What makes Realtors® different from each other? Part 1
What differences make a difference when it comes to deciding on a Realtor® to list and sell your home? This question is maybe the single biggest question homeowners must tackle on their own when deciding upon a Realtor. The surprising part is that most homeowners don’t even consciously realize this is the proverbial $64,000 question but, make no mistake, it is. For many of you, you find the question so daunting that rather than tackle it head on, you look for the easiest way out and end up working with the first Realtor you meet. I know this to be true because according to the National Association of Realtors (NAR) 2018 Profile of Home Buyers and Sellers, “Seventy-five percent (75%) of recent sellers contacted only one agent …. to sell their home.”
With that being said, my first difference that makes a difference that I want to highlight isn’t the Realtor® at all, it’s you, the homeowner. As a Realtor®, I know that for many of you, the home is your single largest individual investment. Yet, to say such, doesn’t really go far enough to describe your home selling situation. You also have to include the fact that for many of you, the home is your only source of savings. According to a myriad of websites like, Forbes, CNBC, NYPost, USA Today, Marketwatch and others, in 2018, somewhere between 65-70% of Americans don’t have more than $1,000 in savings. However, once again, saying the home is your largest financial investment and your only savings isn’t truly an accurate picture of your home selling health because you still need to go a bit further. For the majority of you, we need to also say, the home is your only source for retirement income. According to those many websites I previously listed, 76% of you have less than $5,000 in retirement savings. Nowhere near where you need to be to actually retire. If all of this isn’t bad enough, finally we need to acknowledge the fact that on average, nearly 80% of Americans are holding somewhere between $30-$50,000.00 in debt. With all of this being said, for the majority of you, the home represents your…
#1: Largest financial investment,
#2: Your only real savings,
#3: Your only measurable retirement and,
#4: Your ability to pay off debt.
I’m making this point to highlight the fact that many of you considering selling your home are coming into the situation under remarkable stress. Needless to say, you are frantic and panicked and couple this with the overwhelming amount of information, laws, regulations and selling process, it’s no wonder 75% of you will simply work with the first agent you meet. It’s just easier that way. The truly scary part of all of this is, this knowledge is actively used against many of you by unethical, immoral agents.
Many homeowners want to believe their home is a small gold mine. This is because the home is the lion’s share of the economic health of the family. Many of you reading this article can relate because you find yourself in the very situation I’m describing. You don’t have any retirement to speak of and savings is just as meager, you’re living paycheck to paycheck and any disaster could put you and your family on the road to ruin. The only saving grace you have is that, you are sitting on equity in your home and as such, the home’s equity forms the only foundation you have to economic security. Essentially, all your nest eggs are in one basket and you not only want the home equity to be a small gold mine but, need it to be without exception. This is exactly where a self-serving immoral real estate agent wants to find you.
“Buying the Listing” involves winning your business by telling you that they can sell your home for more than anyone else can. Of course, such promises are all the bait this agent needs to reel you in for the previous reason we outlined in the above paragraphs. This deceitful agent has no real interest in selling your home because he knows it’s overpriced but, that’s not his goal. His goal is to use your listing to generate lead traffic from his sign, syndication, radius mailing and other marketing he may do. Having a presence in your neighborhood allows him to market his services to your neighbors by touting the fact, you trusted him to list your home and they should too. It’s called Social Proof Marketing Psychology and make no mistake, it works.
At the end of the day, he may end up burning his bridge with you but, in his mind, that’s the price for getting his foot in the neighborhood’s door. The fact is, he may never sell your home and that’s ok. Your home may end up on the market for longer than expected or, you constantly had to do price drop, after price drop however, as his sacrificial lamb that’s to be expected. He’s more than willing to overprice your home and never sell it for the multiple closed transactions and sales leads, he generated directly off your listing. He will play on your fears and economic situation and you will be just another victim of something we call, “Buying the Listing”.
