BE CAREFUL: Early offers are often the best offers.
by Neil Jenman
JENMAN – Real Estate Support you can trust
READING TIME: APX 4 – 6.5 MINUTES.
When you sell a property, what is more important: the time it takes to sell or the price?
Most people say price is most important – provided the time isn’t too long. But, once they achieve their price, when do they want their money? As fast as possible, of course.
The two main reasons you employ an agent is first, to get you the best price and second, to get your money as fast as possible. But here’s where things so often go terribly wrong and where sellers can lose thousands of dollars. It’s also where agents feel forced to deceive home-sellers.
DECIDING TO SELL
Picture the scene: You decide to sell your home. You choose an agent you trust. The agent places your home for sale at, say, $900,000.
If the agent is competent, the first thing the agent will do is check the needs of buyers who have enquired to the agent in the past few months looking for a home such as yours. The agent may sift through details of hundreds of buyers.
And then bingo, suddenly all the searching is worth it! The agent finds a husband-and-wife whose ‘wish list’ matches your home.
Thank goodness for accurate record keeping plus initiative from the agent, unusual, as most agents are too lazy to keep records of buyers to match with the homes of future sellers. Most agents just ask sellers to pay thousands of dollars for advertising to attract buyers. Of course, this means that the sellers are usually spending money to attract buyers that had previously enquired to the agent. Such a waste, but that’s real estate. Plus, the more advertising that agents do, the more they promote themselves – which, by the way, is the major reason agents push advertising.
Anyway, this competent agent shows your home to these prospective buyers. They love it. The agent, being highly skilled in negotiation, persuades the buyers to pay an extra $50,000.
The next day the agent visits you and says, “Good news, not only have I secured you the price you want, I got you an extra $50,000 giving you a total of $950,000.”
Naturally, you are delighted. Why wouldn’t you be? You sold your home in a couple of days for $950,000 – $50,000 more than you expected. Plus, you’ve saved hundreds, maybe thousands, of dollars in advertising costs. The agent has done excellent work.
THE ‘MORNING AFTER’
But, the next morning, something feels ‘sus’. Overnight, two thoughts have jumped into your mind – first, your home seems to have sold too quickly. So maybe it sold too cheaply. And second, the agent’s fee – $28,500, three per cent, well, that seems a lot for three days’ work.
What happens to you now is what happens with many sellers after a quick offer: You want more money because, in your mind, ‘quick’ means ‘cheap’. You also want to pay the agent less. You’ve forgotten that the agent not only got you the price you wanted, but an extra fifty thousand dollars on top. And thanks to the agent’s excellent records, you have managed to nab a buyer without having to spend (read ‘waste’!) advertising costs.
But, no matter how much agents ‘reason’ with sellers whose homes have sold quickly, some won’t budge. Many increase their asking price, telling the agent they now want a million dollars. As for the agent’s fee, forget three percent, two percent is plenty.
But, come on. Which is more important when selling your home: How much you pay the agent or how much you get for your home? Of course, all sellers say the net price is most important.
But surely $28,500 seems an exorbitant sum for less than a week’s work?
Well, on the surface maybe.
But consider the alternative. Most agents have already been ‘bitten’ – they have sold a house for a great price in a quick time and then had the sellers say two things: “You seem to have sold it too cheaply and you seem to be charging me too much”.
As you’re about to see, ‘quick’ does not mean ‘cheap’. Indeed, many times, it’s the opposite. The best offers for homes often come early – and fast. And, contrary to what many sellers may think, the buyers who make those early offers are not bargain hunters but genuine family home buyers, many of whom have been searching for the right home and will swoop and pay a high price to make sure they get the home they have been searching for over many months.
Agents who don’t have the ability to persuade sellers that a quick price from the right buyers is often the highest price they’ll get are doing their sellers a huge disservice. If the sellers refuse this first offer, they may never get an offer as good again, at least not in this current market. It happens so many times, sellers make the mistake of equating quick with cheap and then, out of fear or greed (or sometimes both), they ruin the best priced-sale they’ll ever find. The key words to focus upon are “the right buyers”. Check out these buyers. If, as mentioned, they are genuine home buyers who have been waiting to find the right home, they may be the best buyers the sellers will ever find.
