own bids soon.
http://patrick.net/bidders.php
http://patrick.net/bid.php
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I put up my bid....the hardest thing is going to be getting a lot of people on here. Once it's up and running, you need to get everyone to spam facebook, twitter, craigslist, etc etc. If it did start to grow, and you put some ads up for income, I would spend that on paid advertising if possible.
I think there is some merit to this idea, but if it grows I would not be surprised if the NAR came down on it somehow.
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46 male
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Yes, I need to figure out some viral loop which gets it off the ground. Each bid and each reply needs to encourage people to post more bids and more replies.
How would I use Facebook, Twitter, Craigstlist etc for that exactly? I don't quite see it yet. Would each bid go on your Facebook page?
A lawsuit from the NAR would be national news, so it would be wonderful advertising.
I've already heard from NAR lawyers once, where they objected to my using the word "realtor" without their permission.
Or maybe the NAR will learn to live with the First Amendment. After all, public bids might actually help them sell houses.
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In terms of using social networking, you need to start posting it, tweeting it, etc etc
Do you have a patrick.net account on FB, Twitter etc? That would be the first step. Have all of us Pnet guys start following you, starting interactions with you, and then we start posting/tweeting etc about this site and the bidding function. From there you hope people stop by, like what they see, post bids and offers then go back onto their FB/Twitter and spread the word.
The most important part is it has to be badass and something that people want to use and DO use....from there the word of social networking will expand it
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Patrick says
It'll be hard to ask a buyer to submit their "highest and best" offer without even seeing the property. That's just setting themselves up for failure.
The bids will probably be lower. Sellers need to be aware that the prices are just a general range. I'm sure the buyers will try to shave some more off that price after seeing the property.
This completely turns the table against the seller it appears.
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vain says
It's not a bid on any particular property!
It's just the most the buyer is willing to pay, so that sellers know the most they could possibly expect from this buyer.
The idea is definitely to turn the tables toward a fairer deal for buyers. Currently, the system is VERY unfair to buyers. They are told to participate in a blind auction, with absolutely no way of legally distinguishing shill bids from real bids.
Much better to start out with a fixed maximum amount the buyer would pay, IMHO.
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Patrick
Love the idea but have two comments
1) In using this service, everyone knows what areas a patrick.net member is looking to buy in. (I know I'm paranoid about keeping my personal information, well... personal having to public disclose a zip is a deterrent, at least for me)
2) How do you plan on mitigating the potential for scamers to use this service for personal gain? Unfortunately, I the system has great potential for misuse / abuse at the moment. (there's that paranoia of mine kicking in again!)
That said, I hope it works for you. Keep up the good work, and keep the ideas coming.
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46 male
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Thanks for the feedback! The bids are anonymous. No one can tell that the bid is from to you. It doesn't have your icon or username attached.
Of course if you talk about a certain area on the forum a lot people might _guess_ a certain bid is from you, but they'll never know for sure unless you say so.
How could scammers use this for personal gain? I don't see it, but I'm sure there are angles I haven't considered.
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bmwman91's website
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Patrick says
Hello my friend, I recently came upon a cheque for $4,357,247 that I am wishing to exchange for its value. Unfortunately, the printed name was misspelled and I cannot retrieve a proper replacement. The misspelling of the name however, coincides with your exact given & surnames. If you would only send me your social number of security and bank account number, I can have it electronically deposited to you. All I ask in return for this favor is 3,500,00 of the original amount. The rest is yours for this service.
Please respond to me with urgency. If I do not cash this cheque soon, the clique mob will come for me again!
Sincerest,
Norman P. Bidwell
nigerianladiesman@thisisnotascamtrustme.com
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Thanks Patrick. I didn't realize that it was anonymous - but somehow the idea still wireds me out a bit. I can see it now. I post an ad - then a "seller" contacts me about how they have this home, it meets our needs, yada yada.
Despite all of the due diligence in the world, I fail to realize that the person "selling" me the house does not in fact own it. It's a tenant who is renting the house out from a third party.
We end up "buying" said home, only to find out two months later that we did not in fact do so, since the "seller" did not in fact own it. Chaos ensues.
OK maybe I'm stretching. I'll freely admit I have a healthy dose of paranoia.
In short, the fact that is anonymous is a good thing.
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46 male
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I now say "Place Anonymous Bid" in the header and that's also the title of the bidding page, to make it clearer.
I'm glad you're paranoid. I want to pre-empt as many problems as possible.
It does happen that scammers rent out places that they don't own, but it's much harder to sell a place you don't own. You're probably not going to hand them a check for a few hundred thousand dollars without getting a lawyer, or, yes, a realtor involved.
bmwman91 says
1. The seller has to come up with a real specific address that they promise to sell for the bid price, or they can't post anything. And they have to give an email address which I validate.
