Avoid misunderstandings, part one – sellers …

April 12, 2008 at 9:32 pm Leave a comment

The first misunderstanding that can arise is what the agent actually does and what they do not do.  In talking with potential customers it is clear that the vast majority of people do not understand what a real estate agent does or how they get paid.  This can many times lead to misunderstandings and even disputes.  When I became a Broker and started my own business I decided to try and make some of the issues clear to my customers and at the same time provide some legal protection for my new company.

 

Sellers:

 

The issues are a little less confusing for sellers simply because they sign a listing agreement and the fee is in that agreement.  The problem is most sellers do not read the entire agreement.  Most listing agents provide a Competitive Market Analysis (CMA) and many times the listing agent’s services are listed in this document that contains the CMA.  Sometimes the list includes things the agent really doesn’t do for one reason or another.  Many times the list is boilerplate from the broker and each agent can do these things or not.  In some cases the verbiage is confusing or misleading to the customer.  For example I have seen things like the following in these documents:

 

  • Hold open houses
  • Advertise in the local newspaper
  • Advertise on the internet
  • Report to the seller and keep them up-dated on all activities
  • Etc,

 

What the above actually mean is somewhat subject to interpretation.  The key here is no specific information like how often or when is provided.  If you set the customers expectations that you are entirely focused on them and you are working 40 hours a week to get their property sold they may feel you are doing these activities each and everyday.               

 

The other issue is some agents tend to overstate how much influence they have on getting the property sold.  In fact all agents have some impact on this factor, but in general the price and the real estate market in the area are the two biggest factors.  Beautiful flyers, daily ads and other marketing activities by the listing agent will not overcome a listing price that is too high if the market is flooded with property for sale.

 

There is an old saying that goes, “Under promise and over deliver.”  I don’t totally agree with this but many agents tend to over promise what they or their company can actually deliver.  This is one reason many people think of real estate agents the same way they think of used car salesmen. 

 

My listing presentation includes market factors and a description of Market Ratios.  Market Rations are a simple way of providing information about what kind of real estate market exists in you area; is it a buyers market, a sellers market or neither.  The impact of the market is a major factor in selling any property and in how much the seller can expect to get.   This is an important factor and it helps the seller understand the market their home is facing; what their property has to compete with the why list price is critical to getting the property sold.

 

The issue of how and when the commission is paid is an important issue that many times is not discussed.  I think this is a mistake.  I include a one page explanation of how real estate agents get paid and where the commission goes.

 

I’ve seen graphics that show two brokers and two agents and the split commission between these four people 50%, 50% and 50%.  But even here this may not be the case with a desk fee office or some other commission agreement.  I explain that the commission is split between the listing and the selling office.  Each office has an agreement with their agents on how the agent gets paid.  I also say,” Most real estate companies (Brokers) do not hire agents and the agents are not employees, the agents are independent contractors.  Each Broker determines how to compensate their independent contractor agents.”     

 

A sample of my services page is as follows:

 

  • Provide a CMA and assist the seller in establishing a list price
  • Place the listing in the MLS, with 12 color pictures, a map and a description of the property so 25,000 agents (MLS members) and thousands of potential buyers can view the property on-line from their PC on my Webpage and others
  • Have a FOR SALE sign installed on the property with color flyers
  • Install a lock box on the property so agents can show the home when the sellers are gone
  • Advertise the property at least twice a week on Craig’s List, Seattle Back Page and other online sites where buyers look for homes
  • Run an ad once a month in the local newspaper (optional)
  • Hold one open house per month for agents and the public (optional)
  • Email the flyer to local agents to make them aware of the property
  • Mail to 200 homeowners in the neighborhood to inform them the property is For Sale – they may know friends who want to move into this area
  • Respond to all inquiries from the For Sale sign, web ads and other sources and answer all questions
  • Respond to all inquires from other agents and answer all questions
  • Provide a weekly report on the number of times the property has been shown and the number of inquiries from all sources (provided by email only if the seller provides an email address)
  • Meet with the seller after 30 days to discuss the activity and the market to re-evaluate the market conditions and the list price  
  • Receive all offers, confirm the potential buyer is pre-qualified for financing by calling the lender and confirming the letter included with the offer (final authority for making the loan is not the responsibility of either agent)
  • Present all written offers and help the seller decide the response, accept, make a counter offer or reject the offer
  • Assist the seller in negotiations, once the inspection report and form 35R is presented by the agent for the buyer, if there are items to be repaired or replaced
  • Assist with all paperwork including reviewing the escrow closing statement and attending the escrow closing alone with the seller
  • Be diligent in trying to get he property sold

 

The optional items above are at the agent’s discretion.  The agent will determine when and if these things will be done.  The National Association of Realtors has statistics that show the listing in the MLS and the FOR SALE sign, along with the list price are the factors most responsible for getting a property sold.

 

Frankly in the Seattle area over 80% of buyers look on the internet for homes.  I have run ads in the local newspapers and in the real estate magazines and had little or no response.  This may vary by location so I don’t make any blanket recommendations, but spending money just to convince the seller you are trying to sell the property is a worthless activity in my opinion.  In some areas open house is a joke because they draw no visitors.  It is the agent’s responsibility to educate the seller about their market.

 

In today’s real estate market the sellers more than ever need an agent who will educate them as to the market conditions.  In the Seattle area prices have not come down much but the inventory has grown and the activity level has fallen drastically.  Sellers must understand they must list their property at the right price or it will not sell regardless of what the agent does.  The list price is the single biggest factor in getting a property sold.

 

More on how to avoid misunderstandings for buyers later…  

 

    

 

 

 

 

 

 

 

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Entry filed under: Sellers Tips.

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