Episode 2: TruHome Value the Transparent Open Bid Platform

Main Topics Discussed:

• Introduction to TruHome Value: A transparent, open bidding platform designed to address the issues inherent in the traditional blind bidding process in real estate transactions.
• Problems with Blind Bidding:
  • Creates mistrust and manipulation among buyers.
  • Buyers often retract or terminate offers due to uncertainty and distrust, affecting over 30% of transactions.
  • The process is emotionally draining and inefficient, leading to frustration for all parties involved.
• Advantages of Transparent, Open Bidding:
  • Provides all participants with more information, allowing for educated decisions.
  • Reduces negative emotions and increases buyer confidence in their decisions.
  • Typically results in a higher selling price that is more likely to stick because buyers feel more committed and less deceived.
• Real-Life Experiences:
  • Kari Abt shared a personal story highlighting the complexities and emotional toll of blind bidding, emphasizing the need for transparency.
  • KieAnn Brownell discussed the importance of factors beyond price for sellers, such as possession dates and inspection conditions, which are more transparently communicated in an open bidding system.
• Benefits of TruHome Value Platform:
  • Increases efficiency and reduces communication issues by making all offers and conditions visible to all parties.
  • Allows sellers to communicate what's important to them beyond just the price, enabling buyers to tailor their offers more effectively.
  • Demonstrated to potentially increase selling prices by 7-15% without detrimentally affecting buyers, as they operate within their known limits.
• Future Discussions:
  • The next episode will focus on the buyer's perspective in both blind and open bidding systems.

Conclusion: The episode advocates for a shift towards transparent, open bidding in real estate transactions, highlighting the benefits of increased information, reduced emotional stress, and potentially higher selling prices. TruHome Value is presented as a pioneering solution aiming to reform the current opaque system, with real-life experiences underscoring the need for change.

If you believe in our cause and found value in our discussion, please like, follow our show, and share it with anyone who has experienced or is curious about the absurdity of the blind bid process. We're eager to hear from you and continue this conversation. Connect with us on YouTube, LinkedIn, and Instagram @truhomevalue. Let's journey together towards a more transparent, trustworthy, and fair real estate market.

Listen to the episode on Apple Podcasts, Spotify, Google Podcasts, or your favorite podcast platform.

Get in Touch:

• TruHome Value's Website: https://www.truhomevalue.com
• Follow TruHome Value on X @truhomevalue
• Connect with us on LinkedIn and YouTube for more insights and updates.

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Transcript

Episode 2

[00:00:00] 

James: You are listening to the Real Estate Blind Bid Provocateurs, a podcast, taking a bold stand against the opaque and frustrating process of blind bidding. A system that has long plaqued the real estate market with uncertainty. mistrust and manipulation. This podcast is a production of TruHome Value the pioneers of transparent open bidding in residential real estate. 

James: Now on to the show 

James Clark: Hello everyone. Welcome to episode two of the Blind Bid Provocateurs. this episode is about the platform, that we have created with my 

James Clark: co-host here, KieAnn Brownell, and Kari Abt. called TruHome 

James Clark: Value, and it is a transparent, open bidding platform. Why is the blind bid process, is the true problem in the real estate industry?

KieAnn Brownell: James, I think one of the things that's happening right now, there's no doubt there's a lot of companies that are dead set on disrupting the real estate industry, but I think they're missing the [00:01:00] ball. They're focusing on agents commissions and brokerage commissions and this, that and the other.

KieAnn Brownell: And I'm not saying that there aren't conversations to be had about that certainly there are, but at the end of the day, the real problem, I believe is the process. The process is just, foul. It's awful. This blind bid pig in a poke where, everybody comes in and bears their soul and submits their really high bid, that it's at the top of their price point that they can afford. And then as soon as the listing agent gets all the offers, they turn around and go, thanks for the offers now give us your highest and best. And everybody's what does that mean? I just did. How do I know I'm not bidding against myself? The immediate reaction of buyers every single time is distrust. They immediately think I'm being manipulated. This isn't [00:02:00] right. How do I know I'm not bidding against myself? How do I know I'm not already the highest offer? Everybody loses in this process. The net result is by the time a buyer wins this insane bid, escalate, escalate They're so uncertain about the price. Now that they're paying that, oftentimes over 30% of the time they end up terminating on the house because, they just don't trust the process anymore and they think they've been deceived and manipulated and maybe

KieAnn Brownell: they have Kari's. Got a 

KieAnn Brownell: good story about that.

Kari Abt: Yeah, absolutely. And, being the middleman in this process as a mortgage broker, these buyers are coming to me going, what do you think we should do? They're looking towards, my expertise for guidance on is this house worth it? What, what's gonna happen to us if it doesn't appraise?

Kari Abt: What do you think it's [00:03:00] gonna price for Kari? How much will they lend to us on this property? How much more money are we gonna have to come out of pocket on top of our, down payment and closing costs. And it gets to be a real scary situation. And,I recently was in a real estate transaction and, essentially we could not be.

