In making follow up calls on my listing appointments the other day, I was served
this solution to a seller's dilemma: " Oh, I listed for a higher price and with an
agent who agreed to discount their commission."
Geez. Good luck with that.
The Seller, hereafter known as TS paid more for the home than it is worth today.
TS has been in the home less than 3 years. TS is listed above the current market
price. TS has tried a limited service broker for over 6 months and agreed that
they did little to help him. TS hasn't had any real interest from buyers and a
couple of showings (that TS conducted himself). TS did get a renter that wanted
to rent until their credit could be repaired from a foreclosure.
Unfortunately, going on listing appointments in our market today involves a lot
of commiserating and giving sellers "The Bad News." Their home as an investment
went down in value. Similar to the stock market: It is only worth what someone
will pay for it.
A little background: Driving into this subdivision, there are lots of for sale signs.
Lots of For sale by Owner signs. Lots of people, all in the same boat.
We looked at each other and thought Whoa! this isn't going to be fun!
It wasn't. Nice guy in a bad situation. TS asked if he waited 6 months if
we thought the market would come back. We were honest and told TS
we thought he would have to hold on to the house for at least 4-5 years
to see the return of the market value where he purchased, MAYBE.
(Our crystal ball is cloudy about this topic)
TS is about $ 20K upside down before closing costs.
We wished TS luck (he will need it) and said we would be happy to help
if TS reconsidered his selling position. Our recommendation: Take your
loss now and try to recover $$ on the home you buy.
Note to sellers: When an agent agrees to discount his commission, he has
2 choices. He can cut the commission being offered to selling agents or he
can reduce the amount of time/money he spends on marketing the home.
Whatever he decides to cut, it is not to the seller's advantage.
Why you don't want to cut the Marketing:
Will your home ever sell:
- if no one ever sees it is for sale?
- if no one holds an open house?
- if no one takes photos & videos and puts them on the internet?
- if no one negotiates a final contract?
- if no one brings a buyer?
Why you don't want to Cut the Commission:
Real Estate Agents sell homes.
If agents can take buyers to 20 houses in the same neighborhood that
are paying a full commission, why would they spend their time to show
a listing that offers a lower commission? Do you think agents won't notice
you want to give 1/3 less than we can get on a very similar home in the
same neighborhood? Real Estate agents are trying to make a living.
It would be nice if we could show homes, market homes, and do all the
things we do for free.
But we can't.
We have to pay our bills, just like anyone else. Most of our costs aren't
fixed. They are just like yours. They are going up!
You made a bad financial decision, that is not a good reason why your
real estate agent should take less money for the work he does.
Why you don't want to have the price too high.
This is a buyer's market. Buyers know what price your home should be.
They know what price they will pay.
They will not even "LOOK " at a home that is overpriced.
We get many people who want to test the market at a higher price.
It doesn't work. Buyers and their agents know what was paid for
similar homes in your area. And unless you live on the moon,
there have probably been a few foreclosures in your neighborhood
that sold below market value. This lowers the price of your home.
We know it isn't fair but those are the facts we have to deal with.
Copyright 2008 All rights reserved.
Grand Rapids Ada Real Estate - Westbrook Realty
The authors of the this blog write about Grand Rapids Real Estate,
the Greater Grand Rapids MI area, and what it is like to live in
West Michigan. We believe: Grand Rapids is a Great Place to Live!
Contact Terry 616-292-7263