FOCUS ON THOSE TWO POINTS: PRICE AND TIME.
Go back to the first two questions about what sellers want and you’ll understand, instantly, that the agent who sells your home fast and for a top price has done exactly what you wanted. Got you a lot of money and achieved it very quickly
Now you know, when a home is fresh, buyers often pay extra to beat other buyers. But when a home has been on the market for weeks – even a month – it often elicits comments and questions such as, “Why hasn’t it sold?” “There must be something wrong with it.”
FAST IS OFTEN BEST!
Anyone who knows much about real estate knows the following truth: The longer a home is for sale, the lower the price it will sell.
So, fast sales are often sales at the best price.
Agents who sell homes in a few days might seem to be paid a lot for doing a little but, as mentioned earlier, if the agent has got the best price and that money comes to the owner fast, the agent has done a great job.
Is it right to punish an agent for being competent, for doing exactly what you want? Hardly. If your doctor cured your pain or disease fast would you ask for a discount? Or would you say no, put me through months of agony and then I’ll pay you more?
But, seriously, that’s what some owners are virtually saying to the best agents – you have done a great job, so we are going to punish you by killing the sale and paying you less. Don’t do it, sellers. Think it through. Speak with your agent. Your quick buyer may be the best you’ll get.
If an agent happens to locate a buyer in the first day or two, it’s not accurate to say that “the agent has only done two days’ work”. The agent has probably done weeks of background work. To build a portfolio of ready-and-waiting buyers takes months of diligent record-keeping and follow-up. The buyer who buys your home quickly may have spent weeks looking at other homes with your agent. The agent may have helped the buyers arrange finance, without which they would not have been able to buy any home.
Keep the focus on this one all-important fact: You are paying for a result not for the time it seems to have taken to achieve that result. Competent people almost always get results faster than foolish or incompetent people. Does that mean we pay fools more?
HOW AGENTS ‘STRING-OUT’ THE SALE TIME
When agents get a great price in a quick time, they often don’t tell the sellers. Rather than risk having sellers kill the sale or cut their fee (or both!), the agents deliberately string-out the sale process, often for weeks. By then, of course, most sellers are fed-up with strangers looking through their homes – many of whom are bargain hunters who make absurdly low offers. The sellers are also alarmed at the huge cost of advertising. Many agents pressure sellers to spend huge amounts of money on advertising expenses. They say: “You can’t sell a secret,” which is nonsense.
As any good negotiator knows, buyers often pay extra to buy a home that has not been “exposed” in the general market. “Secrets” sell – and often for far more than a home that’s been ‘over-exposed’ through too much advertising. It can’t be repeated often enough. Agents push advertising because advertising pushes agents.
Many people, especially agents, argue that sellers are at fault. By refusing a quick, early offer or by insisting on a discount, agents have no choice but to deliberately sell homes slowly. They deliberately run-up needless advertising costs. And, worst, the home sells for a lower price.
If only the agents had both courage and the communication skills to explain the truth about quick sales, everyone would have been better off, well, especially the sellers.
REWARD A COMPETENT AGENT!
If you are selling your home and your agent comes to you quickly with an offer that meets your needs, the last thing you should do is punish the agent.
Be thankful that your agent is honest enough to tell you they have a buyer now at a great price instead of stringing-out the process and risk losing this early high-paying buyer.
Be grateful that the agent is competent enough to have had the right buyer ‘on their books’.
Forget the discount, the agent is likely a hero. So, reward the agent for doing exactly what you wanted – getting you the highest price and making sure you are paid as fast as possible.
And, one more thing: If you are lucky enough to have found such an agent when selling, give them one more reward for their honesty and competency. Your sincere thanks. Good agents, like all good professionals, appreciate being appreciated.
If you’d like to know more about this article you are welcome to contact the author, Neil Jenman, on [email protected]. No cost or obligation.