You Don’t Know What You Don’t Know. CaseStudy: Priceline

MLS Homes For Sale Arlington VaFor years I have used Priceline for Hotels and Cars (flying is still too risky).

I knew there must be a better way. There is too much technology and crowd collaboration to be the only person that wanted a better way to bid and beat the system. Now I have found it!  Here is a Video.

While I can’t reexplain everything I learned in one post, I can give you the highlights.

1) Databases of previous bids. There are sites like www.biddingtraveler.com and others that will show you what other people have bid and won. Also these sites will show you which are “secret” hotels.

2) “Re-bids” (that is the lingo) for Priceline Hotels. Normally Priceline only lets you bid once per 24 hours, unless you change something in your bid. For example changing the dates, star rating or location within the city. I finally found a trick that lets you rebid in $5-10 increments, sometimes 10-20 times. The way you do it is you pick the area you

want and the star rating. When you lose you then pick an area with no hotels with that star rating. That lets you rebid since you added a zone (with no risk of getting a place in that new zone).  And rinse and repeat. And if you travel with somebody else, you can rebid several time again with their account. Read more about rebidding here. And you can get $20 added to your bid if you have an Entertainment Card.

3) Bonus: While I don’t use Priceline for flights, I wish I did. I just found out that you can rebid an unlimited amount of times (like $1 increments) by changing your search like: DCA > Houston to: Alexandria Va > Houston. Priceline will recommend DCA… yet it still counts as a new search. So you just keep changing the city name endlessly until the price hits their secret reserve. Result… MONEY in your pocket!

Is this illegal? (disclaimer, I am not a lawyer… yet) Nope. Priceline acknowledges these techniques but says that currently only a tiny fraction of their users use this. I call that a green light for people willing to make the extra effort.

So how does this relate to buying homes? The point is:

YOU DON’T KNOW WHAT YOU DON’T KNOW.

I’m sure millions of people think they can just head over to Kayak.com or Hotels.com and get “50% off” on hotels, when in fact they are paying within $5 what other people are paying. You probably didn’t know that there was a better way on Priceline to secure a $135/night for a 5 star that retails for $500+ and is “discounted” for $330 on Hotels.com (true example of my winning bid). And sure it isn’t for everyone, but for many people it can be extremely useful.

Just like real estate. I hear people say all the time “Well I just used the agent at the open house. Heck I knew what I wanted to pay so why not just get it done.” Why not? (as I pull out my hair (see photo of me)). Not only are you either using:

1) the listing agent whose sole responsibility is to their selling client (ie a stupid move in my opinion) or

2) the listing agent’s friend or newbie agent that has nothing better to do than sit in an open house waiting for a sucker (aka you). Most open houses are done NOT for selling the house, but for finding new buyers that don’t know any better (aka, didn’t read this blog).

Why not have an agent that advocates for you? They are called “Buyer agents.” (which is technically paid for by the seller, but we won’t get into that part now). While it might sound risky to eventually signing an Exclusive Buyer Agency Agreement (#1 on google for that phrase by the way, in case you want to be impressed by SEO), it can actually HELP you get a lower net. Also working with an agent that has done several dozen deals before…. maybe just maybe they know a thing or two. It isn’t just a big Madoff Ponzi Scheme. Stuff you don’t even know to ask. Stuff that will make the transaction go more smoothly and help you get a lower net. While many of your think rebating (see blog posts on Rebates, our motto is “I used to Rebate, but then I got good) is the best way to do that, I think the super educated see beyond that.

And for those that think “Well I have done it before, I’m too smart for using a buyer’s agent”… you must think I’m an Idiot.

Why? Well many reasons, but for one, I hired a buyer agent when I bought my house on Lake Barcroft. Negotiations 101 says you shouldn’t negotiate for yourself. But that is for another blog post, so make sure to subscribe in the upper right corner of this blog.

