"A four bedroom house on a cul-de-sac in Cary for less than $90,000? Are you kidding me?"
"Is your house built on a toxic waste dump or something?"
"What's wrong with it?"
"Not one thing. We will show you the home inspection report. It's an incredibly nice house. We have loved it."
The phone calls were rolling in just like the book, How To Sell Your Home in 5 Days, said they would. We were betting our home and our future on a selling method no one we knew had ever heard of before. We were on one of the wildest rides of our lives.
It was the summer of 1998. The dot-com explosion was in full swing. The housing market was a seller's paradise. Within hours of putting their homes on the market, people were receiving offers at the top of their fantasy asking prices. Why would we risk everything on some scheme we had read about in a book? Were we nuts? Maybe.
John and I were juggling a complicated schedule. He had recently taken an offer from his company to transfer to their Durham branch and we were building our dream home there. We had delayed putting the house on the market because we dreaded the prospect of having to store our furniture and live in a motel if our house sold before our new place was finished. On the other hand, what if the house didn't sell fast enough? What if we had to pay off our builder and carry two mortgages? The pressure went up when our builder suddenly informed us that he was going to be finished three weeks ahead of schedule. We were going to have to scramble.
Of course, by itself, that was not big news. Everyone has tricky timing issues when selling and moving. Our big question was whether or not to try to sell the house ourselves. Although we loved the real estate agent who helped us buy our house in Cary, building the house of our dreams was a stretch. We needed to save every penny we could and that commission money would sure come in handy. In a boom market, we felt less uneasy trying it ourselves.
John remembered hearing about the book by Bill Effros. It claimed to be a wildly successful alternative to the conventional methods of either selling your home yourself or through a Realtor. We have always liked to "think outside the box." We decided to investigate.
In a nutshell, Effros' technique is that you run an ad in the newspaper and answer the phone starting on the Wednesday of your choice. On Saturday and Sunday, from 10 a.m. to 5 p.m., you show the house, answer questions, and encourage people to leave their phone numbers and a bid--any bid. On Sunday night, at 8 p.m., you telephone everyone who placed an offer. In a series of round-robin bidding, by the end of the evening, you sell your house to the highest bidder. That's it.
It sounded great, but could it really work?
How the 5 Day Method works
The book describes its method with a simple example. Suppose you wanted to sell a $100 bill. To get your business, a broker might tell you that they could get you $110 for your $100 bill. Oh, sure. That's so going to happen. After a few months of waiting, your broker suggests that you drop the price to $100. Still, who would care? Finally, probably the day before your contract expires, the broker would persuade you that you should drop the price to $95. Immediately, someone pounces. Your broker gets a $6 commission and you get $89. Whoopee.
Using the 5 Day Method, you decide to sell your $100 bill yourself. You take it to a bar, say, or someplace with 30 or 40 people. You announce you will sell your bill for $50 or the best offer in the next five minutes. According to Effros, two factors come into play to make this work. First, you must have a large pool of people in order to find the two or three "real" buyers. Second, the time limit creates an atmosphere of excitement and interest that encourages people to jump into the action.
Naturally, people are skeptical at first. So you reassure them that you are serious, there are no tricks, the money is certifiably authentic and so on. The bidding begins. As long as there are enough people, the author promises, the bidding will make it to more than $95 and hover around $99.50, because that is still a good deal for the buyer. Instead of waiting months to get only $89, incurring untold extra expenses while you wait, you will sell your $100 bill for around $99.50 and in less than five minutes.
This made sense to us. Of course, one could argue that selling a house and selling a $100 bill are very different. When you are selling your home, you can assume that most people are, in fact, motivated and actively seeking a new home. In the bar, it is possible that no one is interested enough to automatically bid up to the full value. On the other hand, my degree in sociology taught me about studies of the human foibles that come into play when people get carried away at, say, auctions and knowingly bid far beyond an object's worth, just for the satisfaction of beating their competitors.
Effros emphasizes that a bidding "war" is undesirable. Because the bidding happens on the phone, led by the seller, without contact between the competitors, a frenzy that might lead to buyer's remorse later is avoided.
The homework phase
Although it was a lot of work, the book was adamant that every possible objection or question a prospective buyer could have should be pre-emptively addressed. So I put together notebooks containing bar charts of our utility bills, property survey maps, brief and detailed descriptions of the house, the neighborhood, the school district. We paid the best home inspection consultant we could find and included his entire report in the information packets.
We were almost ready. The rules covering the transfer of title and all the preliminary steps vary from state to state, as do the laws on who the agent can be--an attorney, a title insurance company, an escrow company, or various lending institutions. Of course, the fees for this service vary too, but they certainly come nowhere near the real estate broker's commission. As the book urged, it was time to find a settlement agent to advise us and make sure that all the legal matters were covered.
We figured getting a real estate attorney might be the way to go, since this technique was somewhat unusual, to say the least. But calling around, I found that the attorneys who had not heard of it were wary of getting involved.
When I found one who had, he warned me that it was nonsense and the worst sort of risk to use this method. He had heard a horror story of someone who had never gotten the bidding high enough to break even. They would have suffered financial disaster had they honored the final bid. So they pulled out and informed the bidders that the sale was off.
