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Thinking about thinking...

Are we lying to sellers?

By: John Bourassa
Thursday, May 17, 2007 12:18 AM

Maybe sellers think so?  We have reverted back to that time when we have to list or sell with substantiating back up figures – the comps.  Yet, sellers are skeptical of the figures we are presenting them. 

 

A seller called me this afternoon responding to one of my magazine print ads.  She is interested to sell her house.  Her house is a 3BR - 2BA, 2 car garage, no pool and, naturally, NICER than all the others because it has a new AC, a new refrigerator and new carpeting in the MB. I was by my computer, so I proceed to give her some quick comps from the MLS.  I could hear her hard-swallowing at the other end

 

Of course, like everybody else, she is a self-appointed neighborhood market authority.  She snarls at me telling that my figures are wrong.   She said that there are many houses for sale in her neighborhood priced at that much and mine is worth the same as the others.  To which I reply: “Maybe I've read those comps wrong. Let me read them again to make sure.”  (I love clever sarcasm.)  I read her the closed comps again s-l-o-w-l-y:  “In the last six months, in your area, there have been only two closed sales and one pending.  The ones that closed sold respectively at $95K and $82K less than what you want for yours.  They are not quite comparable to yours because they are each a 3BR - 2.5 BA, 2 car garage with pool.  The pending is a 2 BR -2BA, one car garage, no pool which does not qualify for this quick exercise.”  

 

She proceeds to deliver me a sermon defending the value of her house and wretchedly accusing Realtors® to be the cause of the decline of home values because we are lazy and we are not using proper selling methods to make things happen in favor of the sellers.  She closed by accusing us, Realtors®, to deliberately falsifying comps in order to convince sellers to sell low so we will earn our FAT commissions quickly.

 

Saved by the office phone ringing, I excused myself saying I have to take that incoming call.  “Can I call you back in one hour?”  She replied “that’s not necessary. Thank you.”

 

You all may say that this is only one example but I certainly can feel the resentment at large from listening to people inferring to the fact that Realtors® are not trying hard enough to sell; that somehow we are in part responsible for the decline of the real estate market. 

 

Inspiration is a state where people look for answers of wondering questions; desperation is a time when people need immediate answers or solutions.  I guess, sellers now need answers and find justification by blaming us.

 

John  

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Comments

Todd Clark
Member Since '06

Todd Clark said:

Here house will sit on the market for 6 months and when it expires you can list it for her then. They always think the homes that haven't sold are the comps. Not the ones that have sold!

May 16, 2007 10:37 PM
John  Bourassa
Member Since '03

John Bourassa said:

Todd,

At the price she wants, make that 2 years. I will reconsider, then.

J.

May 16, 2007 10:43 PM
Auctions And Options For Real Estate
Member Since '06

Auctions And Options For Real Estate said:

Nothing new here. It's a waste of your time to work with an unrealistic seller. Consider yourself lucky that she staked her claim to "expert" status before you wasted your time and marketing funds.

May 16, 2007 11:09 PM
Norman Wierer
Member Since '06

Norman Wierer said:

I always include in my listing presentations how out 'fat' commissions work and that we pretty my pay for most of our own advertising.  I've learned that I would rather turn down an overpriced listing and pick-it up on the expired side for the realistic price.  Oh, and I liked your sarcasm about not being an exact fit because the house that sold had more features....

May 16, 2007 11:29 PM
Steve Swanson
Member Since '04

Steve Swanson said:

I agree with everyone regarding wasting time.  When we work with a seller we are actually 'investing' in the sale of their home, so no need to waste time nor money.  Choose wisely those with whom you choose to invest.

Regarding the 'general perception' of Realtors ... don't worry about it.  People dislike car salesmen, accountants, doctors, lawyers, those of another race, those of another religion... i think you get the point.  And debating the subject usually is futile.

What one CAN do, is turn the conversation positive.  It's truly amazing how people change when you agree with them.

The conversation with the Realtor 'hatr' posssibly might have been turned with something like this...

"(Name), I agree with you!  There ARE real estate agents out there that give other agents like myself a bad name.  It upsets me, too.  However, I work very hard for my clients and consider myself very good at what I do... and above all, I'm truthful and honest.  (name), I wish I could tell you what you want to hear ... but numbers don't lie.