What you can do to avoid working with one of these unethical agents is to interview more than 1 agent. By interviewing at least 3 agents, from 3 different brokerages, you can get a good idea of the true value of your home based on the average and median prices these 3 different agents suggested to you. At that point, you can easily tell, which agent is blowing smoke and which agents are truly interested in selling your home. I know it’s not the easiest thing to do but, make no mistake, you owe it to yourself and your families financial health to make the right decision on which Realtor to use.
“By-pass The Market”, “Guaranteed Offer”, “Streamline The Sale”, I say BEWARE!
Here lately, it seems I’m hearing more and more so called “Real Estate Professionals” touting home sales strategies that allow homeowners to “by-pass the market” or “streamline the sale”. When I hear these commercials or see these ads, I shake my head in disbelief. I’m skeptical of these “guaranteed offer” schemes because I know something about what’s happening that you as the homeowner may not be knowledge of. Let me explain.
First, a short lesson on the real estate market. As regulated as the real estate market is, we think of it as a free market or also known as a market economy. Your success selling your home for the most you can in the least amount of time is going to hinge on your understanding of the real estate market economy. You must know that in this type of market, self-interest and competition are the two most important forces that will directly impact your success. This has been true for over 200 years when an economist named Adam Smith described these two forces as foundational to the function of a free market.
Let’s first talk about self-interest. Why do you do what you do? Why do you go to the grocery store, why do you go to church, why do you go to school? You do all this because of self-interest. This isn’t a bad thing and in fact, it’s a good thing. Your self interest will hopefully lead to your personal gain. You go to the grocery store to get food and eat. You go to church for moral and spiritual guidance. You go to school to get a good job. You do all of these things to achieve the success you want out of life. Truth is, most everything in our society is a direct result of someone else’s or our own self-interest. Adam Smith sums it up really well in his book, The Wealth of Nations when he says..
“It is not from benevolence (generosity) of the butcher, the brewer, or the baker that we expect our dinner but, from their regard to their own interest.”
The point is, the butcher, brewer and baker do what they do to make the money to put food on their own table and in this way, they are acting in their own self-interest. While these three work for their own self-interest, they created a product that you find valuable and, in this way, we get the exchange of goods and services for money.
Secondly, we need to talk about competition. When two or more people compete for a product, like meat, beer or bread, the market keeps self interest that would lead to price gouging or corruption in check. This is directly because the competition for those products are also self-interested. To put a finer point on this, because here in Nashville we have a lot of local breweries, let’s talk beer. If I was a brewer, I would have to brew a beer that was better and cheaper than all the other brewers here in order to convince people to buy my beer over someone else’s. The lesson here is, in order to win your business, I would need to offer a better product at a reasonable price, in comparison to my competition. Granted, if I were the only brewer in 50 miles, I may be able to charge a higher price and care less about the quality of my beer but, I don’t think it would be long till someone else would spring up, offer a beer at a better price and better quality and drive me out of business.
Now that we have self-interest and competition well described, how does this impact you when considering one of these “streamline sales” or “guaranteed offer” schemes? Essentially, what these schemes are doing is keeping your home off the market. In fact, one Realtor here in Nashville advertises his scheme by saying, “Never put your home on the market…” When you do that, you remove self-interest and competition for your home. In other words, you aren’t getting what the market would give you for your home because the market doesn’t even know it’s for sale. Even worse, you are now giving a buyer exclusivity on your home or in other words, the buyer your working with is not competing and he knows it. Just like the example I gave about being the only brewer for 50 miles, he knows he’s the only buyer and his offer will reflect that accordingly. I assure you, 9 out of 10 times, an exclusive offer without market competition will be less in value and without desirable terms and conditions.
The next time you hear about some “Guaranteed Offer” or “Streamline Sales” or even worse “Never Put Your Home On The Market” scheme…..RUN! You will not get the most the market will bear, and you surely won’t receive desirable terms and conditions.
Bad Realtor®? You Can File A Complaint, Let Me Explain.
