Should "Blind" bidding wars be regulated? Time to launch iPetition?
Friday, January 29, 2010 at 10:16PM 
In response to an article entitled, Year’s end lifts sales of condos in Boston, one of Boston.com readers wrote:
"Seriously, the bidding wars that have been going on for the past 2 years, that is what someone should write an article about."
I agree, articles about bidding wars are warranted, but NOT because of an uptick in sales or housing prices. In my professional opinion, "blind" bidding wars over an eight year period, 1998-2006, fueled the "irrational exuberance" that drove housing prices in Boston -- and elsewhere -- to artificial, unsustainable levels; and ultimately left the taxpayer to pick up the tab. (See Real Estate Bubble Map created by The Real Estate Cafe in 2006 when most real estate professionals denied the existence of a housing bubble.)
As home buyers know from this past Fall, the original deadline for the first-time home buyers tax credit was hyped so shamelessly by the real estate industry that too many buyers were once again manipulated into paying OVER asking price. That's why I would love to see multiple bid situations regulated through a transparent bidding process outlined in this blog post:
Dual agency: The illusion of individual savings & the real cost to society
If Boston.com readers and others agree, should The Real Estate Cafe create an online petition to regulate "blind" bidding wars? The goal is not to eliminate competition (that would be politically unacceptable in our capitalist system); but to maximize transparency and minimize deceptive buyer manipulation through a controlled bidding environment, like http://www.N-Play.com.
Over 650 people signed the iPetition we created in 2003 to Protect Consumer Access to Real Estate Listings, without the benefit of social media to turbo charge a viral marketing campaign. If you want to help organize a campaign to regulate "blind" bidding wars, or just to sign an iPetition if we create one, please leave a comment below or contact us privately.
Reader Comments (11)
I noted your comments about a blind bidding war. In Arizona we are seeing a mad scramble by entry level buyers for nice, properties in the $100,000. to $150,000, range. There are very few nice homes on the market at this price point. Most of the properties available in the price range are REOs and they are trashed. Every property we have sold to buyers in the past few weeks has been a property acquired by an investor, rehabbed and put back on the market for profit.The process of getting a nice home in this price range is almost as frustrating as what we experienced at the top of the market with multiple offers and disappointed buyers.
We have taken a new course and are now recommending that our entry-level buyers consider properties that are less than nice and in need of some work. We have a lender who does a good job the 203K loan program. We have a relationship with an approved contractor. With the 203K ibn ur back pocket we now have lists and lists and lists of properties to show our clients and there is no competition. The bank is happy to get the property off of their inventory. The buyers are happy. The contractor is happy for the work. The new lender is happy. We are happy. The neighbors are happy. Win! Win! Win! Win! Win! Win!
This is how we are helping to solve the housing crisis one house and one neighborhood at a time.
Here is a link to our blog post about the HUD 203K program - http://activerain.com/blogsview/1460655/solving-the-housing-crisis-one-house-and-one-neighborhood-at-a-time-
Real Estate Company From Turkek
7emlak Property Real Estate
Apartment Homes Price from 35000 euro 100 meter to the beach and see
7Real Estate
Great stuff. I can’t stand it when we see real estate again with only 1 generic picture in MLS and they wonder why their property isn’t being showed
Wow, awesome real estate blog. Bookmarked, thanks
Miami Condo
Thanks to Boston.coms' real estate blog for linking their blog post to ours. Here's a link to their story, plus a copy of our comment on it:
Why not crack down on bidding wars?
http://bit.ly/2CrackBidWars
With respect to Scott statement about making "calls today to the chairs of the housing committees in the House and Senate on Beacon Hill, as well as to U.S. Rep. Barney Frank's office," I've already talked to two elected officials from Cambridge about the need to regulate BLIND bidding wars. One elected representative, who had been involved in a bidding war recognized the problem immediately and was eager to follow-up. The other wanted to make sure BLIND bidding wars weren't a problem that only impacted higher income households who she believed had the luxury and capacity to engage in bidding wars without exposing themselves or tax payers to harm. I got her attention when I told her about a local policeman who had to bid $20K over asking price to prevail in a blind bidding war, and she wanted to hear from other "victims."
There are ways to use technology and social media to answer the elected official's question about how large and how real the problem is. If the residential brokerage industry weren't "above and beyond criticism" as BrokerMike wrote yesterday, researchers, policy makers, politician, and would already be looking at the question.