You might want to know that there is a good possibility that you WILL find an agent to list your home at the price you would like.  Inside this business they call that "buying a listing".  An agent, just like you mentioned ... there are some bad ones out there, will take your listing knowing that the price doesn't come close to what the market shows your home will sell for.  And after weeks turn into months, he'll then hope that you will keep coming down in the price to what it should have been in the beginning.

If you should end up in that situation, I'm going to ask one thing of you... Please fire that agent.  Your home will eventually sell at the price the market dictates.  And by the way, that's what sets the price ..the market.  Not me, nor any agent.  The marketplace does.  But please don't keep listing it with that type of agent.  Months later when it does sell, why reward a bad agent?  Whether you change to me or someone else, please don't reward a bad agent.  That way, eventually there will be one less bad one out there.

(name), I would love to work with you on helping you sell your home.  It would help if I could see the improvements to your home that you mentioned, but I could only responsibly represent you using realistic information.  Would you like to set an appointment so that I could see your home?"

May 17, 2007 2:44 AM
Ron Tarvin
Member Since '04

Ron Tarvin said:

I usually try to explain to sellers that want an unsupported high price that I don't usually conduct business where I am the only one that benefits...

They then go, "huh?"

Oh, well, what I mean is that I believe in running my business in a win-win fashion.  If I list your house at a price that is in line with the comps in an area, we both get what we want...we both win.  You get your house sold and I get paid for the work that I do to sell your house.

If I list your home at a much higher price than the comps support, it's a Win-Lose situation.  I win and you lose because your house can not sell if it is priced improperly.  However, I win because people will still call me to see your home and I will do my duty to show them your home and when they see that it is not priced comparable to the other homes in the area, they will ask to see other homes in the area.  In other words, they will buy a home through me, but it won't be your home.  In fact, your home will have helped to sell your neighbors home because your price will make his/her home look like a steal of a deal!  I normally don't take listings that I can not sell because I would rather disappoint you now rather than completely fail you later.

May 17, 2007 2:56 AM
Lorna  Zeno
Member Since '06

Lorna Zeno said:

It's true. At slower times some sellers think that realtors are not trying hard enough to sell their house.  But, you know?  The market has changed, and we also have to change with it.  In my case, now I only work with sellers that trust me, and the advise I give them.  When I get the listing I tell them that we are a team, and that we have to trust each other in other for the sale to happen.  If I don't feel trusted, I simply get rid of the listing.  

May 17, 2007 4:42 AM
Howard Arnoff
Member Since '03

Howard Arnoff said:

Steve, excellent comments.

May 17, 2007 5:36 AM
Lucia Brooks
Member Since '03

Lucia Brooks said:

Steve and Ron,

I applaud your eloquent application of logic.  May I ask what percentage of conversions you get from your mentioned objection handling techniques?  Exactly what percentage of unrealistic sellers have an epiphany and realize that you were right all along and decide to list their home with you for 85K less than they thought it was worth after you handled their objections.  I would be interested in those numbers.

I don't think it is wrong to try an apply logic to consumers, but I think it is more productive to have a strong prospecting plan and apply the theory of "Next".  It saves me a lot of wasted time and breath.  The sad truth is that you will never be able to help everyone.  Don't take it personally, "there are some people who just can't be helped".  But that is just me, maybe I am wrong.

Persuade me with your data.

May 17, 2007 5:46 AM
Gregory Bain
Member Since '03

Gregory Bain said:

John, you failed to take into account that her house has hot and cold running water. And, you can drink it.

May 17, 2007 6:07 AM
Lew Corcoran
Member Since '03

Lew Corcoran said:

Steve and Ron are right on the money on this one.

First, I wouldn't even dream of getting into a discussion about market values over the phone - and second, I wouldn't even discuss market values WITHOUT first seeing the house.  I'd close for an appointment to see her at her home.  If she doesn't want that, I wouldn't waste my time.  Put it in perspective - how many appraisers (jewelry, antiques, cars, boats, planes - you name it - would give any kind of value WITHOUT first seeing the object in question?  None!  So, why should you?

