Prompt, Accurate Over-The-Net Calgary Home & Property Evaluations
Why Some People Get Bad Advice
REAL ESTATE GROUP
So you’ve decided to sell your home and have a fairly good idea of what you think it is worth in today’s market. Being a sensible home seller, you schedule appointments with two or three Realtors you find online, by referral or who’ve been hanging stuff on your front doorknob for years. Each Realtor prepares a "Comparative Market Analysis" on fancy paper or in a fancy e-mail and they each recommend a specific sales price.
Surprisingly, the first two Realtors have come up with prices that are almost identical to each other. These Realtors back up their recommendations with recent sales data of similar homes and provide promotional literature about the benefits of each Realtor's marketing approach.
However, when you interview the third agent’s figures, they are much higher. The suggested price may even be higher than your own anticipated value, but he/she assures you that he/she can sell your home for this amount. He or she may then try and sell you on an apparent "reduced commission". Suddenly, you are a happy and excited home seller, already counting the money.
But guess what?
A Sales Practice Called "Bait and Hook" or "Buying the Listing"
If you’re like many people, you pick Realtor number three. This is a real estate associate who seems to be able to sell your house for the most money. This is an associate that convinces you that he will put the most money in your pocket, right? This is an associate that assures you he can get more money than anyone else.
The truth is that you have just met an associate engaging in a questionable sales practice called "Buying a listing" or "baiting" you. He or she "baited" you by suggesting you might be able to get a higher sales price than the other Realtors recommended. Most likely, he is quite doubtful that your home will actually sell at that price. The intention from the beginning is to have you sign on the dotted line and eventually talk you into lowering the price as the weeks and months drag on and your house doesn't sell.
Why do some real estate associates "Buy" listings this way?
There are two obvious reasons:
- Firstly, some Realtors use this tactic for the exposure and subsequent "free advertising". The more signs they can have on lawns throughout the city (especially in more upscale communities) the more exposure they receive. Therefore, some associates will say and do whatever it takes to “get the listing”
- Some associates engage in this sales practice routinely as a means to make money. Once they have you sign the listing contract, they will earn a commission (read: paycheque) when your home finally sells, regardless of the sales price
What Happens Behind the Scenes
If you start out with too high a price on your home, you may have just added to your stress level and selling a home is stressful enough. There will be a lot of "behind the scenes" action taking place that you don’t know about.
Contrary to popular opinion, the listing Realtor does not usually attempt to sell your home directly to a homebuyer. That would be inefficient.
Listing Realtors market and promote your home to the hordes of other local Realtors who do work with homebuyers, dramatically increasing your personal sales force. During the first couple of weeks your home should be a flurry of activity with buyer’s associates coming on their own or with clients to preview your home so they can sell it to their clients...
…if the price is right and your Realtor has a good reputation with other Realtors.
However, if you and your real estate associate have overpriced, fewer Realtors will preview your home. After all, most Realtors are honest and professional, and it is their job to know local market conditions and home values. If your house is above market-value, why waste their client's time? An honest and well-known Realtor's time is better spent (and their reputation better protected) previewing homes and bringing their clients to ones that are priced realistically.
If your house is on the market longer than other comparable ones for an extended period of time, other Realtors and clients start thinking that something is wrong with the home or that it is over-priced. Either way, people stay away. Quite often, you end up having to drop your asking price by thousands (or sometimes tens of thousands) of dollars to re-ignite interest in your property.
You may end up not being able to move when you want, or having to sell your home weeks or months later for a price that is lower than what the first two Realtors recommended.
But guess what?
Realtor number three still gets his paycheque, because he convinced you months before that he could sell your home for the most money.
Don't get fooled.
by Terry Light and RealEstate ABC