I had a referral recently who told me a horror story about their prior experience working with a Realtor® from a competing brokerage here in Nashville. After two hours of listening to their litany of complaints, I asked them why they didn’t allege a Code of Ethics violation and file a complaint. With confused looks on their face, they replied with exasperation stating that they had no idea they could.
I explained to them that the agent they were working with was a Realtor® and as such, was held to a higher standard. I told them that based on their complaints, I felt like the Realtor could be in violation of at least 2 Articles of the Code. The husband explained that he thought being a Realtor® just meant that the person he was working with could list his home, he had no idea about the Code of Ethics or even that it was something he could use to file a complaint against this Realtor®.
I explained to Mr. and Mrs. Smith that the Code of Ethics has 17 Articles and that if a Realtor® is found to be in violation of those Articles that they can be penalized with fines, mandatory training and potentially suspension or expulsion from the National Association of Realtors. I explained that NAR (National Association of Realtors) had a reasonably good system in place for due diligence and that anyone can file a complaint, free of charge.
As a member of my local association’s Grievance and Professionals Standards Committee, the committee who hears these complaints, I had access to NAR’s “Before You File A Complaint” brochure which you can find by following this link: https://www.nar.realtor/about-nar/governing-documents/code-of-ethics/brochure-before-you-file-an-ethics-complaint. I printed out a copy for them to take while in my office and answered their questions about the process and how it works. At the end of the day, they decided to work out a resolution with the Realtor’s® Broker so, they didn’t file a complaint but, was glad to know they had options.
The lesson here is, as a consumer, you have options when working with a Realtor®. Of course, I would hope you could resolve any issues you have with the Realtor® themselves but, if you can’t, always ask to speak with the Broker in charge. If after that, you still can’t get satisfaction, contact the local Realtor® Association and ask to file a complaint. It’s free of charge and they will even help you file the complaint. You don’t have to be locked in working with a Realtor® you don’t feel is representing your best interest and if something does go askew, you can get satisfaction from the Association if nowhere else.
Considering most homeowners will sell no more than two homes in their lifetime, it’s no wonder why most homeowners seek out an experienced and knowledgeable real estate licensee to help and guide them through the complex process of laws and regulations. This real estate licensee is hired to act as the homeowner’s fiduciary agent through the process of listing, marketing, selling and closing the purchase transaction. Per the National Association of Realtors 2018 Profile of Home Buyers and Sellers, they report that 91% of homeowners used a Realtor to help sell their home. Sadly however, not all real estate agents or Realtors for that matter are the same and some are using unscrupulous and immoral techniques to win your business. This article is going to focus on one of those techniques to educate the consumer so that they can avoid falling victim to these less than reputable practices.
In the industry, the scam we are going to talk about is called “Buying the Listing” however, it has nothing to do with really “buying” anything. What it refers to is the illegal and immoral practice of convincing a homeowner their home is worth more than it is in order to win the listing agreement.
Many homeowners want to believe their home is a small gold mine. This is because for those same homeowners, the home is the lion’s share of the economic health of the family. Many of you reading this article can relate because you find yourself in the very situation I’m describing. You don’t have any retirement to speak of and savings is just as meager, you’re living paycheck to paycheck and any disaster could put you and your family on the road to ruin. The only saving grace you have is that, you are sitting on equity in your home and as such, the home’s equity forms the only foundation you have to economic security. Essentially, all your nest eggs are in one basket and you not only want the home equity to be a small gold mine but, need it to be without exception. This is exactly where a self-serving immoral real estate agent wants to find you.
The agent scam practice of “Buying the Listing” involves winning your business by telling you that they can sell your home for more than anyone else can. Of course, such promises are all the bait this agent needs to reel you in for the previous reason we outlined in the above paragraph. This deceitful agent has no real interest in selling your home because he knows it’s overpriced but, that’s not his goal. His goal is to use your listing to generate lead traffic from his sign, syndication, radius mailing and other marketing he may do. Having a presence in your neighborhood allows him to market his services to your neighbors by touting the fact, you trusted him to list your home and they should too. It’s called Social Proof Marketing Psychology and make no mistake, it works.