HAS YOUR REALTOR BECOME AN AUCTIONEER ?

Realtors use a static pricing system to present a property to the market.  Typically a list price is determined, based on comparable sales data, appropriate adjustments for time, and in this market an awful lot of guess work.  The property is advertised and placed on the local MLS and probably Realtor.com. Open houses are scheduled and a realtor usually sits in an empty house for the better part of a Sunday afternoon.  Then they wait, and wait and possibly wait some more for the phone to ring.  You start to see why I’ve call it a static pricing system. Without a mechanism to encourage competition or create urgency on the part of the buyer, the seller can feel as if they are being circle by sharks waiting for a sign of weakness.  Therefore, most Realtors will suggest to their sellers they reduce the list price by 5% or so every month or two until a buyer bites, pun intended.  In effect they have become auctioneers.  Wait a minute doesn’t an auction start with a low bid and work its way up?  In a traditional or western style auction they do, but there is an auction that works the other way around. It’s call a reverse auction or Dutch auction, where the price comes down so much over a given amount of time, until the first buyer to raise his hand becomes the winning bidder. That’s what realtors are asking their clients to do in the current buyers market.  It appears safe but its reactive and allows the buyer to drive the transaction, without I might add any form or competition between buyers, just first hand in the air (or signed offer) becomes the winning bid.