Why I Love Open Houses

There is a running debate in the real estate industry as to the efficacy of the Open House. Some say it is too dangerous, and it is just a way for the listing agent to get more clients. While other research indicates it actually helps sell homes, especially if it is held in the first week.

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Now, I have no doubt that holding an Open House may help my listing agent get new clients and to that I say, “So What!” The only thing I care about, as a home seller, is does it help me sell my home? If it helps me sell my home AND it gets my agent new business, so be it. I think they call that win-win.

I also have no doubt that it can be dangerous, but that can be mitigated. Intelligent home sellers would be wise to not leave a single valuable thing in their home during the Open House. And any prudent agent would make arrangements to not be the only one at the Open House. If they cannot convince another agent to join them, they can always bring a friend (or spouse).

I love Open Houses because it gives me, as a home seller, the best chance to achieve my ultimate goal: multiple offers in the first weekend. When you get multiple offers in the first weekend, you can be assured you will sell your home for the highest price in the quickest time frame. For whatever you or your agent (or an appraiser) thinks your home is worth, when several people submit an offer to purchase your home and back it with cold hard cash, those buyers ARE the market for you home. And they have told you loud and clear what your home is worth. Waiting will do you no good.

Now many agents say Open Houses are a waste of time, but maybe that is because they do not know how to do it right (or what the objective is). The objective of an open house is not to find a buyer. The objective is to get multiple offers in the first weekend. And to do that, you have to do a lot of things right.

First, the home has to be priced right. Open Houses with overpriced homes are truly a waste of time for the home seller. You and your agent would be better off golfing. Next, the photos uploaded to the MLS and third party sites need to be professional quality. They have to make buyers really want to get inside your home. And finally, the most important thing: timing. The thing most agents get wrong.

Serious, motivated buyers want to buy their dream home now! They incessantly monitor their e-mail inbox for a new listing, and when it arrives, if they like what they see, they want to get inside the home as soon as possible. The trick of course is to make the “soon as possible” the Open House. Where most real estate agents go wrong is that they allow buyers in to see the home before the Open House. Of course no buyers will show up to the Open House. The serious ones have already seen it.

When you get ready to sell you home, I urge you to consider holding an Open House. Just make sure you and your agent are on the same page. To learn how ReaListing helps sellers and agents get on the same page, click here.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

Is Redfin Proof That Real Estate Agents Make Too Much?

Attempt to negotiate a commission lower than the standard 6% with any experienced real estate agent and they will try and convince you that there is no way they can do it for a penny less. Oh, and by the way, they are worth every penny.

Now if there were only a few real estate agents, we might have to take their word for it. But as things turn out, there are plenty of them. Some would say too many. And as with any industry where there are low barriers to entry, we would expect to see competition in the form of lower prices from more efficient providers. And that is exactly what we do see (finally).

If you have not already heard, there is a real estate agency called Redfin. It is small, but growing fast. It is the first significant real estate agency to take advantage of the efficiencies of web-based marketing and actually pass the savings on to the consumer. How much savings? For starters, they charge home sellers 50% less than traditional agents.


That’s right! Redfin charges the seller just 1.5% of the sale price, rather than the more traditional 3% (half of 6%) that other seller’s agents claim to deserve.  But wait—it gets better.

Redfin also rewards buyers. As buyer’s agents, they eagerly admit they are overpaid by offering to pass on to the buyer a not-insignificant chunk of their commission. Basically, what the Redfin agent in the ad below is saying, is that he is so grossly overpaid for what he does as your buyer’s agent, that he is willing to cut you a check for almost six grand just for choosing him.

Perhaps these Redfin agents are inferior to other agents? Not if  you judge by Orlando’s 76 customer reviews. They seem pretty satisfied with him. Maybe the more traditional (i.e., expensive) real estate agents have not learned to leverage the new online technology yet, and are therefore not as efficient as Redfin agents. I do not think so. But even if that is the case, economics 101 dictates that their higher prices should either force them to become more efficient or force them out of the market. But that has not happened.

Somehow these Redfin agents have figured out a way to do it for a “penny” less, and yet the market for the “full price” real estate agents is still very strong. Can anyone explain that? Why would anyone not want to save thousands, or tens of thousands of dollars when buying or sell a home?

The question is no longer, do the full price agents make too much? They do. The questions is why? I suppose it simply comes down to people wanting to exercise their right to get ripped off.

To see how ReaListing keeps home sellers from getting ripped off, click here.

