I’ll sell it for $25k more…
by John V. Gallant
Have you ever heard someone grumble at the amount of time it’s taken to sell a home? Or get frustrated that months have passed with little to no activity?
Well, if you have read my past articles, you might have caught on that the right price sells homes faster than the best agent in town. Go ahead, ask her, she’ll tell you!
Here’s the catch. When you sit down with your agent (or better yet the three agents you are interviewing), you are most likely going to get some really pretty folders with a list of their accomplishments and awards, pretty pictures of really happy people, great graphs, and more than likely a price range of what your home should sell for. And that price is most likely inflated for at least one out of the three agents.
And, who wouldn’t take the agent promising the highest price? Personally, I wouldn’t want to give up $25,000 just because those other two agents don’t understand how special my house is.
Without offending you, and hopefully without offending any of the agents on our Island, I am here to tell you this doesn’t translate. Offering an unrealistically higher value is a crude tool used to excite a seller into thinking “hey, this person is going to know how to eek out some extra cash”. However, your agent doesn’t set the closing price, they help determine an asking price. A ready, willing, and able buyer has the most control over the maximum value; and these buyers aren’t going to be throwing in an extra $25k because your agent promised you a higher value in an attempt to gain more listings.
Because I am a whole financial picture sort of guy, let’s look at the costs to each party.
The costs to a seller who allows the price to be set too high.
- Your house stays on the market without much activity. Of the activity you do get are people who are unfamiliar with the area, who end up figuring out you are overpriced when they look at what other options are available to them.
- Your expenses continue to accrue. Taxes, water, electric, insurance, mortgage payments, etc.
- You are maintaining a structure that nature is attempting to relentlessly tear down.
- And finally, after a significant period of time on the market, new buyers to the housing market start to think that there may be something wrong with the house as it’s been on the market for years, or it keeps getting re-listed on the MLS with the same owner. At that point price reductions only serve to exacerbate these negative speculations.
What are the benefits to an agent?.
- They have a listing contract binding you. And if, by some miracle it does sell, they earn a commission.
- They have to advertise your listing. While you may think this is a negative, it’s actually a benefit to have a large stable of listings, even some that are overpriced. It provides leads that an agent can use to show and sell more reasonably priced homes when buyers find your home priced too high.
- While they will have to have an unpleasant conversation with you when your home doesn’t sell, most likely you will agree to lower the price, and they have a sale 6 month to a year later.
There’s a huge downside to you, but not so much for the agent who sold you on their prowess and ability to get you an unrealistically high price.
While I am on the subject, I have no qualms telling you that there are agents out there who knowingly operate in this fashion, with absolutely no misgivings about wasting everyone’s time. What I would add, is that thankfully I believe the number of good and dependable agents far outweigh those who focus on obtaining listings by any means possible.
There are a few “tells” that may help you figure out who has your back. None of these are problematic individually, but if you are checking every box, you may want to give it some thought, and get a second opinion.
- Your agent discusses past customers and sales with an unnatural focus on volume. Yes, we all like making a decent living, but personally, I am in favor of providing a service to individuals. There are nuances that get lost, and items that are overlooked can end up costing you tens of thousands of dollars.
- Your agent disparages other agents to you. I can understand a carefully worded warning (although it’s still close to crossing a line), but seriously, if you hear an agent speaking poorly about multiple people who are their competition, that’s a huge red flag.
- Your agent as some sort of “magical marketing plan”. Yes, advertising works. Yes, some people are better at marketing than others. But here is a secret; simply entering a listing into the MLS database transmits that listing to over 500+ websites across the world, unless for some strange reason you ask the agent to restrict distribution online. In most cases, another agent ends up bringing the buyer anyway, as a good number of buyers are using other local agents.
- Your agent gives you a suggested listing price or price range that is significantly higher than what is for sale within a quarter mile (or neighborhood) without some substantive reasons for the higher value.
- Your agent gives you a suggested listing price or price range that is significantly higher than what has sold within the past 4 months for comparable properties.
- Your agent doesn’t include a mechanism for you to escape a listing agreement within a reasonable time frame.
- Your agent stops being responsive or stops communicating soon after obtaining your listing.
- Your agent is pushy
- Your agent doesn’t take the time to explain the process or methodology of selling your home.
For the sake of brevity, I’ll stop here. There are more, but I am sure I have set you on a good track to sniff out bad behaviors.
As a real estate professional, please allow me to expound on the qualities I would look for in an agent if I were personally listing my home.
- Personable and friendly, with positive feedback from members of the community and their peers. Don’t pick an agent, only to find other agents avoid them.
- Willing to take the time to meet and answer questions knowledgeably.
- Responds quickly and efficiently – Availability is a key trait, if they aren’t available to you, are they going to be available to potential buyers? It could have been your buyer had they only…
- Doesn’t always seem like they are trying to sell you something. Buyers tend to reject awkward sales tactics, and high pressure tactics absolutely do not work in real estate transactions.
- Is willing to let you move at a comforteble pace, and stresses urgency only when warranted.
- Has strong ties to the community, and strong community involvement. Not just membership and titles, but actual work and accomplishment in charitable organizations. This is a personal preference, but I believe it speaks volumes about character.
- Has experience and education.
- Possesses honesty and integrity. Trust your intuition, you know when someone doesn’t feel right. Potential buyers do as well.
- Has strong negotiation skills, and an ability to moderate unpleasant situations tactfully and peacefully. It amazes me the number of deals that fall apart because agents are focused on forcing the deal rather than matching the needs and wants of their customers. Sometimes a deal will fall apart, attempting to hold it together with bubblegum and duct tape to make it through another few weeks is a waste of time, effort, and energy that could have been used to find a better fit.
Perhaps the most important factor to consider in finding the right listing agent is remembering this person is going to be representing you to other agents and potential buyers. If you feel pushed, rushed, ignored, or uneasy; your potential buyers are going to get the same, or worse. If your agent doesn’t actually hear what you are saying, and find solutions to problems; successful negotiation is going to be a really difficult task. The key to a successful negotiation is actually figuring out how to meet everyone’s needs and desires equally to bring about an agreement and exchange of money and property. Muddle that, and potholes turn to sinkholes, greatly reducing the chances of a successful transaction.
Ask for a guarantee. Not a guarantee that the home will sell, but a specific timeframe and price that should be met with a clause to be released from the contract if they do not perform. A guarantee that they will put up proper signage, professional looking pictures, and accurate details of your home. A guarantee that they will be focused on your needs, not theirs.
If you are thinking about listing your home for sale, there is hope! The vast majority of agents I have worked with here are good, hardworking, decent people who care about the customers they represent. Many of them work with various charitable organizations, and are pillars within the community. We live in one of the best communities within the US, and we should be proud of that. It isn’t hard to identify, we take care of our friends and neighbors.
My hope is to help you find one of the many great agents we have here locally, and to assist you with the insights I have within the profession. As always, I am happy to discuss anything relating to real estate, construction, this article, or economic theories. Feel free to call or email me with questions or concerns.