Some Truths about Real Estate that many agents prefer you not know.
1) Professional Agent or Factory - Many listings are taken as "insurance policies". Agents may take listings, then submit to the MLS and forget about it, hoping that other agents bring the buyer. If the listing sells, GREAT, the agent makes some good money. If the listing doesn't sell and the Seller changes listing agents, no big loss because the original agent most likely spent very little time or money. Meanwhile the agent taking the listing is spending time with buyers, leaving the listing virtually unattended. Do you see your prospective agent regularly promoting properties (not monthly promotion but weekly or daily promotion)? There are over 300 hundred agents in the Evergreen Area and on average of late about 1,300 properties for sale yet you only will find maybe 100 homes promoted in the local weekly paper. What about the other 1,200 homes? Your home should be promoted every single day, in a broad variety of sources. With Dave Kellogg, they are!
2) Misleading from the Start - Agents may suggest an unrealistic list price to gain a sellers support and obtain the listing. Once listed the agent will concentrate on having the seller reduce the list price, often below the true market value, so that paying for promotion of the home will not be necessary. During the interview process study the comparable homes that are Active, Under Contract and Recently Sold that are most like yours. Does the recommended list price really match the data? Does the data really support the recommended list price? Does the information from an agent that provided a lower estimate make sense? You would rather hire an honest, professional agent instead of an agent willing to lie to you, or mislead you to "get the listing", wouldn't you? Frequently, agents with high ethics don't get the listing, because Sellers fall for the false hope and the agent that promises unrealistic prices, or fails to notify you of imminent obstacles up front "to get the listing". They paint a rosy picture until they get the listing. Soon after the listing period starts (one to two weeks) you all of a sudden have requests to paint the walls remove the linoleum change the counter tops, offer a decorating allowance and reduce the list price! Sellers need to do a good job up front in the interview process to have the best results with their home. Insist on having "all" the information and then pay close attention from the agents they interview of the interpretation of the information.
Don't pick an agent based on price! Pick an agent based on the entire package i.e.: marketing, professional designations, reputation, visibility in real estate publications, tenure as a Realtor, salesmanship...
3) Words of Advice - If your listing agreement does not spell out exactly what will be done to promote your home and to keep you updated, the listing agent is not bound to perform duties that may have been discussed during the interview process. Most listing agreements do NOT address specifics of what WILL BE done. Sellers should get the marketing plan incorporated into the listing contract complete with advertising vehicles and dates to be used. Talk is cheap, advertising is not cheap - Get things covered upfront in the listing agreement.
4) You get what you pay for - Commission Rates are negotiable. The typical rates are 5-6%. If you want consistent advertising that blankets the market, a lot of money will need to be spent. An agent charging 3-4%, can't spend much if they hope to have a profit after sale. This will hurt the sellers bottom line and normally costs them well above 6% in lost time, fewer showings, aggravation and lower sales prices. 2.8% of the sales price will go directly to the agent working with the buyer. The remaining commission will typically be split between the listing agent and this listing company. A sample sale of a $400,000 home with a 6% commission looks like this: Seller pays $24,000.00. The listing agent and company will split $12,800(3.2%) and will pay all advertising costs from this amount (A great marketing agent will pay an average of $2,500.00 per listing). So your listing agent will make a profit of about $5,150.00 before taxes. The agent working with the buyer will get $11,200.00 (2.8%). The listing agent charging 5% fee will make $8,800 before company split and expenses. If that agent is great, and spends $2,500.00 promoting your home during the listing period, that will leave them just $3,150.00 before taxes! (Not enough to live on. Might work for a "part-time" agent). There are certain instances where a commission rate makes sense to be lower. One situation is when the seller will also be a buyer working with the same agent. Another is higher priced homes. At Re/Max there is no split of commission between the listing office and the listing agent, thus the RE/MAX agent has more flexibility for variable commission rates for you, the seller. On the flip side of the coin, the RE/MAX agent pays 100% of expenses! Not even a paper clip is provided by the company!
5) Lets see one of your Files - When interviewing agents (it is a good idea to interview 3 agents) ask them to bring a file for an active listing they have. Take a look at the file and see if it looks organized, has copies of "all the advertising they do", see what the reports to the homeowners looks like. The agent will probably be embarrassed once they know what you are looking for. This would be a good time to go onto the next agent. Make sure the file they bring is of a current listing, presently being advertised or presently under contract!
6) Agents with a staff of Assistants - Typically agents with assistants will not be directly involved with you or your home after the listing is signed, except on spotted occasions. If you want the expert on a daily basis, make sure you get the expert. Ask prudent questions during the interview process! Do a test call, Call the agent to ask a question and see if you can speak with the agent. Often the agent will not be available to handle the call. Guess what, that agent isn't available to handle the marketing of your home either! Try contacting a team at night, on a holiday or a weekend...GOOD LUCK!