Kari Abt: beat, we were going to offer this much more than anyone else, but we eventually had it be at an unlimited price for the house, right?

Kari Abt: There's no price cap. Like we, we didn't say it has to stop here. We won't go above this. We'll pay this much more than anyone else. and it's open-ended. So how can you be beat on that? Somebody else had a escalation clause on the table as well.

Kari Abt: and so the listing agent decided that you can't escalate an escalation clause anyway. it would mean that no matter what anybody wants to offer. 'cause that other escalation class had a cap, but we won't pay more than this for the house. And we said we'll pay anything for it. So we'll match them and raise [00:04:00] 'em by what we had.

Kari Abt: Go back and rewrite your offers. This went on from a Friday to a Tuesday morning, and let me tell you, emotions were high for everybody. They were high for the other offers on the table. They were high for the seller. The seller was super frustrated and confused because their agent is left to interpret language that was, a standardized contract by the state.

Kari Abt: And agents, technically, if they're not attorneys, can't practice law. So she's still trying to practice law with her managing broker who's not an attorney, who's trying to then can, and my buyer's agent is having the same, it's a complete crap show. And had there just been. An opportunity to see what the offers were on the table then everybody could have just backed off and said, you know what, this one here, they're gonna continue to kick our [00:05:00] butts. That's the bottom line. 

James Clark: Yeah. 

Kari Abt: they're not. We, everybody would've felt better about the process if they could just see who the dogs were in the fight.

James Clark: Right, who you're going up against. Who is my competition? What am I playing with here? I know we talked about our genesis story and these stories are plentiful and we promise to tell more real estate horror stories and that's gonna be part of our gig here on the podcast. So in 2020, we all got together. By 2021, we built a platform that gave people the ability to see everyone else's bid on the platform. 

James Clark: so 2021 KieAnn, you sold a couple houses on this platform and its very, initial stages. What is it that people can see in a transparent, open bid platform? 

KieAnn Brownell: So I think the important thing is information, and this is where the blind bid system is failing. I think that. Back to the misconception that the blind bid gets a [00:06:00] seller the highest price. Here's what happens really on the blind bid, okay? Is that as soon as the agent comes back and go, now give us your highest and best thanks for all those great offers, but now give us your highest and best buyers pull back.

KieAnn Brownell: They don't just open their checkbooks and go, okay, here, have more money. They start going, what's going on? They start to lose faith in the process. So what the Transparent Offer platform will give people via TruHome Value is the opportunity to have information. And what we've seen in our tests is that with information, people will make educated choices. It removes the negative anxiety ridden emotion, and it allows them to make a decision based on their personal situation, based on their finances, based on how much they want this house with good [00:07:00] information and having that information ironically drives the price up. It nets the seller a higher price that sticks because they don't fall out, they don't terminate because they made this decision.

KieAnn Brownell: They feel good about it. They know where they stood against all the other offers. They know there were other offers. It really, changes the whole landscape of buying real estate. And if you think about it, we do it all the time this way for other things.

James Clark: Yeah, Carrie, if you would've had that in your situation, what you are saying is we really didn't have a cap on how much we were willing to spend. So for instance, let's say in a bid system, someone bid $5,000 more. you could counter that with a thousand. At some point in time there's a cap, right? But you've set your own. Value, your own true value to that property is established by you, it's established by the market. You have two people who really want it, then the price can go [00:08:00] up. That idea of having the visibility and being able to compete in a way that makes sense. And then, and if you lose.

James Clark: It was a fair competition. 

Kari Abt: James, absolutely. And. In full transparency, it wasn't like there was an unlimited money supply to pay whatever for this piece of property, nor would I be that financially foolish. Let me be clear on that. It was a strategy because buyers in a situation like that are forced, I hate to say it this way, to play a game.

Kari Abt: Just to get a home. 'cause buyers get exhausted of putting in offer after offer on different homes, falling in love with them, and then having to walk away from it. So then you start to get strategic. The consumer feels manipulated by the antiquated real estate process, so they start to get creative.

Kari Abt: I'm like, how do we get this? Because again, as I mentioned earlier, these are standardized contracts. They're still outs for the buyer.

Kari Abt: And [00:09:00] I'll tell you, had there been some transparency where everybody could have seen what was on the table, the process would've been faster, more efficient, less painful for everyone involved. And as this particular transaction continued to unfold, there was an issue through this standardized, process of negotiation after the deal is on the table, the long story short is. it never did close at this astronomical number above and beyond, this craziness that was going on. And the seller may have had an opportunity just to part ways with where the deal went under contract and gone back to some of the other offers that were on the table and see if they were still, interested.

Kari Abt: But everyone's so pissed off. They're like, screw that seller. We're not even interested anymore. We went through pure hell. This open, transparent offer platform would have kept everything calm, [00:10:00] cool, and effective.