 

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

Hey Home Seller, Nobody is on Your Side

You might think that in the $160 billion dollar industry that is residential real estate brokerage, somebody would be on the side of the home sellers. You know, the ones that contribute most of those $160 billion dollars. You would be wrong.

insaneAppearances aside, there is really nobody on the side of the home seller. That $160 billion is a mighty big trough, and a lot of people’s livelihoods depend on their continuing to feed at it. For starters, there are the real estate agents themselves. They may claim they act in the home seller’s best interest, and some may even believe it. Unfortunately, whether they acknowledge it or not, they suffer decidedly from the Principle-Agent Problem. For proof, look no further than the research of two noted Stanford professors. What did they discover about these well-intentioned servants? “All of the empirical findings are consistent with agents distorting information to mislead clients.”

If that were the limit to the problem, it would be understandable. Everybody in a more-or-less free market tries to do the best for themselves. I am okay with that. But those not in the real estate industry probably do not know there is an entire industry that does nothing but sell things to real estate agents (to make their jobs more palatable). This “agent support” industry is also not on the side of the home seller. They want agents to make as much as possible, regardless of how unfair it is to home sellers. For the greater the agent’s take, the greater their market.

Perhaps you think these new third-party sites (Realtor, Trulia, Zillow) are on the side of the home seller. After all, the information and marketing they make available can be very beneficial to home sellers. And that is true, to a point. But you have to understand who the customer of these sites is—where their revenue comes from. If you guessed real estate agents, you are correct. To the extent that these third party sites help home sellers, it is just a means to an end. The more home buyers and sellers use these sites, the more they can charge the agents to advertise on them. And more importantly, the more the agents make, the more they can charge them. These sites, while they will never admit it, do not want anything to jeopardize the lucrative commissions the agents garner.

And finally, perhaps you think the ancillary real estate services industry (title, escrow, mortgage, etc.) is on the side of the home seller. Definitely not. Unlike home buyers and sellers, who have at best a fleeting business relationship with these service provides, real estate agents have an on-going relationship with them. These service providers depend heavily on agent recommendations for their on-going business. Hell, some even pay for them with kickbacks, which is illegal. They certainly do not want anything to endanger “their” agent’s livelihood.

So there you have it. An entire industry purporting to serve home sellers when in fact they would like nothing better than to have home sellers pay as large a commission as possible to sell their homes. The bigger the trough…

To see how ReaListing takes the side of the home seller, click here.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

The Four Secrets to Interviewing Real Estate Agents When Selling Your Home

Real estate agents will tell you, and rightly so, that selling a home is the biggest dollar transaction in which most people will ever engage. And yet few home sellers take the time to find the best real estate agent to sell their home. Studies show that a majority of home sellers list their home with the first agent with which they speak, which is usually a referral. Those are the two biggest mistakes you can make when choosing a listing agent: limit yourself to only referrals and then do not even bother to interview them to see if they are a good fit for you. Never forget, you are entering into a business partnership in which you will spend thousands or tens of thousands of dollars. Your choice of agent is critical.

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I think the reason most sellers do not interview agents is because they do not know how to do it. So, here are four secrets to interviewing agents (that you will never hear from them).

1. Do not conduct the interview at your home. Find a neutral location near your home (I suggest Starbucks). Once a real estate agent gets inside your home it can be difficult to “reject” them. They have no reason to leave and you may have difficulty asking them to leave. At a neutral location, nobody has to ask anybody to leave.

2. Do not have the agent bring a CMA to the interview. Most real estate agents like to bring a CMA (competitive market analysis) to their listing appointment. These help the seller determine a suitable listing price for the home. But having an agent bring one to the interview is a bad idea for several reasons. First of all, it will make you feel a sense of obligation toward them since they have already done some work for you. Second, the agent can bring a CMA with an inflated home price, which could distort your selection decision. And finally, since you have not chosen the agent yet, there is no need for them to work for free.

3. Have a list of ready made questions. You should have a few standard questions to ask every agent you interview. The answers from any one agent are useful, but what is really useful is asking the same questions to multiple agents. Comparing their answers is where the real education takes place. You simply cannot make an informed real estate agent choice by interviewing just one agent.

4. Understand your objective. The objective of interviewing agents is simple: you want to find one whose answers make you feel comfortable. If you interview at least three agents, I assure you that you will one whose answers make you feel more comfortable than the others. Their answers will make sense with you. And their demeanor will resonate with you. And you will have no doubt about which one to choose.

When you are done, thank the agent for their time and give them a commitment when you will let them know of your decision. And you should get back to each agent, whether you chose them or not. And if you really want to be helpful to the agents you did not choose, make it worth their time by telling them, in a kind way, why you did not choose them, so they can improve in that area.  

To learn how ReaListing is changing the way real estate is bought and sold, click here.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.