7) Price Reductions - There are many agents out there that send price reduction request letters to their sellers based on nothing more than the fact that the home was not under contract during a 20-40 day period of time. Most agents will try to tie you up for a 6-9 month listing. Working off 20-40 periods gives that agent that knew he /she mislead you about price, 3-5 good opportunities to "get you down in price", before their listing is up. Often it is a task that an assistant is given to send out form letters to all sellers whose homes have not sold in this common 20-40 day period. The goal of these agents is to get their listing sold fast and limit their advertising costs by bringing the list prices BELOW market value, regardless of the impact on their sellers! Any suggestion to modify the list price should be accompanied by supporting information such as current competing listings, recent price reductions of competing listings, "specific" feedback information from previous showings and should be done in person with the listing agent. If you get a letter saying something to the effect of "Based on market conditions and information from agents having seen your home, it appears that we are priced too high. I recommend that we reduce the list price at this time by at least 5%", DON'T fall for it! Ask for the specifics! Then ask yourself if you really want this kind of representation.
8) OFFICE TOUR OF YOUR HOME: Agents may often promote the fact that they will bring their entire office over to view your listing. Soon each of the agents from the listing firm will personally see your home and be able to see if it would fit one of the buyers they may be working with at the time in an effort to "get your home sold". Sounds great! The real story behind the office tour is a team effort to prepare the home owner for a price reduction soon. Each of the agents visiting the new listing are asked to give their opinion of value after being in your home no more than 5 minutes! Those opinions are then gathered and normally reduced to an average. The average will invariably be less than the list price. This information is then sent back to the homeowner in a fashion similar to this: Dear Homeowner, Last Tuesday our office toured your home. They were all very excited to see it. Each agent gave me their opinion of value and the average suggests that we might be priced 5% high. We will see what kind of feedback we get from showing through next week and go from there. Thanks again for having your home available for my office to see! Most likely the home will not sell during the next week and will probably have some showings. Now the realtor has you where he / she wants you... primed for a price reduction! You were mislead at the interview stage and you then work with that agent to price your home under the market, thus giving your money away!
9) OPEN HOUSES - Open houses have one primary purpose and one primary purpose ONLY. An open house by design is a method for real estate agents to come in contact with potential buyers not for your home (agents know they have less than a 1% chance of having a buyer show up that will buy the "open house" and let them write a transaction for them). Think about it, people are following arrows to some unknown location then arrive at the open house which they have no idea of the number of bedrooms, age, condition or PRICE! Do you really think the odds of selling the open house are good? What the agent is counting on is having a number of lookers sign a guest list so the agent can follow up with and hopefully gain as a new buyer client that will buy "some other home", not your home "some OTHER home", different area, different price range, different style. The agent will then have another client and make another commission thanks to...YOU! What do you think that agent is doing for YOU to get YOUR home sold while he or she is out working with the "New" client they got from YOUR open house? You are right...probably nothing. (If a seller requests that Dave Kellogg hold an open house, then Dave Kellogg will accommodate the sellers request, but seller will know the above information).
10) Broker Luncheons - You have a $650,000 home
and an agent brings up "Broker Luncheons" in the interview. Agent - I
organize a broker luncheon and I will invite agents over to view your house and
enjoy refreshments. They will then know your house and will be able to
tell their buyer clients about it, getting us maximum activity and a sale".
The $650,000 or above figure comes about because Broker Luncheon agents seldom
hold such occasions for lesser priced homes/clients. Will this activity
sell your home? Like open houses the likelihood is nominal at best.
Some agents will come because of the "Free Lunch" and to socialize with each
other. Yes, the more people that know about your house the better.
In reality with today's sophisticated computer technologies offering numerous
photo tours, 360 degree tours and the like, luncheons are not the answer.
Before such technology existed say 1990 and before, Broker Luncheons were of
greater "real" value because otherwise agents could not know what lies behind
the address. In real terms today, sellers are competing with say 10-20
other homes in their direct price range and area. The average buyer views
8-12 homes before buying one. The key will first be getting in on the 8-12
homes shown and next being the perceived as the best of the 8-12 homes thus
garnering the offer! Long story short, Realtor Luncheons are another
ploy to trick or entice a seller into signing the long term listing agreement
with them. If the lunch wasn't offered who would show?
When the lunch is offered who shows? The hungry agents that have time to
spare.
11) Discount Brokers - You have seen the
ads "Full service for as low as under $3,000.00*"
Note the "*" , then note the
fine print! Beyond the fine print you will discover a myriad of options
that will keep inflating that Under $3,000.00 figure as you talk further with
the discount broker.
This is bate and switch on the largest of ticket items!
I suggest you interview a discount broker and two reputable Established
Brokerages. When interviewing the Discount Broker, if you DON'T
get "full Service for a total listing fee under $3,000.00", then haven't you
heard enough? It's time to go on. If you CAN get "full service" for under
$3,000.00. then that is a true no brainer...list it up! The key will be
understanding what "full service" is referring to. You will gain this
definition when interviewing the other two agencies. After interviewing all
three, go in the direction you know will net you the TRUE best results.
Interviewing? Give me a call, Dave Kellogg 303 670-8606 - You will get
your best deal and a good deal more!
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