Like so much of the conflicts of interest and market manipulations underlying the causes of the "Great Recession," is one tempted to ask, "Where were the regulators?" To me, Scott's got it the right angle on that question NOW:
"What kinds of reforms are necessary to protect homebuyers in the future, so TAX PAYERS don't end of picking up the tab for "irrational exuberance" again?"
Regulating BLIND Bidding Wars is on my list, how about yours? If there was NO mention of the role residential brokerage practices played in the creation and collapse of the housing bubble yesterday at the Federal Reserve Bank of Boston hearing, maybe the blogosphere can generate calls for inquiry and reform that go far beyond those Scott is making today.
Carpe Diem!
We've posted another comment on this thread:
Why not crack down on bidding wars?
http://bit.ly/2CrackBidWars
BRAVO! CandresVRM wrote:
"A fair system that could identify real bidders can be built with today's technology. Information cards are a digital credential that can be issued by an identity provider such as Equifax or Acxiom that can without revealing who you are, electronically and instantaneously verify that what you claim about yourself is accurate.
While such a system does not exist today, a service that registers qualified home buyers and could be used to prove these folks are legitimate potential bidders without sharing identifying details or offer specifics could be built for under $1M from existing technology.
The existence of such a system could become common practice in a few years."
In the absence of legislation or mandatory regulation, it might take a few years for this to become "common practice" but pieces of the technology and underlying data standards are already in place.
To me, the question is political will! If multi-billion dollar could be allocated over weekends to rescue Wall Street institutions, what would it take to get some funding from the public or private sector to create a variety of demonstration projects to test whether regulating BLIND bidding wars is both possible and beneficial.
One of the benefits of creating the kind of buyer certification system you describe is that sellers would then be able to search buyer profiles (at least those buyers willing to make their search criteria public), as easily as buyers current search listings. (Some have called this model a reverse MLS.)
The result would be BILLIONS of dollars a year in consumer savings through reduced transaction costs (ie. commissions), as well as less tax payer exposure from irrational blind bidding.
Added another comment to:
Why not crack down on bidding wars?
http://bit.ly/2CrackBidWars
Talk about SYNCHRONICITY. This article appeared today on the leading real estate technology web site (view quickly, content available to subscribers only after 24 hours).
Online offer, negotiation service expands to Atlanta
N-Play plans to be active in 10 markets this year
This win-win perspective addresses some of the issues raised by readers, both buyers and sellers:
"Raymond Morris, president of RE/MAX Greater Atlanta, said in a statement that N-Play provides transparency in the offer process "without jeopardizing anyone's position. We believe it will help our sellers sell more quickly and at a higher price and buyers will pay only what the market will bear.""
http://bit.ly/N-PlayUpdate
Great Post! I find your blog very helpful for real estate and I am sure others do as well. Keep up the good work!
Click here for : Sale Houses Miami
It is just so tempting to abandon the real estate business (at least temporarily) right now. However I’ll look into your ideas. Thanks
Click here for: Icon Condominium
Basket nike tn chaussures pas cher,destockage polo ralph pas cher,basket Nike Chaussures,TN Requin Pas Cher,nike ninja,polo fred perry pascher,Air Max 95 Pas cher,Tn Requin,Nike TN,Chaussures Nike,Nike Air Max,Pas cher Nike TN Requin: http://www.pascher-basket-nike-tn-requin-chaussures.com
Basket nike tn chaussures pas cher,basket Nike Chaussures,TN Requin Pas Cher,nike ninja,polo fred perry pascher,Air Max 95 nike tn requin chaussures pas cher: http://www.pascher-basket-nike-tn-requin-chaussures.com
magasin basket nike tn requin,tn discount,nike id tn,nike tn chin: http://www.pascher-basket-nike-tn-requin-chaussures.com
Basket nike tn chaussures pas cher,destockage polo ralph pas cher,basket Nike Chaussures,TN Requin Pas Cher,nike ninja,polo fred perry pascher,Air Max 95 Pas cher,Tn Requin,Nike TN,Chaussures Nike,Nike Air Max,Pas cher Nike TN Requin: http://www.pascher-basket-nike-tn-requin-chaussures.com
Basket nike tn chaussures pas cher,basket Nike Chaussures,TN Requin Pas Cher,nike ninja,polo fred perry pascher,Air Max 95 nike tn requin chaussures pas cher: http://www.pascher-basket-nike-tn-requin-chaussures.com
magasin basket nike tn requin,tn discount,nike id tn,nike tn chin: http://www.pascher-basket-nike-tn-requin-chaussures.com