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WHY DO I NEED AN
AGENT AT ALL?
Maybe the
thought has crossed your mind that you should try to sell your
home yourself. "How difficult can this be?" you may ask
yourself. Indeed, the reward can be the savings of sales
commissions. Consider the downside:
You may
place the security of your home and yourself at risk.
Ads and "For Sale By Owner" (FSBO) signs tend to invite
just anyone to inspect your house. You have very little
control and no opportunity to pre-screen potential
buyers.
You may
not know the marketplace well enough to establish the
best price for your home.
If it is too high, you may lose buyers. If you ask too
little, you stand to lose a great deal of money.
Coordination of arrangements and the paperwork involved
with a home sale may require many hours,
especially if you are not well versed in real estate and
the law. You stand a chance of making costly mistakes.
Who will handle the abstracting, correcting the
abstract, preparing conveyance papers, attorney
communication, prorating and paying the taxes,
assessments, mortgages, preparing statements for future
reference income tax wise, and handle earnest money
disbursements?
The
advertising resources available to you may be sorely
limited. Along
with the placement advantages they receive from frequent
newspaper advertising and internet exposure, REALTORS
also attract buyers through the multiple listing service
and numerous referral opportunities.
Without
good advertising and professional help, your home may be
on the market for too long to get top dollar.
That makes it harder to sell even if you do ultimately
decide to list it with a Realtor. People may think it
hasn’t sold because there is a problem.
Buyers
often need assistance with financing.
That’s a job best left to a trained professional.
Unless
you are skilled in the art of compromise, you may not be
able to effectively close your sale.
The "give and take" aspects of the sale of a home must
be skillfully negotiated before a transaction is
successfully completed.
Believe
it or not, buyers don’t like to deal directly with home
sellers. They
aren’t comfortable asking questions or pointing out
discrepancies since insult or confrontation may result.
Dealing with a Realtor gives them confidence and
reassurance.
Buyers
often offer less than it’s worth because they know that
you are saving the sales commission.
The bottom line
seems to be: It’s best
not to take chances with your most valuable asset!
SO, HOW DO I GO
ABOUT FINDING AN AGENT TO LIST MY HOME?
Whether
you decide to talk to one, two, or three, you should ask
them to provide you with a comprehensive marketing plan
and Comparative Market Analysis (CMA) before you sign
to list your home with them. You will recognize a
good marketing plan when you see one. A good plan
answers these questions:
How
will you be kept informed about appointments for
people coming into your home?
When
will you hear feedback from your agent on the
results of the showings?
When
will Open Houses occur and how will they be
promoted?
Who
is the target market?
What
advertising will be done on your home, in what
publications and in what frequency? How about
internet exposure?
Is a
thorough analysis completed of comparable properties
that are on the market now or recently sold? This
needs to be done so that you can select a reasonable
listing price.
WHAT SHOULD I
EXPECT FROM A COMPARATIVE MARKET ANALYSIS?
A real estate
agent has access to all kinds of market information for homes
similar, but probably not identical, to yours. Some homes that
sold in the last six months to a year were like yours in size,
amenities and neighborhood. When we look at properties that have
sold and compare their list price to the actual selling price
and number of days on the market (DOM), we learn a lot about the
strength of the market for properties like yours and the values
buyers are assigning to properties in your area. Some are on the
market right now and these would be your competition for buyers.
Expired listings often reflect a property that was overpriced.
Studying these statistics can help agents price your property
competitively—right from the start.
A market
analysis is as thorough as the real estate agent who does it. A
very careful analysis will give you a very good idea of a fair
selling price. The more information you provide to your agent
and the more analysis the agent provides, the closer the report
will be to a "customized" analysis. The homes used for
comparison will be the type of homes that a buyer would most
likely consider, if they were still on the market, before
purchasing your home.
SO, WHAT
IS THE BEST LISTING PRICE?
Each of the
three Realtors that you have interviewed has come prepared with
a Comparative Market Analysis on fancy paper and they each
recommend a specific sales price. Amazingly, a couple of the
Realtors have come up with prices that are lower than you
expected. Although they back up their recommendations with
recent sales data of similar homes, you remain convinced that
your house is worth more. When you interview the third agent’s
figures, they are much more in line with your own anticipated
value, or maybe even higher. Suddenly, you are a happy and
excited home seller, already counting the money.
WHICH REALTOR DO
YOU CHOOSE?
