“All good things come to those who wait” has not applied to real estate bidding wars, until now. Taking a cue from the slow food movement, the Consumer Financial Detention Bureau (CFDB) used their April Fool’s Day press conference to preview their Slow Bid Reform Act.
The reform package, which Dealtors fear could paralyze real estate’s “pre-covery,” is anchored by three core constraints designed to protect overeager homebuyers from shooting themselves in bidding wars and unintentionally reinflating the housing bubble:
1. In an effort to “out” premarket and pocket listings, which are estimated at 25-30% of sales in some areas, homeowners will be required to put “Coming Soon” signs on their front lawns at least one month before accepting an offer from a real estate insider;
2. Bidding deadlines, which are as little as 24 minutes in some overheated markets, will be extended to 15 days so buyers can comparison shop for two weekends instead of being driven to OVERPAY impulsively in a bidding war; and
3. To prevent passing on the cost of another trillion dollar housing boom / bust cycle to the next generation of taxpayers, two thirds of any bids over asking price will be directed to CFDB’s Bidding War Reparations Fund.
To the delight of consumer advocates and homebuyers alike, regulators are still crafting language and testing apps to guarantee a transparent bidding environment and bidder verification to eliminate straw bidders.
A fourth measure, which is modeled on existing regulation in Massachusetts which requires real estate agents to forfeit both sides of their real estate commission if they switch agency relationships, will force Dual agents or Designated Agents who benefit from bidding wars to take a “Timeout.”
“Suspending their real estate licenses for two full business quarters should give fast buck artists an opportunity to slow down and consider the high cost of trying to fool consumers,” said a member of Senator Elizabeth Warden’s staff. “We have an obligation to protect first-time homebuyers, who are already fear housing prices are not real. “Giving Dealtors a timeout will should result in less buyer remorse and more broker remorse.”
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