Due to the nature of their business, real estate agents are very much tied into the same fate as the home seller. The offer accepted determines their payoff just as much as it does the seller’s capital return.
This presents a conundrum: Let’s say that the seller is really interested in getting rid of their house because they’re supposed to move to another city for a job next week, okay? And really, they would take any reasonable offer as long as it wasn’t a complete rip off. Then you’ve got the realtor, who is sort of aware of the fact that the seller is in a hurry to sell but not so inclined to take any offer that walks in the door. They’re looking for asking price or better.
It’s not uncommon that—in this scenario—the agent wouldn’t necessarily tell the seller about the offer that was 10K lower than the asking price they received last week from a buyer interested in moving in quickly. That would greatly reduce their commission rates, even force them to renegotiate their commission given the lower selling price. The seller working with the agent would have no idea of the offer and be wondering why no one was even sniffing at the property. This would of course send them into a manic episode of despondency and oblivion, forcing them to reconsider their new position in the company in a new location, their ability as an employee, father, husband, son, and lover, and ultimately catapult them into a deep, profound, downward spiral of loneliness and desperation.
Just kidding—that won’t happen…I hope. If it does then maybe you shouldn’t move in the first place. The bottom line is that not every agent does operates with this sort of clandestine self-interest, but they are out there.
Who can blame them, really? They probably know that somewhere down the road, a substantial offer will come along—it’s just going to take time.
Such are the pitfalls of working with an agent. You are at their will and they sometimes don’t operate with the sellers’ best interests in mind.
COMING UP NEXT:
WHAT AGENTS SAY BEHIND YOUR BACK, and…
THE BEST OF HOLIDAY HOMES!!!
Archive for December, 2010
In continuing with our series on “10 Things About Agents”, we move onto commissions. The whole basis for the For Sale by Owner model is to avoid those costly commissions. So I think I should start this post off as saying that commission are more than negotiable—they’re unnecessary. Instead of selling your house and paying that 5%-6% commission rate (which sellers are responsible for), you can sell your home yourself, save the thousands on commission and never have to deal with realtors.
Despite the resounding reasons against going with a realtor in the first place, we shall still enumerate upon this topic—briefly.
Real estate brokers and their agents tend to make is sound like their fees are at a set price, a certain percentage of commission on a given sale. But when market factors tend to force competition—such as this market—realtors tend to be a little bit more flexible. If you ask them, they’ll probably be more than happy to give you a discount if you commit to selling your house and purchasing your next with them. If you end up in a dual-agency position, the representing agent will typically reduce fees.
Bigger agencies tend to offer “better” services through their agents and will have more fees and costs before commission is even discussed. So it’s typically cheaper to go through independent realtors or smaller agencies.
One case in which seller and buyers should definitely try to negotiate with agent commission fees is when the home doesn’t quite sell at the asking price. In many cases, agents are more than happy to renegotiate their commission percentages in order to get a deal in the books.
Although agent commissions seem like hard, fast rules, they’re often negotiable under the proper circumstances as evidenced by the cases presented above. Remember: you always have the ability to ask for a lower commission rate. Or you can’t just go the FSBO route and avoid the whole debacle.
Coming up next:
The 3rd thing about realtors, and…
Texans start to feel the housing crunch.
Well folks, it’s that time of the year again and I spoke with our dear friend and founder Andy Salo about any ideas that he had for For Sale by Owners for the Holidays. Here’s what we came up with.
HOLIDAYS ARE A BAD TIME TO SELL.
Typically, folks get busy this time of year—what with all of the shopping and presents and what not. Thanksgiving, Christmas, and New Year’s are such homey times that most people are settled where they are for the season. After all, who wants to spend the winter months moving out of an old house and dealing with mortgages and what not? Nobody.
However, there are still bargain house hunters out there. Folks looking to start their new year in a new home may be privy to the fact that no one’s really trying to sell right now, so they’re looking for good deals. For the FSBO, this means that you’re not going to have a lot of competition in the market. If you list your house at a reasonable asking price, you could improve your chances of making that unlikely holiday sell.
HOLDIAYS ARE A GREAT TIME TO SPRUCE UP THE HOUSE
So if you do decide to hedge all bets and put your house up on the market for the holidays, why not decorate accordingly? Nothing makes a house look warmer and more inviting than some tasteful holiday décor. You’ll want your potential buyers to picture themselves with their kids, next to the hearth opening up presents on Christmas day. Just refrain from telling that anecdote about the year Uncle Pat came to Christmas unexpected dressed in a Santa Claus outfit and made the kids cry.
Merry Christmas Y’all!
If you list with an agent—and I’m sure many of you have before—you’re probably aware of the overwhelming push to host an open house for “walk-in” customers. The agent has a big hand in this, but his reasons may not be a helpful in your cause as you may have thought.
According to an NAR study, only 2% of houses are sold thusly. I have another agent corroborating the opposite saying that 20% of his residential listings are sold through open houses. The jury is ultimately out on whether or not open houses get houses sold, but is seems that it certainly doesn’t hurt. That being said, it’s probably not the best allocation of resources.
So what really goes on at open houses and why are listing and selling agents so eager to give up their Saturday afternoons to come sit in a pristine looking house if—at best—they have a 20% chance of locking in a buyer? Networking.
It’s true. A great way for listing agents to find “orphaned” buyers and other potential customer is to bait them with an open house. It’s all about the conversion factor. With the right touch, any one who strolls into an open house is a potential customer and possible addition to an agent’s client base. So while he/she may have you thinking that this is the be-all end-all way to get your house sold, it’s not necessarily true.
But FSBOs beware. The open house, likewise, is not the key to selling a house. A good listing and properly set asking price is the key. Dig into your network of friends and family to find a seller. Use those social media tools we discussed in an earlier blog—just don’t rely on a few signs and some desperate walk-in buyer to buy your house.
UP NEXT AGENT’S “NEGOTIABLE” FEES AND HOW TO SPRUCE UP YOUR HOME FOR THE HOLIDAYS