In 2010, I helped a client, we’ll call her Theresa, purchase a house. Last year, she and her boyfriend were able to buy a larger house without having to sell the first house. I did list the first one for a while, priced at $175,000, but eventually she rented it out when an offer was not forthcoming.
Theresa contacted me a couple months ago because the renters were almost at the end of their lease term, and she was thinking about listing it for sale again. I had just sold a house identical to hers, on the same street, for $170,000. I suggested that price and offered to list it for X.X5% (3% to the agency which brings the buyer, X.5% to my agency. That’s a deal I only offer to repeat clients). She said she’d let me know when the house was ready to list , and if indeed she decided to sell when these tenants moved out, or if she wanted to rent it out again.
Yesterday morning I saw her house listed for sale on the MLS, with a different agent from a different agency. My heart sank. Not because of the loss of business, but because I was worried that I’d offended my (now-former) client in some way. I quickly texted her asking if I’d done anything to upset her.
She wrote the following: “Yea. Nothing personal. He just offered 1% and that saves me a lot of money.”
I wrote back that I was relieved and that I was “interested in watching what he does for that 1%. Please let me know how it all goes and if you find a discernible difference for the money.”
She went on to write, “To be honest, he’s definitely not as communicative as you. He does quantity, not quality. So we’ll see how it goes.”
The house is listed at $174,900, and I see this agent is offering 2.5% to the agent who brings the buyer. So, he’s charging a total of 3.5%. Theresa will save over $3,000 by not going with me as her agent.
A couple things to note:
- I did an intensive study in 2005, where I compared how quickly houses sold that offered 3% to the selling agent versus houses that offered 2.5% to the selling agent. The houses that offered 3% SOLD FASTER. Now, that was many years ago, and things may have changed. I need to find a day when I don’t have very much to do and compare more recent stats.
- If he’s not communicative with her, how communicative is he with other agents? Potential buyers? If an offer is eventually offered and accepted, how communicative will he be with the lender, title, and escrow officers who depend upon him to convey information for a timely and accurate closing?
- The fact that I sold an identical house for $5,000 less, just two months ago, is available for any agent to see. Theresa may have suggested $174,900 because that’s the amount for which she wants to sell it (if she sells it for $170,000, it will be for less than she paid for it). But, this agent has accepted an over-priced listing. I’m not denigrating him at all for that. I’ve accepted over-priced listings. I would venture to say all agents have if they’ve been in the business for longer than a year.
The point is, over-priced listings take longer to sell.
I am truly interested to see how long this sale takes, how the closing process goes, and what the final result is for the seller.
Agents are told that there are always going to be clients for whom price is everything. If given a choice, they will ALWAYS choose the least expensive option. Conversely, there are clients who will ALWAYS choose the most expensive option, because the belief that you get what you pay for is a mantra for them. The vast majority of clients fall somewhere between the two extremes. I think Theresa is actually in the middle, and I welcome this opportunity to see how a situation plays out when price becomes the major concern and quality goes by the wayside.