The Real Deal recently published an article dubbed “Beware of Agents Who Will “Buy” Your Listing,” and it proves to be a good read for those interested in selling a home in any real estate market in this country, but this especially holds true for sellers in South Florida.
“It’s one of those hush-hush practices that homeowners rarely hear about, but real estate agents know only too well: It’s called “buying the listing.” What it means is that some agents want the listing to sell your house so badly that they’ll go along with whatever price you ask, even if it’s outlandishly above what comparable houses are commanding. They know that there’s only a minuscule chance the house will sell at the inflated price you’re proposing but they take the listing anyway. They fully expect that after a few weeks with no takers, you’ll sober up and agree to what may have to be a series of price reductions.
Buying the listing works for some agents because they get cut into a commission payout that they would have missed had they lost the listing to competitors who counseled lower prices. Plus they reap immediate benefits: They’ve got their name plastered on a sign in front of your house, and they can hold open houses that could bring them new clients and other houses to sell.
But there are potentially big drawbacks for you as the seller. Overpricing a house can doom it to months of sitting unsold, even with price reductions. Serious buyers get turned off by new listings with inflated prices, and they may not come back when the price inevitably gets reduced. At the end of the process, you could be left with a final price well below what you would have gotten had you priced it realistically earlier.
CLICK HERE to read the full article from The Real Deal.
The Overpriced Listing
Bottom line is, do your homework. Choosing an agent because they agree with the price you want is going to bring you as much success as choosing an agent because of the color of their shirt or because they drive the same kind of car as you. Sellers usually come up with a price from an emotional point-of-view because their home is special to them. We as agents hear this all the time…”the house next door sold for $900,000, but mine is worth $1,100,000 because my house has a better layout and custom kitchen.” Or, “I know that house…the kitchen is ugly and has less closet space than my house,” etc. It doesn’t matter that the house next door is the exact same size and was built in the same year, it is almost always inferior to a seller’s house in the seller’s mind because of the emotional attachment a seller has with his/her home.
The Underpriced Listing
Overpricing a home because a seller wants to set the price is not the only disservice real estate agents do. On the flipside of the overpriced home, what about the home that is underpriced? While interviewing an agent, beware if they boast about recently selling a home at or over full price (in the South Florida real estate market), or that it sold in 5 days. This is actually terrible for those other sellers. Selling too quickly or at or over asking price is almost always a sign the home was underpriced.
The Agent Who Has 10 Listings on Your Block
You don’t want to overprice or underprice your home…so why not pick the agent who has all the listings on your block? You see their signs everywhere. If all of your neighbors selected 1 particular agent, they must be the “best,” right? They may be good, but this is not a good strategy for a seller.
Let’s pretend for a moment that you choose this “best” agent and price your home at $900,000. During a tour of your home, this “best” agent gets push back on price from the buyers. Instead of reviewing all of the benefits of your home and showing the buyers that it is well priced in comparison to recent sales in the neighborhood, they decide to take the path of least resistance and leave your home to take the buyers to other homes he/she has listed down the street at $850,000 or $800,000 or $750,000 (this “best” agent does have 5, 10, 15 listings in your neighborhood that you and your home are competing with).
Is the “best” agent really going to fight to sell your home? Or, just use your listing as a reason to get more listings in your neighborhood, use open houses at your listing as a marketing opportunity to attract buyers for themselves or even worse, use your home as an example of how well priced another home is in order to make a sale on that other home?
Any agent who has been in this business for more than 5 minutes has seen every single one of the examples that I mention above. I see it all the time, and it no longer surprises me. But for sellers who may sell a home every 5-7 years or longer, you have to find a way to cut through the “noise” and feel comfortable with the agent you ultimately choose to represent you. You have to find an agent that you can partner with to sell your home for the best possible price.
What Should Sellers Ask?
How is the agent going to market your home…Personal Website? Print media? Post cards? Drone video? How much of their own money is the agent willing to invest into the marketing of your home (if you get a shaky answer to this question, or the agent is not willing to put a number in writing, beware!). Does the agent work for a brokerage that has a worldwide reach to market your home globally (get hard statistics)?
Many agents, especially in the Miami and Miami Beach real estate markets, engage in practices as explained in TRD article above, mainly because there are over 40,000 agents in Miami-Dade County fighting for business, and agents are willing to tell sellers anything they want to hear just to get their listing, but this is not effective, possibly an ethical violation and just plainly not good business!
The 3 P’s
The three P’s of real estate marketing for MOST agents: Put a sign in the yard, Put it on the MLS…Pray that it sells! My main advice to sellers…do not work with an agent who only uses the 3 P’s for their marketing strategy!
If you are interested in selling your home or condo in South Florida, please contact Michael Light, Director of Luxury Sales at Douglas Elliman, for a full marketing presentation of how Michael can market your home to sell for the best possible price. You may reach me on my cell at (786) 566-1700, directly at my office at (305) 350-9842 or via email at michael@sh-qjwh.com.