If you learned anything here, you will learn a TON by taking some time and reading more posts on this blog. Use the right side to find the category that interests you the most. And don’t miss the older stuff too.

Never too busy for your business and referrals (proof I’m not too busy for you [Video]).

Frank LLosa J.D.

Broker FranklyRealty.com

Owner FranklyMLS.com

  • 28
  • October
  • 2011

11 Responses to “You Don’t Know What You Don’t Know. CaseStudy: Priceline”

  1. As always, insightful and on point – Thank you! Beth

  2. Just last week, I received an email from a home buyer asking, “How do I negotiate with the seller to save big bucks by not going through a real estate agent?”

    My reply: “You don’t save big bucks by negotiating yourself. You save big bucks when you use the services of an experienced buyer’s agent who will negotiate for you the best price, the best terms, the follow-up negotiations on the home inspection, the contingency clauses, and much more.”

    I agree: it’s a matter of educating the public as to what is in their best interest. Since a buyer’s agent is free to the buyer, it’s a no-brainer.

    Carolyn Warren,author
    Homebuyers Beware

  3. Bill says:

    Thanks Frank. I enjoy your informative little videos, and still love franklymls!

    Carolyn, the buyer’s agent is *not* free. The buyers pays for them. They get paid from the money the buyer is bringing to the party. But yes, they are cheaper than *not* having a buyer’s agent and paying too much or getting a house with problems.

  4. FranklyRealty.com says:

    Thanks Bill. I tend to try not to ever say the buyer agent is “free to the buyer”. Most consumers are experienced enough to know that is a marketing line. The buyer pays for it indirectly when they buy the house. Where we create value is in a long laundry list of ways including 1) calming you the heck down!! How many buyers I have seen get freaked out and need to buy it NOW. I calm them down. Show them some statistics that show there is only a 5% chance this home will sell this wekk, etc. When I have a calm buyer, then we can start working on the price. 2) Talking buyers out of certain properties. One buyer told me “you saved me more than XYZ company with their rebates”, my reply was “forget that, what I did was smack sense into you about two dumps you wanted to buy within 2 hours.” THAT is value when an agent protects you first over getting the deal done fast.

    Thanks for your comments

  5. Elizabeth says:

    So here is a scenerio: A home has placed on the market for two weeks now and is listed for 229K. The seller purchase the home for 195K in feb 2011 is now in nov 2011 selling the property. The asking price is 34,000 above 195K and its very visable the seller made very significant renovations. The neighboorhood is okay but its not great and neither is the neighboorhood next to it.

    A buyer comes a long on the third day it’s on the market (first time buyer) and wants to make an offer. The buyer is willing to pay the asking price but wants to negotiate the closing costs, but the realtor says to negotiate the asking price and the closing costs. The offer goes in with 221K offer and the seller to absorb closing. The seller nor the agent response for two weeks then the agent responses saying the seller is still thinking about it. . . . Isn’t it etiquette for either a rejection or counter offer.

    So why would any seller not counter an offer? The seller has no clue what the buyer is willing to pay? The seller could potentially make the profit they are looking for now rather then later and it wouldn’t prohibit the seller for reviewing other offers if he was Contingent with No Kick Out.

    Any opinions, comments or advisement?
    Thanks in advance

  6. FranklyRealty.com says:

    Hello Elizabeth,
    I love these types of questions.

    Here is the first nuance issue: “The buyer is willing to pay the asking price but wants to negotiate the closing costs.”

    This isn’t paying asking. All the seller cares about is the net. So this question becomes “The buyer is willing to negotiate and offer under list”. Which is 100% fine, but you can’t disguise your offer as being “asking price”. Whether a $250k listing gets an offer for $250k with $15k back or $235k, it is the same. Neither is an “asking price” offer. Many are confused by this. Actually the $250k with $15k back might be seen as worse since it might not appraise for the $250k, thus leading to a future renegotiation.

