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The Stock Market (for Real Estate)

OpenDoorAuctions.comWouldn’t it be nice if there was a stock market for real estate? Where buyers and sellers could easily and quickly transact their business? Where pricing was deduced by the ultimately fair law of supply and demand and not by the vagaries of a protracted, slow motion negotiation? Well, actually we do have a stock market for real estate and Open Door Auctions is here to tell you about it. Sellers, sit up and pay attention because what you’re going to learn here today could help you get rid of that “for sale” sign in your yard that seems to have grown the roots of Stonehenge over the past months of your traditional real estate agent “trying” to sell it.

Here we go. In a perfect world without insider trading the price of a stock on the stock market fluctuates as a result of the battle between supply and demand. When company news is good, everyone wants a piece of the action and the price begins to rise due to a scarcity of supply – not enough shares out there willing to be sold at the lower price. Likewise, when bad news hits the fan, shareholders can’t dump the dog stock fast enough, to borrow a phrase from Gordon Gecko and the movie Wall Street.

The idea of the stock market functioning as a barometer that reflects a real-time estimation of a stock’s value is genius. Of course, in the real world, the stock market is not a closed system and finds itself influenced by all sorts of shady dealings and manipulation that makes it something less than a true reflection of value, but that’s not our point right now.

Today we want to focus on the mechanisms of supply, demand, volatility, and how Open Door Auctions borrowed them to turn property sales into an honest to goodness stock market for real estate. Our vehicle of choice is the Multiple Listing Service (MLS), a tool that was invented by the old-fashioned real estate industry more than a one hundred years ago and, though horribly under-utilized by the average broker, serves as the perfect online platform from which to launch our real estate stock market idea.

Here’s how the average agent uses the MLS…

1. List a property for sale
2. Do nothing else for a really long time
3. Re-list it months later at a lower price

Pretty boring, right? We concur. So what does Open Door Auctions do differently that turns the MLS into a de facto real estate stock market? Simple. We take the eons of time that your old agent used to market your house and cram it down into a two week supercharged process where the price of your property changes every day, catapulting it back to the top of the listings by the way, and drawing new interest from a whole new set of buyers.

To get started, we ask what price you want to list your house at. Not many agents do that. They have a preconceived idea in mind of what your house should be worth and, since they’re the “professional”, you’re expected to listen and obey. In our way of thinking, it’s your house and you should set the initial listing price. Who knows? Maybe you have a perfect feel for what the price point should be. Or maybe there’s a buyer out there who can’t wait to open his wallet and give whatever price you ask.

Unfortunately, the old way of selling property ignores the fact that the seller really might know best, and completely misses the idea that a set of deep pockets out there might have paid much more if the starting price had been higher. But it’s what comes next that makes things really exciting and is the point at which we begin working the MLS like the stock exchange. Typically, within a day or so, a newly listed property begins to slide down the front page listing and out of sight as newer properties are added. Sorry, that’s just the way it works…unless…you lower the price, re-list the property, and watch it vault back up to the top of the page where it can attract new interest from people who were not willing or able to pay the first price point. A day later, your property is drifting down the listings again, so we lower the price again and send it back to the top to draw interest from another round of buyers.

And so on and so forth until the day of the auction two weeks away.

At this point we should remind readers that an Open Door Auctions sale is NOT an absolute auction where you are forced to sell the property even if you didn’t like any of the bids. Under the terms of your agreement with us you are free to reject any and all bids, which is the way it should be in a free capitalistic system. But you should also keep in mind that the bids solicited through the process are a true reflection of what the buying public thinks your house is worth. This is likely to be the exact price an old-fashioned real estate agent will arrive at, though the downside is that, since his business model prevents him from using the MLS like the stock market, it might take him a year or longer to find that price.

Next time we’ll highlight case studies from recent sales for people like you who have chosen to embrace the future of real estate with us.

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The Open Door Auctions Team

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