I recently saw a press release about a “new eBay-style platform which allows vendors to bypass agents” being launched by non-bank lender inTouch. The release said that the service was designed to deliver transparency and allow vendors to avoid paying agents’ fees.
Sounds fair enough: I don’t mind competition, and I especially respect good competition.
The founder of inTouch, Mr Paul Ryan, was quoted as saying that one of the great frustrations for vendors and buyers was the lack of transparency around the sales process. Their solution was a “vendor assisted” platform they call “Live Offer“.
A later quote attributed to Mr Ryan said: “Live Offer allows the vendor to see offers from real buyers and buyers know what other buyers are offering“.
I mean no disrespect to Mr Ryan or his company inTouch, and I wish him well in his venture. My purpose in mentioning this new offering is to highlight one flaw from a negotiating perspective that, to me, is clueless negotiating, specifically, “…and buyers know what other buyers are offering.”
No negotiation expert will tell you that it is smart negotiating to allow one buyer to hear what another has offered. What one buyer offers is NOBODY’S BUSINESS, except the agent (if one is involved) and the owner of the property under offer.
Yes, buyers at auctions can hear what another buyer has offered, and what do they do? They offer a small amount above the other buyer’s offer. They do not offer the maximum price they are prepared to pay for the property; they offer just $5,000 or $1,000 (and sometimes as low as $100) more than the other buyer.
So just because this happens at auction, it does not mean that allowing one buyer to hear what another has offered is good negotiating.
I hark back to what the experts say, and this is ALL experts, not just a few of them. Experts say that if you want to get a high price for anything, start high and reduce until a buyer is found. They also say that offers should be given in confidence, without other parties being privy to them.
There is transparency and then there is privacy. If I give you an offer, I expect privacy. I expect you to pass it onto the seller, who considers it and then accepts or rejects it, or perhaps asks me for more money – a counter offer.
I do not expect you to blab to another interested buyer and play me off against them. Nor do I believe that displaying my offer to other buyers – as ‘transparent’ as it may be – is anything other than clueless negotiating for any seller who expects to get the HIGHEST PRICE (which is different from a HIGH PRICE) for their property.
It is totally clueless to allow one buyer to know what another will pay. Worse than that, it’s a breach of privacy.
What happens on eBay? Many buyers sit and wait until the dying moments of the auction and then put in a last-second bid that is slightly higher than the current highest displayed offer. Often they win. But does the seller? Does the seller get a high price, or does the seller get the highest price that buyer was prepared to pay?
Every time I attend an auction and say to the successful bidder, “Congratulations, you must be happy. Tell me, would you have paid more?” On all but ONE occasion, I have received the answer, “Yes“. Most said they would have paid more.
If money is left ‘on the table’, that method of sale has let the seller down.
I’ll take privacy over transparency when I go to sell, thank you very much.
PS If you feel that this article may be of use to potential property sellers, please feel free to distribute it as you see fit.