Was talking to an industry buddy about some theoretical things, and something kind of jumped out at me. Why the standard practice in real estate of sealed offers? You know, the whole “best and final” submitted to the listing agent without knowing what you’re up against?
Why not simply have more of the “open outcry” system as in the stock markets? With technology as it is, it should be simple indeed to put up some sort of a “Bid” page with a list of offers and major terms, no? (Or do it in the MLS if there are privacy concerns?) I could imagine someone setting forth the bidding period, at the end of which the decision will be made, with an Ebay-style anti-sniping rule (if bid comes in within the last 4 hours, the bidding period is automatically extended for another 24, etc.).
I know there are terms besides price (contingencies, time to close, etc.) but those could all be spelled out and put on a webpage somewhere. It’s not quite an auction system like they have in Australia and elsewhere, but it is a bit more transparent than the “best and final” sealed bid system.
Is the idea behind sealed bid that some buyers might bid way more than others because they don’t know what the others are offering?
Since I’ve never worked as a real estate agent, I’m just really curious about why. Would love to hear from my REALTOR friends on why the offer system is the way it is today.
-rsh