2. All seller responses to bids are publicly posted to the forum as a comment for that property's page (every property in the US has its own page on the forum). Even if they come up with a real address to sell and use a working email address, obvious scams would quickly get flagged and I would delete it and ban that user by email, IP, and username.
What else could go wrong?
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Why would the seller participate in this? Wouldn't the seller want bidding wars?
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46 male
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The seller would participate in this because he's getting to contact interested buyers for free.
It's actually worth quite a lot to advertise to people who have already expressed an interest in what you're selling. That's how Google makes money. You've already told Google what you're searching for, so advertisers are willing to pay a lot to contact you with an ad.
Sellers do want bidding wars, but realtors can very easily suppress bids that don't give their own brokerage both sides of the commission, or they can hide bids that compete with a friend's bid, etc. Sellers never have any way of knowing for sure if their realtor was honest.
Even worse: listing on the MLS does not yield a price premium relative to listing on FSBO advertising sites like I'm trying to start:
http://www.freakonomics.com/2007/06/08/how-much-is-a-realtor-worth/
With my system, the seller can advertise directly to interested buyers for free, and if the buyer's price is good enough, the seller can completely skip the realtor and save the entire commission.
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Patrick says
Sorry, but I dont feel this use of any website will solve the problem. Face to Face, on a predetermined date, with interested buyers present to make "open" offers. The final winning bid makes the final contract.
The losing bidders will know there was a winning bid and how much it was sold for...
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thomas.wong1986 says
That sounds good, but does it ever happen that all interest buyers are phyically present? And even if they are there, how do you know one or more aren't shill bidders? When a lot of money is involved, it pays to be very paranoid. Best to set a maximum price and stick to it (or reduce it, but never go up).
cab says
No worse than what we have now (blind bidding against possibly imaginary shill bidders). If you simply set a price and refuse to be moved by any other bids, you have an advantage. Instead of the question being the seller/agent asking "How can I fool the buyer into overpaying?" only question becomes, the buyer asking "What's the best house I can get for this price?"
cab says
It does give away your maximum price, but it also broadcasts your intention not to pay more than that. This will hopefully discourage sellers from dicking you around, trying to squeeze yet more out of you.
cab says
True. Maybe I should add a warning not to go alone to view any place.
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thomas.wong1986 says
I've attended some of these where the winning bidder flakes. Possibly their own people bidding as a way to set a reserve.
Bidding is stupid because there are always people that have no clue as to what may be wrong with a property that bids. Then they get their inspection and say "ohhh.. i want a reduction." At that point, the seller would have been better off selling it to the 2nd highest.
It should be the first person who offers list price gets the property. Make them subject to advertising laws.
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cab says
Yes, the seller will always try to get the amount you bid, even if the house isn't worth that much, because they know you could pay it. So sure, you'll be pressured to pay your bid amount when you put a bid out there.
But they can't make you pay it. You can always say, "sure, I'd pay X for the ideal house, but your house isn't ideal and here's why". At least your bid amount puts a cap on things, unlike the ridiculous open-ended blind please-screw-me bidding system we have now.
cab says
Yes, it should be that way. If you advertise a toaster and then won't sell it for that price, that's bait and switch, and it's illegal. Can you imagine being told to bid for the toaster against (possibly imaginary) other buyers when you get to the store?
If you do the same with real estate, it's totally legal.
But exactly what would the law say to prevent that? Should it be the _first_ offer at your asking price that gets to buy it? Then you'd just have weird races to pay.
Maybe it should just be public bidding, with the name of a real person and a bank-verified bid amount published, by law, for each bid. After a fixed amount of time (30 days?) then the highest amount that actually comes up with the money should get it?
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Patrick says
You can have the bids placed on weekends only. And many would occur on say Sat during a afternoon schedule.. therefore Shill bidders cant be present at all the bid at the same time. Registering the bidders may also help with shills getting fined say $10,000 and their REA fined $50,000. See the Austrialian Anti-shilling laws. Hitting them where it hurts! They will think twice, the cost of greed.
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cab says
No such thing in prior decades.. final prices were always between the higher asking and lower offers. Past 10-12 years public went insane with real estate, regardless that it would kill the economy.
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cab says
In hind sight REA should disclose RE price trends over the past 10 years, plus price history of given homes they represent as part of full disclosure. The use of just comparables to justify current asking is not enough.
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46 male
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I think agents should be required to disclose the actual value of the house to someone who rents it out. This is very easily calculated, for example with http://patrick.net/housing/calculator.php
In high-priced areas, there is just no way to justify the price of a house based on how much you could rent it for.
But of course all this is just dreaming. With the continuous corruption of our government by money, the only things that are going to happen are those that transfer yet more money from the middle class to the top 0.1%.
