RE Platform Promotes Transaction Trust
To be successful an appraiser may have to embrace the philosophy of founder and CEO, Jim Hodson, of Countdown To Buy, Bethel, CT, who sees real estate valuations and pricing as part art and part science.
His idea of a better real estate transaction is one where potential conflicts of interest and the disconnect between buyers, sellers and agents is removed through providing buyers with "as much information as reasonably possible before making an offer, including appraisals, BPOs and property condition reports."
In today's marketplace the unprecedented inventory of real estate-owned and foreclosed properties has further challenged the property valuation process and buyers' trust in service and data providers. "With many properties being sold 'as-is,' it is important to have solid information before making an offer. In the case of appraisals, there is an upfront cost, but the opportunity to reduce what the industry refers to as 'fall-out' is significant," Mr. Hodson told this publication. His company favors upfront, independent providers. CTB's online platform was set out to create an environment of trust between buyers, sellers and third parties. "Now more than ever homebuyers need 100% transparency and unbiased information throughout the entire home purchase process," Mr. Hodson says.
At yearend 2009 the company entered into an agreement with a nationwide servicer of residential mortgages in Connecticut, New Jersey and New York who is participating in its initial pilot program in the Northeast. Website users can investigate property listings, arrange and submit their offers through a bidding process. The goal, says CTB president, Dan Connell, is to improve the homebuying and selling experience and also accelerate the sale of properties in times when banks and servicers are holding considerable volumes of REOs. It helps increase processing efficiency "from list to close," he added. Its patent pending technology automatically matches buyers and sellers in a RE transaction within a time-limited process during which the property's list price is reduced 1% per day while the actual seller offer is the same, so buyers are essentially competing against themselves. Once an offer matches or exceeds the daily price, the contract process is automatically initiated.
Why not 2% for instance? "The 1% per day gets immediate attention from buyers yet is not an amount that sounds desperate or frantic. Although CTB can technically facilitate a transaction of any percentage, if one looks historically and statistically at the time it takes to maximize exposure of a property, we can time the price reductions to coincide with the most likely sales price at the peak time for activity of the property," Mr Hodson explained. As to price limits, "One key benefit of the CTB approach is that we focus on getting the seller to agree to process, not a price. This allows a seller to have the potential to achieve an upside if there is indeed market demand, but automatically accommodate the market if demand is weak. It also ... sets a timeframe for a transaction that people can plan their lives around." So if a CTB appraisal, ordered upfront, comes in at $210,000, a BPO at $195,000 and automated valuations between $192,000 and $215,000, it just proves that pricing is part art, part science, he says. CTB uses its proprietary BidTelligent pricing methodology to consider these factors in addition to prevailing trends to determine a probable price at $200,000. Plus, all potential buyers see the different valuations. To optimize the 1% reduction after 10 days, the upper limit may increase to $220,000 and the lower dropped to $180,000 to ensure a probable price.
Executives say Countdown To Buy is an innovative online real estate marketplace for various reasons.
For example, it has eliminated the concept of a list price and replaced it with an offer range where offers are tendered but there is no negotiation allowing sellers to subscribe to a process, not a price. The presumption here is that by building a processing model that is based on a fair transaction, Countdown To Buy provides buyers with the incentive to enter the marketplace and submit their highest offer.
Countdown To Buy ensures that buyers receive relevant property and home buying information before they have to make their final decisions.
And since appraisals are one of the most important pieces of information related to real estate sales, whether it is a loan origination on a new purchase loan, mortgage refinancing or modification, the company is working with a network of independent appraisers in an effort to ensure appraisal accuracy.
Furthermore, the results of every property assessment and valuation review completed by these independent professionals are posted online for all prospective buyers to see. "By offering 100% transparency and a confidential and trusted offer management system, equality is inherent throughout the entire home buying process," he said.