If you’re like
many people, you pick Realtor number three. This is an agent who
seems willing to listen to your input and work with you. This is
an agent who cares about putting the most money in your pocket.
This is an agent that is willing to start out at your price and
if you need to drop the price later, you can do that easily,
right? After all,
everyone else does it!
The truth is
that you may have just met an agent engaging in a questionable
sales practice called "buying a listing." They have "bought" the
listing by suggesting you might be able to get a higher sales
price than the other agents recommended. Most likely, he is
quite doubtful that your home will actually sell at that price.
The intention from the beginning is to eventually talk you into
lowering the price.
Why do agents
"buy" listings? There are basically two reasons. A well-meaning
and hard working agent can feel pressure from a homeowner who
has an inflated perception of his home’s value. On the other
hand, there are some agents who engage in this sales practice
routinely.
WHAT HAPPENS
BEHIND THE SCENES
Whichever the
case, 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 agent does not usually attempt to
sell your home to a homebuyer. That isn’t very efficient.
Listing agents market and promote your home to the hordes of
other local agents 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 and their agents coming to tour your home. Interest
will be at its peak.
If the price is
right.
If you and your
agent have overpriced, the word will get out. After all, the
Realtor’s job is to know local market conditions and home
values. If your house is dramatically above market, why waste
everyone’s time? Their time is better spent showing homes that
are priced realistically.
DROPPING YOUR
PRICE….TOO LATE
Later, when you
drop your price, your house is "old news." You will never be
able to recapture that flurry of initial activity you would have
had with a realistic price. Your house could take longer to
sell.
Even if you do
successfully sell at an above market price, your buyer will need
a mortgage. The mortgage lender requires an appraisal. If
comparable sales for the last six months and current market
conditions do not support your sales price, the house won’t
appraise. Your deal falls apart. Of course, you can always
attempt to renegotiate the price, but only if the buyer is
willing to listen. Your house could go "back on the market".
Once your home
has been appraised below what a lender is willing to loan, or
sits on the market awhile, it is harder to get a good offer.
Potential buyers will think you might be getting desperate, so
they will make lower offers. By overpricing your home in the
beginning, you could actually end up settling for a lower price
than you would have normally received.
It is human
nature for you to want the highest price for your home. However,
when you choose the agent who promises what you want to hear, it
often leads to stress and frustration. Most of the time, it will
take you longer to sell your home. Possibly, you will end up
selling at a lower price instead.
PRICING YOUR
PROPERTY FOR MAXIMUM RETURN
The market value
of your property is relative. It is not based on what you paid
for the property or what you have put into it through the years.
It isn’t affected by anyone’s opinion of its worth, even that of
a professional appraiser. The value of your property is
determined solely by what a buyer is willing to pay in today’s
market. Buyers will decide whether your property is
realistically priced by comparing it to others currently for
sale. Most people look at an average of twelve properties before
buying. Thus your property must be priced in line with the
competition.
Your property
will generate the most attention and showings in the first weeks
it’s on the market. For best results, you should list it at a
realistic price right from the beginning. If your price is too
high relative to the competition, the right buyers will not even
look at an otherwise attractive property—particularly during the
critical stage of initial market exposure.
HOW QUICKLY WILL
YOUR PROPERTY SELL—AND AT WHAT PRI CE?
Many factors
affect both the amount of time it will take your property to
sell and the price you will receive for it. As you select your
agent, be aware of the following aspects of the real estate
world that can and cannot be controlled and try to focus your
energies on those points that you have a degree of control over.
Factors You Can
Control:
Listing price--the
single most important factor in the sale of your
property. The best way to ensure the timely sale
of your property is to price it competitively.
Condition—the
better condition of your property, the higher
price it should bring and the faster it should
sell.
Marketing Plan—a
coordinated marketing plan will expose your
property to the broadest possible audience, and
you’ll have a better chance of attracting a
financially qualified buyer.
Terms—your
flexibility in negotiating the terms of your
agreement (points, closing date, appliances,
etc.) can also enhance your ability to sell your
property
Factors You
Cannot Control:
Competition— If
there are a large number of comparable
properties for sale, there is more competition
for buyers. In a supply and demand market like
real estate, a large inventory of similar
properties makes our job more challenging.
Location—another
key factor in the sale of your property.
Interest Rates—the
economy will also affect the sale of your
property, particularly through interest rates
and consumer confidence.
Next:
THE LISTING AGREEMENT AND MARKETING
PLAN |