Then, the attorney told me, unable to disguise the glee in his voice, when the homeowners put their house on the market in the conventional way, one of the bidders decided to sue, citing breach of verbal contract. In the end, the suit was dropped, but it was an expensive and traumatic experience for everyone.
This was daunting news. I scoured the Internet, trying to track down the author so I could ask questions. At that time, there were almost no references anywhere online.
Although I was unable to contact Effros, I managed to find two veterans of the 5 Day Sale. They both assured me that the strategy had worked beautifully for them, exactly as the book described. One, in fact, had been so successful, he had decided to become a part-time consultant for people who wanted to use the method but preferred to have more hands-on guidance.
He reminded me that in the book--while Effros is emphatic that he is not an attorney and that the seller should always talk to a local professional if this is a concern--Effros also states that in the hundreds of sales he has facilitated, all over the country, he has never heard of a case in which the seller was forced to take the high bid if they did not want to.
This was somewhat reassuring. But just in case, we called our real estate agent friend and asked her opinion. She pointed out that the world is a litigious place and stranger things have happened. But without a signed contract, she felt it would be very doubtful that any such suit would be taken seriously. Moreover, she was quite intrigued by our plan and graciously outlined all the necessary legal steps we would need to set up the sale. She even provided the documents required by state law, at no charge.
John and I were ready to give it a try.
The Five-Day Countdown
The ad went out. The online ads came out the night before the print edition so our phone started ringing Tuesday night. By 3 p.m. Wednesday we had the 25 calls the book says are necessary for a critical mass of bidders. By Friday, I began to sound like a recording -- patiently explaining the process, reassuring everyone that, no, the house was not laden with asbestos or rats.
Saturday loomed. We boarded the cat at the vet. We cleaned everything top to bottom. We recruited two of our best friends to help handle what we hoped would be a good turnout. We vastly underestimated the response.
There was such a mob of visitors, no one ever had to use the doorbell. For the entire seven hours, both days, there were groups in various stages of arriving, waiting their turn for the tour, signing the bidding book or departing. The four of us greeted people at the door, made sure everyone got their bidding rules, the information packets, the house tour, and all questions answered. It was utterly exhausting and exhilarating.
We followed the book faithfully, assuring everyone that we would include each bidder in the Sunday night finals, no matter how small the bid. Naturally, someone scribbled in our greeting book that their bid was $1. Someone else offered $7. This was discouraging, but of course, more serious bids came in without delay, saving us an emergency trip to the cardiac care unit.
Promptly at 5 p.m. Sunday night we closed the door. We refused to answer the phone. We sat on the sofa and closed our eyes. We drank a beer, maybe two. We ate some dinner. We gathered all the paperwork, and the phone numbers of the initial bidders. We watched the clock.
And then I fell apart.
I had whisked through all the preparation steps, overseeing repairs, composing the ads, the forms and the notebooks. I had made coffee, fluffed pillows, zipped throngs of buyers through the house. I had sailed through it all, but 15 minutes before the final bidding was to begin, I lost it. The thought of us risking this house and our future home and all our dreams and all our money on this unknown, unconventional, possibly insane scheme suddenly paralyzed me.
John smiled, kissed me and picked up the phone. He called each bidder (including the one dollar cheapskate), dutifully noting every bid, which buyer had dropped out, who was next in line. I ran from one end of the house to the other, weeping, afraid to listen, afraid not to and ready to jump out of my skin.
Round Robin Final Bidding
In the first round, most of the 30 or so visitors who had signed our book either did not answer their phone or admitted they were dropping out. Exactly what the book had predicted. By the second round, we had narrowed the field to 12 bidders, one of whom was the person who had opened at $7. Yet I simply could not bear the uncertainty. We were sitting at around $100,000, nowhere near what we needed ($128,000), much less making the killing that we secretly hoped for.
The time crawled by. One by one, people dropped out. By 10 o'clock, after two hours of calling and informing everyone where the bidding was, we were down to four serious buyers. The amount was finally creeping into an acceptable range, around $125,000. Round and round the calls went. I was nearly numb with hope and worry.
Finally, we were down to two bidders, an Egyptian family and a family from Nicaragua. I did not remember meeting the first, but I remembered that the wife of the family from Central America had called the first day. It seemed like years ago.
They bid. The Egyptians counter-bid. The Nicaraguans raised the bid. Back and forth it went between them for more than 40 minutes. It seemed like it would go on forever.
But then, without warning, at $131,000, the Egyptian bidders stopped dead. They had reached their limit and they were finished. Hands shaking, John called the Nicaraguan family. They had bought our house.
Since we did this in 1998, it seems that the 5 Day method has really taken off. In fact, when I did some research on the Internet, I found all kinds of references to it. A corporation has been created to represent the book and its methodology, called Sales Systems Inc. The company says tens of thousands of homeowners have successfully used the method. Like the part-time consultant I chatted with before, a number of people enjoyed the process so much they offer help leading others through the process; some may be incompetent or even unscrupulous while others seem enthusiastic and professional.
In retrospect, it was the most thrilling, stressful, fun and terrifying way you could ever sell your house. I would do it again without hesitation.