James Clark: And then tell me, KieAnn, maybe what's the difference? because we've done this as we've been building TruHome Value, we've been taking a look at other bidding platforms like cars&bids and Bring A Trailer. Carrie, you mentioned before, we don't ever buy anything like this. we buy homes in a blind bid system. And there have been other industries that have really changed, They give you the opportunity to enter in an auction. A lot of the similar faculties are in place where you can see each other's bids it's anonymous. you don't know who you're bidding against, but what are, what is it that's unique about real estate that puts it in this idea of transparent open bidding gives you view into all of the deal points rather than just price. Talk about why that matters.

KieAnn Brownell: One of the things about real estate is that it's a specific performance contract for a seller. So once a seller enters into this [00:11:00] contract,

KieAnn Brownell: they're basically forced to close. Unless the buyer terminates, the seller cannot terminate that contract. That's why this isn't an auction, because the highest price does not always win. It's not always in the seller's best interest to enter a contract with just whatever the highest price is. I remember a few years ago I had a listing and some seller came in, literally like a hundred thousand dollars over. on a property that was selling for 250,000. everybody was 20, but this guy had, I knew he didn't have the cash to substantiate that gap. His cash was only like 10,000. So he was just throwing some astronomical price out to win the auction. But it wasn't an auction. Because. a seller has to take into account [00:12:00] all these other things like possession. Oftentimes possession is a huge driver for a seller because they don't wanna have to move twice. So what day do they have to give possession matters? How picky are they gonna be on inspection? That matters. Do they have the cash in hand if their price that's way over asking doesn't appraise? These are all, just a few of the say 10 or 15 considerations that a seller has to take into account in order to really pick the best offer for themselves. 

James Clark: And those are all visible and to the, to all the bids. they're saying, Hey, this is how we're approaching inspection so everybody sees what the other buyers are offering to the seller.

KieAnn Brownell: Exactly. Plus the seller has the opportunity to tell the buyers. This is what's important to me. Price obviously is always important, but I really have [00:13:00] to have this possession date. I cannot move because my kid's school, I'm moving outta state and my kid's school ends this date. I have to stay here until this date period. So that might be their number two driver for them. And a seller can communicate that and then they can rank the bids Buyers can come in and see, hey, that's a really high offer, but they can't meet their their possession date. We can match that offer and meet the possession date. I bet we'll move ahead. 

James Clark: Speaking with some of the individuals, the buyers who actually didn't win the bid, but yet loved the process because they knew exactly what happened. 

James Clark: better luck next time essentially, They couldn't meet the terms, that were required by the seller, and it wasn't price. And if you're doing this with a blind bid, then you're relying on your agent to call that agent and that agent has to talk to 10 different people or whoever it is, five different bids.

James Clark: A transparent open bid platform basically reduces those [00:14:00] communications issues. I think Kari, you talked about that before. We have massive communications issues in the blind bid process. We don't necessarily know, and we're just guessing, taking our best guess.

James Clark: And to your point, KieAnn, if that's the case, we're gonna retract, We're going to reduce as much risk as we can because that's just the nature of the human being.

KieAnn Brownell: Exactly.

james_2_02-16-2024_110658: One of the interesting things that, came out of it is when we look at blind bidding and you look at, let's say, auction style selling, to your point earlier about the sellers, feeling as if. the blind bid process is the way to get more money, it's just not true. There is data, that an open bid process actually generates anywhere between seven and 15% higher, selling price. Now, this isn't necessarily detrimental to buyers because buyers already know what their limits are. They're not gonna pass their own limits. And as you mentioned Kari, they're not gonna get into some ridiculous situation, right? That that you as a lender aren't gonna back. So they, they know what their parameters are. If I was the [00:15:00] buyer and back to my story, turns out I lost the original bid by $500. I was like, what? That someone should have just called me and told me Hey, you want to go up another 500 bucks?

james_2_02-16-2024_110658: yeah. that's just the way it is. Now we have clarity. Now we have a reduction in miscommunication. Now we have a focus just in terms of what you can and can't do. And then again, we're not in this crazy, highly emotional, getting exhausted process because we just see where we are and then, and if you lose the bid, you start learning the things that are going to, we're gonna be able to win at.

james_2_02-16-2024_110658: And so you're probably gonna start recognizing those when you enter into the next bid.

Kari Abt: Yeah,

KieAnn Brownell: Definitely.

Kari Abt: exactly.

James Clark: All right, so we are gonna get into the buyer themselves in our next episode. So all the different aspects of what it means to be a buyer in the blind bid [00:16:00] system versus the open bid system. We're gonna do that deep dive in episode three. 

James Clark: Please, follow us on Apple Podcast.

James Clark: You can also find us on YouTube if you search for @TruHomeValue, T-R-U-H-O-M-E Value. like and comment on this podcast. Share it with everyone. 

James Clark: Thank you very much for listening to the show and we'll catch you on episode three.​