That being said - no matter what they say, you must agree with them, but then turn it around (as in Steve's and Ron's examples).  If at the appt., the seller continued to insist on pricing her home way out of the market range despite all the facts to the contrary, I'd have no problem getting up, thanking her for her time, and handing her a list of area real estate agents who will be more than happy to fall on their faces - and I'd say that - with a straight face!

May 17, 2007 6:08 AM
Cathy  Clark
Member Since '06

Cathy Clark said:

John, Your caller actually had a good point.  I had a listing in a very slow market last year that I comp'd at about $310K.  Other agents comp'd it at $275-$280.  That's a big difference. Obviously, I got very nervous because these Agents know that town better than I do.  I almost beat myself up believing that I wasn't doing the right thing by my Seller (also an elder relative).  I sold it for $305 and breathed a huge sigh of relief.  If it had been listed by either of the other Agents it would have sold very quickly because it was a steal at that price!  It took 6 months from list to close but my relative (94 years old) had a lot more money in the bank than she otherwise would have.

I can't say for sure why they priced it so low because I never asked and I don't read minds, unless they're 13 and 15 years old, but a quick sale was all that came to mind to me.  

May 17, 2007 6:19 AM
Gloria Losie
Member Since '06

Gloria Losie said:

Yes, I would see the home first.  It would be much harder for her to snarl at you in person.  However, she would not list with you at this time because her price is so far out of the ball park.  You have some great posts and are one of the top agents in the area, I'm sure. You could put her on your call back list in 6 months or drop by after it has expired and ask her to list with you then.

May 17, 2007 6:24 AM
Cathy  Clark
Member Since '06

Cathy Clark said:

Lucia,  I don't have exact numbers but I know I lost two listings using this rationale:  "Do you want to sell your house, or someone else's?  Overpricing will sell someone else's. There are other Agents out there who, unfortunately will list your house at the higher price just to get the phone to ring...blah blah blah"  One took three years to sell, at the price I quoted and the other still hasn't sold after four years.  My Broker has used this for 25 years and has been very successful.  They were both early on in my career so maybe I just wasn't confident enough.  I have used it successfully since. Another one I've used  is "Why wouldn't I want to sell your house for $100K, rather than $85K?  I'd make more money!  I stand to lose money, though, if it doesn't sell at all because the price is too high.  We both lose."

May 17, 2007 6:28 AM
Nick Carter
Member Since '04

Nick Carter said:

Rather than 'turn away' the listing - why not suggest to the 'optimistic' seller that they consider having an appraisal done and offer 2 or 3 appraisers for the seller to contact.  Funny how resistant the sellers are to this approach, yet the would-be Buyer/Borrower will have to have an appraisal done before the loan is approved....!!  Ask the Seller what they will do if the property doesn't appraise at the contract price...??  OR Suggest a Dutch Auction or and English Auction, whichever they prefer....to see what the highest bid would be...Most Autioneers will pay a referral fee....!!  Go on to explain that some auctions create great exposure and a 'frenzy style' demand for a property which 'could' command an excellent sales price.....OR take the opposite position and diplomatically suggest another Realtor....Oh, be sure to work out a referral fee with the other Realtor just in case it does sell...??  Offer this:  "I would be happy to work with you in the future."  And finish by saying, "As you know the inventory of homes in your category is at an all time high and buyers know that it is a Buyer's Market.  Homes that are selling are those listed close to Fair Market Value and that is exactly what the buyer will pay for it.  Let me ask you this - Would you pay $xxx,xxx for your home today...??"  And don't say another word.  

May 17, 2007 6:42 AM
Gloria Losie
Member Since '06

Gloria Losie said:

Cathy:

I like it.

May 17, 2007 6:42 AM
Klaus Nicholson
Member Since '07

Klaus Nicholson said:

It's all your fault John, how dare you undervalue her castle just to make a quick fat commission.

I like to do that kind of business in person. Being on the phone with you gave her that anonymous edge.  In person she would have been much nicer,  lied to you and strung you along a bit longer.  She's on the phone right now finding somebody who will agree with her.

May 17, 2007 11:42 AM
Gregory Bain
Member Since '03

Gregory Bain said:

John, when I was in the third grade the teacher gave out stars. The kid who was sitting next to me cheated like hell and he always seem to get a gold star. When I went to college their were some of the dumbest kids walking around with a 4.0 grade point average just because they were a member of a fraternity and were given the answers to the professor’s tests by his “brothers”. Now, I have this P2 web site and they give out gold stars for what?

