Sounds like you have an astute business person for an agent… congratulations. We have often discussed the agents that will list at any price because they are either: a. ignorant and thrilled to finally have a listing to work on, or b. they are going to take the listing and beat you up week after week for a price reduction. The smart agent knows that an overpriced listing won’t sell, and ultimately it will have a detrimental impact on the Market and the property itself.
The matter is actually more involved for the savvy agent, the good business person that understands not just the mechanics of the industry, but the fact that it is, indeed, a business. Despite the perception of the uninformed public that all a listing agent does is put a sign in the ground and put the property in MLS, there is a lot more to it. When a homeowner signs a listing they agree to pay the agent a selling fee when the agent has performed … not just procuring a Buyer, but actually closing the escrow with the Buyer.
When an agent lists a property they are committing to a substantial financial investment. In our particular market area, Northern Nevada, Just taking a listing actually costs the agent around $2,000 of hard money… without the extra stuff. Then there are ongoing monthly carrying costs in the neighborhood of $400 per listing. That figure will vary according to how many listings the agent carries and what his monthly operating costs are, i.e.- if an agent has ten listings and a monthly base cost of operation of $5,000 his monthly cost per listing is $500. If it takes six months to sell your home, a neutral market (not Buyer or Seller), the carrying cost is $3,000. The agent’s cost is now $5,000 without a guarantee of any return. If you have a $300,000 home and their side of the fee is 3% they will gross $6,000. Now you know that the net is only $1,000 for their personal expenses, i.e.- taxes, house payment, food, utilities, recreation… life.
Some agents might take a listing for the sign placement if you have a highly visible property. That is an old school thought for there are fewer sign calls these days with the proliferation of the Internet in our industry. If your agent is taking the listing too high you might be an unwitting victim … and so is the agent. They are only fooling themselves as to their actual benefits of the listing, and they aren’t serving you well.
Our Advice: Even in a traditional office where agents don’t pay as many direct costs, they still pay as their broker receives a larger portion of the selling fee. Many agents, regardless of their fee-split arrangement, don’t know they are in business. Be careful with such an agent when considering them to list your home. If they can’t manage their own finances properly how careful will they be with yours… your money… when it comes time to negotiate on your behalf and to protect you through the escrow process that is fraught with financial traps?! There is no “let’s just try it”, or “they can always make an offer” since marketing times have gone from a week to nine months on average. The costs and risk are just too high to put your hook in the water on a whim.
An agent must protect your property and investment as well as their time and financial expenditures when they take a listing. The art is to price it right – to get you the most possible in a reasonable period of time. Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472, carsonvalleyland@hotmail.com, www.carsonvalleyland.com
Showing posts with label realistic price. Show all posts
Showing posts with label realistic price. Show all posts
Tuesday, August 26, 2008
Wednesday, September 5, 2007
What is the right price in this market?
The home we want is priced right … what should we offer?
Many Buyers are compelled to offer low because they’ve read, or been told, to do so. Others think they have to do it because somebody did it to them in another market. If the home you like is priced right … get what you can and buy it.
Smart Buyers are making offers based on their knowledge of the market and hopes for a good deal. Ultimately they are accepting a negotiated price and getting what they want at a good value regardless how it compares to the listed price. We recently saw an offer 22.2% below the list price of a well priced property. The Buyers had to try it and they did. Fortunately, they knew the market and recognized that the property was well priced. Ensuing negotiations resulted in a price but .7% below the list price, less than a 1% reduction! Both parties were happy and achieved their objectives.
The values are all over the board these days. We recently showed property and found homes three doors apart, the same plan by the same builder, that were priced $30,000 apart. They were essentially the same house. One was priced right – the other deserved a “wake-up” offer. In another neighborhood we experienced a discrepancy of $60,000 between similar homes. In that case the lower home was priced by a very active local agent that had great knowledge of the market. The other agent was from out of town and unfamiliar with the market. Sometimes out of town agents are relatives, but more often they are sought out by Sellers because the local knowledgeable agents wouldn’t tell the Seller what they wanted to hear. Both of the homes $60k apart are still unsold, but which do you think has a better chance of selling?
Sellers and their agents must look realistically at what they are trying to achieve and plan accordingly. It doesn’t matter what you paid or what you owe – market is what market is. If you want, or more importantly, have to sell then get a realistic Realtor. One that will tell you the truth and make a plan that works for you for your situation, not just say what you want to hear so they get a listing hoping one of two things happens: 1. they find a fool and his money – rare in today’s market, or 2. they list high at what you are hoping for, and then beat you up for a price reduction week after week, you concede and their slimy tactics are rewarded … for them.
Our Advice: Because of the great discrepancy in prices in the market place one must be really sure when pricing. If it is priced right … really right … you will sell. What your home was worth in 2005, or will be worth in 2009, is irrelevant. If you want to sell today you can … if you are positioned in today’s market in a today manner. That includes price, condition, showing availability, experience … and intention. If you don’t need to sell – don’t right now.
If you need or want to sell … do it right, price it right, and you will be moving. The days of the uneducated Buyer are over. If you are waiting for someone to come in and pay too much you might as well hunker down for a long winter. Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, carsonvalleyland.com, 775-781-5472.
Many Buyers are compelled to offer low because they’ve read, or been told, to do so. Others think they have to do it because somebody did it to them in another market. If the home you like is priced right … get what you can and buy it.
Smart Buyers are making offers based on their knowledge of the market and hopes for a good deal. Ultimately they are accepting a negotiated price and getting what they want at a good value regardless how it compares to the listed price. We recently saw an offer 22.2% below the list price of a well priced property. The Buyers had to try it and they did. Fortunately, they knew the market and recognized that the property was well priced. Ensuing negotiations resulted in a price but .7% below the list price, less than a 1% reduction! Both parties were happy and achieved their objectives.
The values are all over the board these days. We recently showed property and found homes three doors apart, the same plan by the same builder, that were priced $30,000 apart. They were essentially the same house. One was priced right – the other deserved a “wake-up” offer. In another neighborhood we experienced a discrepancy of $60,000 between similar homes. In that case the lower home was priced by a very active local agent that had great knowledge of the market. The other agent was from out of town and unfamiliar with the market. Sometimes out of town agents are relatives, but more often they are sought out by Sellers because the local knowledgeable agents wouldn’t tell the Seller what they wanted to hear. Both of the homes $60k apart are still unsold, but which do you think has a better chance of selling?
Sellers and their agents must look realistically at what they are trying to achieve and plan accordingly. It doesn’t matter what you paid or what you owe – market is what market is. If you want, or more importantly, have to sell then get a realistic Realtor. One that will tell you the truth and make a plan that works for you for your situation, not just say what you want to hear so they get a listing hoping one of two things happens: 1. they find a fool and his money – rare in today’s market, or 2. they list high at what you are hoping for, and then beat you up for a price reduction week after week, you concede and their slimy tactics are rewarded … for them.
Our Advice: Because of the great discrepancy in prices in the market place one must be really sure when pricing. If it is priced right … really right … you will sell. What your home was worth in 2005, or will be worth in 2009, is irrelevant. If you want to sell today you can … if you are positioned in today’s market in a today manner. That includes price, condition, showing availability, experience … and intention. If you don’t need to sell – don’t right now.
If you need or want to sell … do it right, price it right, and you will be moving. The days of the uneducated Buyer are over. If you are waiting for someone to come in and pay too much you might as well hunker down for a long winter. Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, carsonvalleyland.com, 775-781-5472.
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