When an Agent Tells You They Already Have a Buyer for Your Home – Run Like Hell

When a real estate agent, who you are considering hiring to help you sell your home, tells you they already have a buyer for your home, the only thing you can be sure of is that they don’t. There are only two reasons why an agent would tell a prospective home seller they already have a buyer: 1) they want the listing bad enough to lie or 2) they want to keep it off the MLS so they can get both commissions.

running

According to an article in the Westport News,

“There are more licensed agents in Westport and Weston, Connecticut, than there are transactions each year,” Coldwell Banker agent Evi Coghlan reports. The result? Homeowners get ‘bait and switch’ letters from real estate agents who claim to have out-of-state buyers who want to live on their street. “The agents’ purpose in sending hundreds of these a month to every neighborhood in town is to get an audience with owners who are likely to be selling their homes soon, so that they may develop an inside track to becoming the listing agent,” Coghlan says. “Mysteriously, after you meet the agent who authored one of these letters, the (out-of-state) buyers … ‘change price ranges’ or ‘find another house’ or ‘decide not to relocate after all.’ “Most sellers don’t even realize the buyers were never real,” Coghlan says.

It does not shock me that in the ultra-competitive world of residential real estate that some agents might stretch the truth to get a listing. What does surprise me is that home sellers believe it. I suppose some home sellers actually believe that agents carry buyers around in their back pocket like a wallet, pulling out just the right one for each home seller.

At the end of the day, this is not a real estate agent ethics problem. It is a home seller education problem. Home sellers need to be reminded that until their home is actually for sale, with photos and asking price, that NOBODY has a buyer for their home. Because it is not for sale.

Very few home sellers know how to tell a good real estate agent from a bad one. It can be challenging. And while it may be difficult to find a good one, sometimes it is just enough to know how to quickly spot a bad one. If an agent is willing to lie to get the listing, you have to ask yourself “what will they do to get it sold?” I think a good rule of thumb is when an agent tells you they already have a buyer for your home – run like hell.

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.

Should the Real Estate Agent’s Face Be on the For Sale Sign?

Not all, but many real estate agents put their smiling face on the For Sale sign they put up in the yard when they represent a home owner in the sale of their home. I see this most often with the national brokerages, such as ReMax and Keller Williams, and less so with small, independent brokerages. And the question I want an answer to is why?

images

Normally, when you want to sell a product, you try to entice prospective buyers with a beautiful photograph of the product itself. You know, to whet their appetite. Today, most home buyers start their home search on the internet where they can easily get an idea of a home’s interior with the posted photographs. But, there are still plenty of home shoppers who drive around searching for homes the old fashioned way: by looking for For Sale signs. Why else would you put up a For Sale sign?

It seems to me that if a real estate agent really wanted to take advantage of every marketing opportunity they had when selling someone’s home, rather than put their picture on the For Sale sign, they would put a gorgeous interior picture of the home instead. You know, to whet their appetite. But I guess that is the point.

When an agent puts their image on the For Sale sign they are communicating loud and clear what they are really selling with that For Sale sign: themselves. Because of the crazy way the real estate industry is structured, where almost no real estate agents are actual employees, and are therefore perpetually unemployed, they always have to be on the lookout for their next customer. And what better way to do that than with a nice portrait of themselves on a For Sale sign. I cannot think of another profession that so blatantly self-promotes with their own mugshots. Have you ever seen plumber’s face advertised anywhere?

If you want to know why real estate agents often rank low in consumer surveys, this is why. It is not that they make their self-promotion a top priority. Is it that they say that they don’t. If you tell me that I am your top priority, then put a damn picture of my home on the For Sale sign and not a picture of you. Or, just be honest about it. Tell me that because of the crazy nature of the real estate industry, you always have to be promoting yourself, and while you promise to give me 100% effort when helping me sell my home, you will also use that opportunity to advertise yourself. I can handle that.

I still wait for the day in the real estate industry when honesty and transparency rule the day. Where consumers are not treated like acquiescing buffoons, but rather as equal partners in the home selling process. But until that day arrives, check out ReaListing for tips on saving money when you sell your home.

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 an Instant Sale an Instant Rip-off?

“Sold. The minute you’re ready,” declares the home page of upstart real estate company Opendoor. They certainly have a new take on selling your home. Rather than deal with real estate agents and months of hassles and stress, they will buy your home from you, right now, no questions asked. You can get your money in as little as three days. The only question is, should you?

opendoor

Generally speaking, anything that eliminates the middleman in a transaction, I am all for. Eliminating the middleman eliminates their expense, which should result in a cost savings for the consumer. Since Opendoor is eliminating real estate agents, I would expect some cost savings there. The only problem with Opendoor is that it is not clear there is any cost savings to the home seller. In fact, I suspect using their service is extremely expensive.

