I recently saw a video posted on my Facebook feed where a VP from Keller Williams (and best selling author) talks about why houses don't sell. Why some homes sit and others move. He explains a very basic principle, one that I have talked about many times here.
If you are priced too high for your market you won't sell.
He goes on to explain that if you are getting no showings it tells you you are OUT of the market. If you are getting showings AND offers than you are IN the market. If you are getting showings but no offers than you are in "No Man's Land". What he failed to mention is that the cost of your trusty Realtor is what has you stuck in "No Man's Land".
Drop your Realtor and join the IN crowd!
Here's the video (don't judge him for his lack of white board skills.
OK so I talk quite regularly about selling. A recent comment asked about sharing some knowledge for buyers.
The comment specifically was:
I know property guys have been really going well with sell your self but what about buying. Using an agent seems to be the only option and then that becomes a problem since they won't show private sales.
Let's first focus on the misconception that using an agent is your only option when buying. Stats show that 90% of people start their home search online, not with an agent. We find that buyers are more concerned with the homes than the sign on the lawn. They care which website it is on because they want to be able to get as much info as possible while doing their search. As pointed out by Levitt & Dubner in Freakonomics the hording on information on the public facing portal of the MLS (www.realtor.ca) forces you, the buyer, to have to call them. Information hording throws the balance of the power on their side. Sites like PropertyGuys.com work the opposite way. As a home seller you want to talk to qualified buyers, buyers that want to buy your home. To do this you have to give them all the information you can. Quality photos, virtual tours, Google maps (including street view), and all the information you can cram into a web page.
As for agents not bringing buyers to private sale homes, this is another misconception. I would estimate that 5 to 10% of the PropertyGuys.com homes sold here in the Waterloo Wellington area are sold to a buyer with an agent. We make sure to coach our clients on just how to deal with an agent assisted purchase. It is simply about knowing your bottom line and knowing your "agent" bottom line (bottom line divided by .975). This will allow you to account for the agent's 2.5% commission they "expect" for working with a buyer. When worked this way the seller is not paying for the agent they are simply allowing the buyer to pay for the agent as part of their purchase. Want to see how it works?
Private Home Seller Asking Price - $300,000 Private Home Seller Bottom Line - $290,000 Private Home Seller "Agent Bottom Line - $297,435.90
If a buyer comes in "sans agent" they have $10,000 in negotiating room. Buyers that choose to use an agent now have less negotiating room on the house,$2,564.10 to be exact. This means they are paying for their agent without having to cut a separate cheque. As a buyer are you keeping your eye on the dollars you are spending?
I have been knocking on a lot of doors lately. Last week I had the pleasure of talking to a gentleman about his listing with a C21 agent. As he answered the door and saw my PropertyGuys.com Beetle over my shoulder he was quick to blurt out "I already have an estate agent." He continued on in his proper British accent about how the agent was giving him a deal by lowering the price on the house he was purchasing because he had listed with her.
So in this case the house was listed for $459,900. That means that the commission the home seller was expecting to pay was $24,097.50 including GST. What I am trying to figure out is how is this agent going to reduce the purchase price of the house they are buying by nearly $25,000. Generally if an agent does both sides of a deal (working on behalf of both buyer and seller) they reduce their commission from 5% to 4%. Let's say this agent was feeling awfully generous this day or even more likely, motivated to move the property and adjusted her commissions to 2.5%. For her to reduce the price by $25,000 it would mean this couple was buying at least a $1,000,000 home. Seems like a bit of a stretch for an upgrade, but possible.
If you are shopping to buy a house and the one you want is listed with an agent keep in mind that if they offer to work both sides of the deal to reduce the price of your purchase, under the condition that you list with them, they are not doing you any favours.
If they want to do the world a favour, they would let you sell privately and then you could pass on some of your savings to people that could REALLY use it...
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