    “Isn’t it etiquette for either a rejection or counter offer.” Not really. The listing agent has to do what he feels is for the best interest of their client, the seller, not you the buyer. They have no duty to you (except to be honest). Lets say you are a buyer with no agent. And the seller doesn’t like your offer (either price or terms). And they know you “don’t know what you don’t know”, why not string you along and use your offer to shop to other buyers? There is a ton of value for the listing agent to say “we have another offer… would you like to offer”. Buyers LOVE to offer when there is another offer on the table. And the buyer, if they had an agent would know that they should have added a deadline after a couple of days (there are pros and cons to a deadline added up front). No deadline, means no obligation to contact you back. But note that if you put a deadline, then your offer is dead when that time expires.

    Also this sounds wrong “seller to absorb closing.” What does that mean? Is there a dollar amount associated with that? If not, as a listing agent I would see that as “this buyer has no idea what they are doing” and “I wish they had an agent representing them that had a clue.” And listing agents don’t like to have to hand hold a buyer that doesn’t know what they are doing. The liability soars for one. Also unrepresented buyers tend to flake. They run off, change their mind, don’t follow the rules, try and reinvent the wheel, etc etc.

    “So why would any seller not counter an offer?” Because they want to shop your offer to somebody that will pay more, has better financing terms and more likely to close.

    “The seller has no clue what the buyer is willing to pay? ” This is very true. I have had many lowballers come up to full list price. Who knows what their strategy might be.

    “it wouldn’t prohibit the seller for reviewing other offers if he was Contingent with No Kick Out.”

    Nah, few buyer agents will submit an offer on a home that is under contract. Just too unlikely to happen. And I think you meant “with a kickout.” But you can’t kickout (as per the default contract) things like finance contingency.

    Now another explanation could be the agent is overworked and is just a bad agent that never got back to you.

    Hope that helps,
    Frank

  7. Jeff Royce says:

    I find a simple phone call to the listing agent saying, “we need an answer by tomorrow at 11AM or we are withdrawing our offer” works wonders if they are really stringing you along. Of course, your buying client has to be with you on this and really be willing to walk. But most buyers are right there with you on that suggestion; nobody wants to be used simply to get offers from other buyers. If you bluff on this and don’t really pull your offer you’ll have very little credibility in negotiations going forward.

  8. Samantha says:

    I have a question. We unfortunately saw our offer get shopped around within our 48 turnaround deadline – not crazy about that, it frankly feels like WE’RE doing the marketing for the house, not the listing agent!

    But what do you do when a seller counters with an offer that has NO deadline? Is that another marketing ploy to put a “pending offer” sign on the house and scare up more bids? How can we as buyers “pull or void an offer” that has no response deadline? And finally, is this common practice in the DC/VA/MD area?

    For now we’ve been advised to write an email saying the offer is not in play and we’re spending time on other houses. But who knows what pricing guidance or things they are saying to other parties.

  9. Frank says:

    Hey Samantha,
    I have never really understood “Pending offer” and haven’t seen that used too much in this area.

    You ask about “pull or void an offer.” Once they counter… that rejects your initial offer and makes it void. But I think you got that. If you want to quickly reject their offer so they can’t tell others they have a counter offer out there (ie “you better hurry up”), you can reject it. EMail, fax and say “no thank you.”

    I also assume you have an agent right? You say “we’ve been advised to write an email…” so that wasn’t clear if you mean your agent is sending the email or you are going solo.

    As for what they say to other parties, sure you can’t control that.

    Best of luck, and if you don’t have an agent… get one. Don’t try and reinvent the wheel and read blogs and think that is enough to fly solo. Heck, I know how to do real estate and I still hired an agent when I bought.

  10. Tchaka says:

    “Pending offer”? I’ve never heard that one. Isn’t every Active listing a “Pending offer”? LOL!

  11. [...] More Follow up and integration with the blog, which, once you read it, you will see how a good Realtor can offer real value beyond simply filling out paperwork. The “You don’t know what you don’t know” (see post) [...]

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