April Fool’s Day coming early? Beware bidding war hype, manipulation

Greater Fool Housing Market

Have you see the front page news yet? Bidding wars are back, or at least that’s what some buyers are experiencing as they house hunt across Eastern Massachusetts.

Have you see the front page news yet? Bidding wars are back, or at least that’s what some buyers are experiencing as they house hunt across Eastern Massachusetts.

The story, IMHO, should be required reading for any home buyer, as much for what it doesn’t say (or even ask) as what it does.  That’s not to say the reporter did a bad job; bidding wars are a complex subject: seasonal phenomena at best, full of smoke and mirror manipulations at worst.  Are bidding wars really back?  How will you defend yourself?  Get our preliminary response, we invite yours:

  • What would you like to know about how to compete in or avoid bidding wars?
  • Should industry regulators or app developers provide a solution to prevent a replay of manipulative bidding practices that helped create the housing bubble?
  • Think we should publish a guide to “games real estate agents play” for April Fool’s Day (eg. see cartoon on our 2005 ad above warning homebuyers about that the housing bubble was about to pop)?

If so, The Real Estate Cafe invites your contributions, either real victims stories or parodies of industry hype! Our comment on this morning’s Boston.com blog post addresses one of them:

Jima,—Thanks for raising the “Phantom Buyer” technique, one of the games listing agents play this time of year when there is a short-term imbalance between overeager homebuyers and MLSlisted properties. As Scott knows, The Real Estate Cafe has proposed a variety of responses to “blind bidding wars” and the unethical business practices that sometimes accompany them.

Here’s one of our blog posts from last year:
http://bit.ly/VerifyRE

Hope to hangout on Google+ and even host a virtual Town Meeting shortly to discuss the “problem” and possible responses, both for individual buyers, industry regulators, and application developers.

First things first, though. SVV, thanks for asking: What’s really happening with bidding wars, and how much of this is self-serving industry hype and high pressure sales tactics? IMHO, 48 hours bid deadlines may create a fear of loss, but shouldn’t be mistaken for housing demand and purchase power roaring back. Glad a lead listing agent and buyer agent quoted at the end of the Globe article both told buyers not to overreact to a passing phenomenon.

Given that, one wonders why the story was on page one?  Want to read our line-by-line response to the Globe story and be invited to the virtual Town Meeting if there’s enough interest to host one?

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