I was recently invited to a home for a “Listing Appointment”.
Listing appointment ; interviewing a Realtor to help you sell your home.
After more than an hour of touring the home, answering questions and giving suggestions, the owner asked, “how much can I list it for?” A reasonable question and the most popular topic. Per usual, I explained the current market, the most recent comparable sales nearby, and I eventually gave a range that I felt comfortable with for an initial visit. A range that would likely give them the best outcome; lowest days on market + highest sale price.
I also explained the in’s and out’s of that range. For example, if you do everything we discussed to prep the home (deep clean, fresh paint) and consider staging it, then we are on the higher end of the range for a list price. In the opposite scenario, if you’re not interested in much prep and want the house on the market as-is, the lower of the range might be ideal and strategic.
Staging ; the activity or practice of styling and furnishing a property for sale in such a way as to enhance its attractiveness to potential buyers.
I left the appointment feeling confident that I could help them and that the meeting went really well. I was ready to get to work and expected to hear from them in the next couple of days.
Of course, before I left, the Seller did ask if we could increase the list price AND if my fees and commission could be reduced. For some context, almost every listing appointment is sprinkled with these questions…expectations…higher profit, lower fees.
Commission ; a percentage of a property's purchase price that is paid to the real estate agents and brokers that facilitated the purchase and sale of a property.
Real estate agents typically make their money through their commission and do not make a commission (or get paid) unless the house sells. With that said, it isn’t surprising that some people hope or expect this to be an easily negotiable “fee”. Even worse, I get the sense that some Sellers may think that Realtors may try and list their home for less to get a quick sale and make a buck. Yea, it sucks to have to say that…but I think there are a lot of misconceptions about Realtors.
To be clear, I want to sell your house for as much as possible. I want you to net as much as possible. Sometimes, this means listing it for less than you’ve decided it is worth. There are so many factors in play and overpricing is a giant pitfall. A lower list price (within the current market value range) often times ends up with a higher sale price and lower days on market.
Your home is only worth what someone is willing to pay for it. In the end, the market will speak for itself.
I am writing this to say, I did not get that listing that I initially mentioned above. I knew the reasons why because I asked. Lower commission and a higher sale price. I saw the listing hit the market this morning and I wasn’t surprised by the list price but it’s significantly higher than I would have advised, operating with the Seller’s best interest in mind.
Now, we are definintely in a “Seller’s Market”, so I believe that their final sale price could likely be around this number but I think strategically, starting lower would have driven even more interest in the property and given “bumpers” to a transaction because the property has a few “cons” that will eventually come to light after the sparkly photos get buyers in the door, writing contracts or performing inspections.
Seller’s Market ; When real estate demand exceeds supply; too many interested buyers and not enough homes on the market. Since there are fewer homes available, sellers are at an advantage. In a seller's market, homes sell faster and buyers must compete with each other in order to secure a property.
So, I will watch the listing and see what happens. A case study, if you will…
My overall point : If you are considering listing a property and interviewing agents and their list price ranges (or commissions and fees) are broad or confusing, don’t immediately just go with the higher/lower numbers. Ask follow up questions. Circle back and think about the overall strategy…a slightly lower commission and hefty list price won’t mean much when you’re sitting on the market a few extra weeks, making another mortgage payment, and receiving offers under list price in a market where that isn’t the norm.
I love talking this topic and answering questions with brutal honesty. I want to help you make this entire process as pain-free and profitable as possible.