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cab says
Very true. If people actually did the economic analysis, in the high priced markets where "starter houses" are common, it would not make economic sense to buy a starter house EXCEPT when prices are still rising quickly during a housing boom. The transaction costs associated with starter houses are astronomical, and the main beneficiaries are people who get a one-time fee --
realtorsused house salesmen and banksters.Follow
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Actually, I meant the agent should disclose the value of the house to buyers, based on potential rental income.
But anyway, a house does have a value based on the rent it might bring in. That should be publicly available info.
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Patrick says
Hold on, I thought property values are based on COMPS. That is what every appraiser in America uses to determine values.
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46 male
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Comps are just a way to get you to overpay by pointing out that someone else overpaid.
Comps also led us into economic hell by making people believe we had an extra few trillion dollars of housing value to balance out an extra few trillion dollars of housing debt.
Well, that housing value based on comps was entirely imaginary, but that debt is very real, and that's what's screwing the whole economy.
The real value of a house depends only on what it would rent for. Using valuations based on rents would have completely prevented the bubble and the crash.
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cab says
A fabricated marketing term. And it certainly should piss you off since it is used in CAR affordabiltiy index. Prior to the bubble it was median incomes to median "SFH" home prices using 30 years fixed with 20% down. That shifted to 5% down with ARM loan on a "starter home/house". WTF is a starter home ?
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cab says
I agree with you. Assuming that they stay in one city/area within their working life, most people would be far better off if they bought one house in their lifetime. Yeah, obviously if you have to move for work, you may have to sell it.
The starter home thing is dumb, however. The idea is to buy a house that does not fit your needs, hope that it goes up in value significantly in an unrealistic manner, pay an additional fee to realtors and banksters, and pretend that you're "building equity" while doing so. This is all marketing.
If instead, you saved your goddamn money for the house that makes sense for you, you'd have a bigger down payment in the future and save money on house payments. All the starter home thing does is enrich used house salesman and banksters at the expense of homeowners.
thomas.wong1986 says
An overpriced house that doesn't fit your needs, but that you buy because you think renting is pissing money away and buying in an uneconomical manner is not.
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The MLS is just a loose confederation of local computer databases that all agree to screw buyers as much as possible. They don't even have a common data format among the different MLS's.
Since they are all privately owned, I don't think they will ever put in rental-equivalence data that proves a house is less valuable than the asking price.
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cab says
Local real estate groups run each MLS and determine what shows up where. That's why here in the Bay Area you see different Data for SFAR MLS vs. East Bay MLS vs. Peninsula MLS. Sometimes realtors cross-post on a different MLS -- I've seen SF houses on suburban MLS, and suburban houses on SF MLS, in addition to the local MLS.
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I live on the East Coast and prices actually were going down before the Govt offered the tax credit (worthless). The average price for 3 bedroom was between 220k - 280K. After the tax credit asking prices have jumped up about 100k. Now same comps are hanging onto between 320k and 380k price points. These homes are basically sitting and chasing down the market. It's crazy because a lof of these homes need about 60-100k in work. Sellers/Banks just don't want to negotiate realistic price points and they are setting the tone for sellers who are not upside down, so it is essentially freezing the market. Huge mistake for sellers because this market has only one way to go and that is down. I feel they are putting off the inevitable. I refuse to buy at overinflated prices as do many other buyers. I'm looking at several homes in the low 300s that are really worth mid 200s. So what do you do?? Sit and wait for reality to sink in to the sellers.
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Patrick says
Funny Agents only want to use comps that are high not the ones that are low. My Buyers Agent is quick to point out all the high comps when she wants me to put in a high offer, but when I start listing all of the comps that sold for 80k less, she basically tries to write it off. They cherry pick the comps to get inflate the value of the house in question which is to me unethical.
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La Mesa, CA
When I click on the link for 'Matches' I'll sometimes see this: "Nothing for sale found. Please try a different search." even when the link shows a number > than 0.
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46 male
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Yes, that's because when I recorded the number there were some, but now they've expired (more than a week old on Craigslist).
I've got to improve that somehow, while also minimzing database calls to keep the site fast.
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rubyrae says
Definitely unethical. But an inevitable result of the commission based system, where she doesn't get paid unless you buy, no matter how bad the deal is for you.
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San Jose, CA
rubyrae says
Just do not agree to go view the property if the list price doesn't meet your criteria unless you are suggesting your agent is trying to get you to overbid. Or are you trying to low-ball?
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rubyrae says
Yeah, that's very common. "Oh, that one's on a busy street." "Oh, that one is not designed as well as this one." It's all nonsense. Those same houses had the same characteristics when they sold the last time too.
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San Jose, CA
corntrollio says
This may be a valid argument because I've seen people here completely disqualify a property simply because it's on a busy street.
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bighorse says
You don't understand. The same house sold in 2005 for X and sold in 2009 for X minus $150K. In both cases, the house was on a busy street -- last I checked, it wasn't moved and had the same address. Yet the realtor will dismiss the busy street as if it wasn't present for both sales.