What is zBid?

zBid is a bid collection tool for listing realtors for a property for sale. Using zBid a listing realtor can obtain the maximum bid from every potential buyer by registering the property with zBid and registering interested buyers. Buyers will then be able to bid against each other.

zBid is like an auction without the commitment to an auction. zBid updates all buyers with competing offers allowing all buyers to react and update their offer.

Why zBid?

With zBid your client will achieve the highest possible price for his property. Common sense dictates that if you allow buyers to upgrade their offers, you will end up with a higher sales price, and there is abundant data to support that. Real estate auctions have been shown to result in an average sales price 4-15% higher than typical negotiated sales. (Ref 1-4)

Current practice and its problems

Current practice in selling real estate is to request a one-time “highest and best” offer from all interested property buyers and choose between them. A substantial drawback of this practice is that it doesn’t allow for any revision offers. Therefore, the buyer is between a rock and a hard place. If his offer is too low, he won’t win, and if it is too high, he might overpay. Often times the fear of overpaying results in submitting an offer lower than he would be willing to pay, if he know what the other offers are. Unfortunately, with this practice the seller misses out on the highest possible sales price he could realize for his property.

Solution: zBid

For a buyer knowing competing offers provides a reference for the value of the property and lowers the buyer’s threshold for submitting a higher offer. zBid anonymously updates all buyers with incoming offers in real time per text message and allows the buyer’s realtors and their clients to easily update their offers. As a result, the seller realizes the highest possible price for his property.

Win-Win-Win-Win

zBid creates a Win-Win-Win-Win scenario for sellers, buyers and realtors. The buyer pays 1.5% of the final sales price in addition to the final sales price as a commission. The commission is equally shared between the listing realtor (0.75%) and zBid (0.75%).

1. Seller wins: Seller receives the highest price someone is willing to pay for his property. The zBid commission is paid by the buyer.
2. Listing realtor wins twice: Firstly, zBid shares its 1.5% commission fifty-fifty with the listing realtor. That means that on top of his regular commission the listing realtor receives an additional 0.75% of the final sales price. Assuming a standard listing realtor’s commission of 3%, that’s a 25% increase in the realtor’s commission from 3% to 3.75%.
   Secondly, using zBid allows for a lower asking price and a potentially quicker sale. Since the seller is not required to accept any of the offers, the seller is not taking any risk. Overpricing a property wastes time and money. A lower asking price gets more buyers interested and can spark a bidding fever.
3. Buyer wins: The buyer has a greater chance of getting his desired property because he can update his offer as often as he wants. The buyer knows that he is getting the property at a fair price as he can see what other people are willing to pay for it.
4. Buyer’s realtor wins: The buyer’s client has a higher chance of winning the bid. This decreases the amount of times his client gets outbid, and therefore results in fewer showings until his client acquires a property. This results in significantly less work for the buyer’s realtor.

How does zBid work?

zBid is easy to use. It does not change the listing realtor workflow, but rather functions as an added value tool.

1. Every step in your workflow is the same until at least two buyers express interest to submit an offer for your property.
2. Download the Realtor-Seller Agreement and have your client sign it.
3. Instead of asking buyers to submit an offer via Docusign, you register the property with zBid using MLS and address and register buyer’s realtors with their email and phone number. Realtors who have not signed up yet for zBid will receive an invitation link tied to your listed property. The realtors can bid for their clients. Optionally they can register their clients who can bid themselves.
4. Ask buying realtors to download the Realtor-Buyer Agreement and have their buyers sign it.
5. Receive bids and re-bids. Bid parameters include $ amount, cash percentage of the offer, type of loan, inspection (Yes/No), appraisal (Yes/No) and optional comments.
6. All bids are valid until midnight the next day EST, so you are not dealing with multiple deadlines throughout the day, if you have multiple listings. Bids can be upgraded at any time prior to their expiration.
7. All register bidders are being updated with incoming bids in real time by text message. Bid updates are anonymized to the other bidders.
8. Accept any bid you want at any time you want, or have your seller accept a bid himself.
9. When you and your client are happy with an offer, you can ask for more information if needed (i.e. loan preapproval letter). Then you can finish the same way you are used to by asking the buyer to resubmit the final accepted offer via Docusign.
10. If for whatever reason the closing is unsuccessful you can go back and re-negotiate with the other or new bidders.

There is no risk. If your seller does not like any of the bids, he does not need to accept any. No commission is paid unless there is a successful closing. In case of a successful closing 1.5% of the final price is paid as a commission by the buyer in addition to the final price. The commission is shared equally between the listing realtor and zBid.

References

1. Lusht KM, Auctions Versus Private Sales of Houses: A Description and Empirical Analysis of Melbourne, Australia Market, Working Paper, The Pennsylvania State University: Philaddelphia, PA, 1990.
2. Lusht KM, A Comparison of Prices Brought by English Auctions and Private Negotiations. Real Estate Economics, 1996, 24, p517-30.
3. Newell G, MacFarlane G, Lusht K, Bulloch S, Empirical Analysis of Real Estate Auctions Versus Private Sale Performance, Working Paper, University of Western Sydney: Hawkesbury, Australia, 1993.
4. Dotzour MG, Moorhead E, Winkler DT, The Impact of Auctions on Residential Sales Prices in New Zealand. Journal of Real Estate Research, 1998, vol. 16, no. 1, p57-71