It is hard to know for sure if there is any net-benefit to using Opendoor. They have only been around for a few months and it appears as if they only operate in Phoenix, Arizona as of this writing.

Here is what we do know. Their transaction expense is very high. They charge the home seller 5.5% commission, which they brag about being less than the standard six percent charged by real estate agents. It is true that 5.5 is less than 6, but with a little shopping around, any home seller can sell their home for 4.5% total commission. That seems to be the new standard, especially in markets where Redfin is present. And in more expensive neighborhoods, with some negotiating prowess, a home seller can secure the services of a real estate agent for 3%, or less, total commission. So, using Opendoor is definitely going to cost you thousands (or tens of thousands) of dollars in transaction fees compared with using agents. But the more important questions is, what will they pay you for your home?

Like most venture-backed companies these days, Opendoor is a data analytics company. It is not a real estate brokerage. They operate by taking publicly available pricing information, plus information from the home seller, cranking it through some magical algorithm and coming up with an amount of money to offer you for your home. But is the amount fair?

Intelligent home sellers know that their objective is to sell their home for its appraised value. That is the best most home sellers can do. So, the big question for Opendoor is, will they offer you the appraised value (or something very near it) for your home, or will they build in “a little” profit for themselves by low-balling you? Time will tell. If I had to guess, I would speculate that the Opendoor business model includes paying less than the appraised value for your home. Anything else probably does not provide enough profit margin.

If that turns out to be true, using Opendoor will simply be a really fast, really expensive way to sell your home. Home sellers desperate for cash just may take them up on it. Unfortunately, those taking them up on it (i.e., desperate for cash) are probably those least able to sacrifice their hard-earned equity.

I have no idea what the future holds for Opendoor (and any imitators likely to pop up if they are successful). Who knows—maybe they are the future of residential real estate. What I do know is that the three companies touting the benefits of the Opendoor with testimonials on their website are fortune.com, venturebeat.com and techcrunch.com. You know what company I do not see? Consumer Reports. Hmmm.

 

 

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.

Do Home Sellers Need a Coach?

It seems as if everyone has their own personal coach these days. Heck, Even Tiger Woods Has A Coach. Do you know who else hires coaches? Real estate agents.

coahc2

People not in the real estate industry probably do not know that real estate coaching is big business. Superstar real estate coaches like Mike Ferry and Brian Buffini can cost an agent up to $1,000 per month. And what do real estate agents hope to get from these coaches? Generally speaking there are only two things agents care about when they hire a coach: they want to be better at prospecting (i.e., finding more buyers and sellers) and they want to know how to overcome their objections once they find them.

And what are the two primary objections they are taught to overcome?

1. Why should I use you?
2. Why should I pay you that crazy-big commission?

Teaching agents to overcome the commission objection is job one for the real estate coach. For if commissions where ever to drop dramatically, it would no doubt have a negative impact on their own business. Their successful real estate coaching ensures them of continued business.

Teaching agents to overcome objections is easy business, though. That is because all buyers and sellers have the same handful of objections. Real estate agents hear these same objections hundreds of times during their careers. So, knowing how to quickly dismiss them, and move on to something else, is imperative for long-term successful agents. And that is where the coaches come in, with something called scripts.

Scripts are nothing more than canned responses to anticipated objections. There is not a successful agent around that has not mastered a handful of these overcoming-objection scripts. What is a typical script sound like? Suppose you try to negotiate a lower commission with your listing agent, you are likely to hear one of these scripted responses…

1. If I lower my commission, I will have to lower my effort. Don’t you want me working as hard as possible for you?
2. The reason I will not lower my commission is because I am worth every penny. It is the inexperienced agents who agree to lower their commission, is that what you want?
3. If I cannot be strong and negotiate my own fee, how can I negotiate for you. Don’t you want a strong negotiator on your side?

Since real estate agents are so well prepared by their coach for common objections, especially from sellers, it got me thinking. Should home sellers have a coach to help them deal with real estate agents? You know, counteracting their canned responses to seller objections? It is an interesting proposition.

With a seller coach in place, when a listing agent threatens to give half effort for a lower commission, the seller will be prepared to remind them that if the home does not sell they get nothing, so any half-hearted effort that results in the home not selling is a true waste of their time.

I doubt home seller coaching will happen anytime soon. It is just too radical of an ideal. But just in case, ReaListing is here to help.

 

 

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.