You want a gold star? Send me a self addressed stamped (.41) envelope with two American dollars, and I’ll send you five gold stars.

You want your own gold star system? Go out and get a listing, 1 gold star. Sell a listing, 2 gold stars. Sell your own listing, get 4 gold stars. Don’t lie, cheat, or, steal – get 5 gold stars. (WARNING: this star system may not put food on the table or keep a roof over your head).

See what you've done. The BLOG Police have removed that thread. Now we are forced to continue our discussion on this one.

May 18, 2007 6:38 AM
Steve Swanson
Member Since '04

Steve Swanson said:

Lucia,

Truth is, I've only needed to use this idea twice. One did allow me to meet with them and give a presentation.  Neither of them listed with me.

BUT, I did get a phone call and referral from one of them later.  She ended up using the agent that had quoted her a MUCH higher asking price.  Her house eventually sold 5 months later for lower than what I had suggested.  It turned out she stayed on with that agent because it was a friend of hers.  When she called, she said their friendship was damaged because of that experience, said I was right but she felt committed.  She then gave me the name of a neighbor that was getting ready to move.  I got that listing.

My business philosophy is that whenever I talk with anyone about real estate I am trying to position myself for the future, both with that person and those that they know.  

I know some agents will blow off clients right away and register it as a waste of time.  But how long does it really take to be courteous?  As I try to be understanding of their point of view, I figure a few minutes of conversation could become a positive situation.  And if not, that's okay.  At least I tried.  I know that I won't get every deal, though it's my belief that if I keep doing the right thing things will work out in the long run.

btw, I monitored the other transaction and it eventually sold near my comp price as well.  I'm so arrogant that I believe that at least I know that seller can't say anything bad about me now, even though they might have been p-o'ed at the beginning just like John's client.  But NOW they know ... and I know they do.  ;0)

May 18, 2007 6:49 AM
Steve Swanson
Member Since '04

Steve Swanson said:

Gregory...

HUH???

Saw by your post time that it was almost noon... time for your meds??

May 18, 2007 6:55 AM
Gregory Bain
Member Since '03

Gregory Bain said:

Steve, I know I have been labeled as delusional. But, our friend John posted on a subject that has been sent to the bad boy corner. P2 does not like us talking about their grading system.

Coffee?

May 18, 2007 7:00 AM
Gregory Bain
Member Since '03

Gregory Bain said:

Steve, this was the post that John put up:

P2A: Handshake or Fistfight?  

submitted 8 hours, 37 minutes ago by John Bourassa to Thinking about thinking...

Note: this discussion has moved to the Point2 Agent Message Board ( link )....  

It was taken down while I was typing a response.

May 18, 2007 7:03 AM
Gregory Bain
Member Since '03

Gregory Bain said:

John, when are you going to stop rocking the boat? If you want to say something that "big brother" isn't going to kill - then you have got to open the thread up with a different title and highjack it to be something else after it passes thru the approval process.

Of course, they are now "watching" you!

Bad Boy

May 18, 2007 10:48 AM
Cathy  Clark
Member Since '06

Cathy Clark said:

Tsk, Tsk, John.  Now just where did Sr. Catherine Mary put that ruler?  I just went to your Gulag post to place a comment and, guess what?  That's been moved, too!  You rabble-rouser.

May 18, 2007 11:12 AM
Steve Swanson
Member Since '04

Steve Swanson said:

;0)  Trying to get back on the original subject of this post ....

I really like Nick's input of then suggesting to get an appraisal done.  This tact in negotiation would allow some constructive conversation including that of sharing that any buyer's loan would only be approved based on the appraisal.

There would be a cost, obviously.  Do you think it would be a worthwhile approach in offering to share that cost if the seller agrees to list with you and you as an agent agree to list the home at the appraised price?  

I would think an agent would have nothing to lose and everything to gain IF the seller agreed.   Is it legal to start the listing agreement, get it signed just leaving off the date and the price (which will be determined and agreed to by the appraisal)?

May 19, 2007 11:36 AM

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My comments herein are not authotitative; they are humble expressions of my wanderous mind or they are recollections of my past or present real estate experiences, whether they are good or bad. Hopefully, someone may profit from them.