Unfortunately, unrealistic expectations can set buyers  up for  unnecessary disappointment and frustration.   There are several flavors of unrealistic buyers out there.

The “I want to steal a house” investor:

This buyer is determined to find  a home for pennies on the dollar. They comb through listing after listing and call agent after agent to show them home after home that looks as though it is the bargain of the century.  The trouble is that once they see the home, they realize that this is beyond the simple fixer-upper.  A new coat of paint is not going to do the trick.   These  homes don’t just need TLC – they need to be gutted.

This type of buyer needs to realize that there is no free ride here.  Many of them have been  watching too many late-night TV shows that claim that banks want to get rid of these properties at “any price.”   After the way the banks have behaved over the past year – does anyone seriously think they are going to get the better end of any deal involving a bank?   Banks have shown  themselves to be more than  capable of looking after their own interests.

The “I’ve got champaign taste and a beer budget -but I’m not settling” buyer:

This buyer can appear in any market. Since affordability has improved, it might seem counterintuitive to observe an increase in this type of buyer right now.  Yet, that’s what I’m seeing.   They want far more than they can ever possibly afford and the buyer’s market media hype is giving them tacit permission to push for the impossible.   The sad thing is that this buyer is not looking at the increased affordability of the past year as the gift that it is – instead they are on a quest for even more.

This type of buyer has two choices: bite the bullet and buy what they can truly afford or roll the dice and hope that affordability increases still further.   The latter has true risks in this market. Although prices may decline further, affordability  is probably not going to increase because interest rates are almost certainly headed northward.   This may well more than offset any further price decreases.  For affordability to increase the buyer has to look to their own finances not the marketplace in order to afford “more.”

The buyer who will only put in offers 10-20% below asking price no matter what the comps say:

This type of buyer is of the mindset that “if you don’t ask, you don’t get.”  They want to “test” the seller with a lowball in the hopes that the seller is desperate enough or ignorant enough of the comparable solds  to accept.  As I said in my previous blog about sellers:  asking isn’t getting.

Not only does this rarely work, but it can really offend the seller to the point where the buyer could lose the sale.  Low-balling is not a good way to win friends – or negotiate a sale.  Offers should be based on the comparable sales – NOT the asking price.  Many seller’s have already priced their homes realistically.  A realistically priced home is more likely to be having multiple offers – so low-balling is a bad idea.

At the end of the day, buyers need to take a realistic look at the comparable sales.   Those numbers are not lying and placing realistic offers in that “sweet spot”  where they are consistent with recent sales – leads to success in the long haul.

In the end, the sale and purchase of a home should be a win-win for all concerned. It’s not about “beating the market” or “getting the better end of the deal.”  It’s about negotiating a transaction that works for all parties.

© 2010 Ruthmarie G. Hicks – http://thewestchesterview.com. All rights reserved.

In the end, I  promised a sequel  that got into more specifics.  So here it is – six  major myths about  listing a  property and marketing a property that are often trumpeted by our own industry.  Its been said that if you repeat something often enough it becomes “fact” in the eyes of the consumer.  So let’s put some of these “facts” to rest.

Myth #1 – “We have  12 billion to the 10th power  active listings, so  our reputation speaks for itself!”

Really?  How on earth does anyone come to that conclusion?  You can have all the listings in the world, but if you can’t sell them, what’s the point?   The percentage of sold listings is a bit  more pertinant. However, even that number does not discriminate between individual agent performance.

Myth #2 – “Your listing will appear on our website which is on page 1 of Google!  That will draw in TONS of buyers”

Yup – it sure will be – along with every other listing in the ENTIRE MLS – whether you are listed with this brokerage or not.

Why? because listings and pictures are like  crack-cocaine to buyers and that’s what  these sites are designed to lure.  The “bait” has to be the entire MLS or the buyer will be on to the next site in very short order.   So rest assured your listing will appear on their site just like every other listing on the MLS whether your contract is with them or the small independent broker down the street.

Myth 3# – Our brokerage has the big dollars behind it to fully support your listing!

It sounds really comforting.   Many consumers believe that a big listing brokerage must be brimming with money to market their home.  Why wouldn’t they do it if they stand to make so much more once the sale is complete?

There are a couple of problems with that notion:
1. That big plush brokerage has a big plush overhead to go with it!  That’s a fixed cost that doesn’t go away and in many cases it has become a monster demanding ever more revenue to sustain it.  Most brokerages are not nearly so flush with money as they were in years gone by.

2. The other problem is “risk.”   By marketing a house the agent or/and brokerage puts money on the table and assumes a financial risk.  The risk is that the house won’t sell.  No matter how good you are as an agent or broker…its a game that you will not always win.

Most sellers would be shocked at how little a brokerages will actually spend. But the  fact is  that if a broker is holding  700 listings, how much money can they spend at any one time?   If you spend $2000 on each listing that’s  $1,400,000 in outlays – with no guarantee of success.  HELLO!!!   Do you see now what I mean about the risk issue?

Brokerages of this size are generally playing a numbers game.  They throw 700 listings up against a wall and some will actually “stick.”  The sheer volume of listings necessitate this approach.  But how wedded to each listing can a brokerage of that size be? That dedication must fall on the individual agent representing the seller.  Since the agent doesn’t carry anything close to a the volume of a major brokerage – each individual listing is of far more importance.  This is another reason why sellers should look to the AGENT not the BROKERAGE when selecting a professional to list their house.  .

Myth #4 – “Our brokerage has a terrific individual marketing!”

If a brokerage has  over 700 listings, how individual can the marketing plan possibly  be?
Usually  that means that the listing will be sucked up into the cookie-cutter marketing machine they throw at every listing.

In fact, if the agent keeps intoning “my brokerage does this, my brokerage does that” it is often a signal that they may well have divorced themselves  from all but standard brokerage marketing. In this tough market that’s not a good thing.  It is also a sign that nothing truly unique or outside the box will be brought to the table to help move the home.

Myth #5 – “We are the biggest brokerage in the area with the most agents and everyone of them is ‘motivated’ to find you a buyer.

WHOA!!!  All I can say to this is RUN THE OTHER WAY!!! This may well mean that they are highly motivated to keep the sale “in-house” which is  code for the agents have a financial motivation to do so.

This is a problem on so many levels, it’s hard to know where to begin.  For openers it violates the spirit of the MLS.  The MLS’s were created to  level the playing field between competing brokerages so that buyers and sellers could work with whoever they wanted to without feeling they were at a disadvantage.   Creating financial incentives to keep sales in-house throws a monkey wrench into that system.

It may sound great – having 500 agents looking to find you a buyer,  but there’s a big elephant in the room.   If the listing agent is motivated to keep the sale in house, what will they do if an agent from a competing office brings in the best offer?  Will they push an ‘in-house’ offer?   Even if it truly isn’t the BEST offer? The answer depends on the individual.  I know many agents who would never compromise their sellers…but there are always a few who would.   Bottom line:  Why work with a brokerage that encourages this since it can almost invites unethical behavior? In the end, the numbers tell the story.  There are roughly 6500 agents working in our county.   Even if a brokerage had 1000 agents, statistically, it is far more likely that the “best” offer will come from an agent outside the listing brokerage.

Myth #6 – Our big brokerage has a relocation service that brings in gazillions of buyers just panting to see our listings!

Please see myth #5.   Any buyer coming in through a relocation service will be looking at the entire MLS inventory…not just the listings within that brokerage.

So there you have it….six common myths about listings, agents, brokerages and marketing.  I hope this adds some transparency to an issue that is generally a black box to consumers.

Further Reading:

This Brokerage Has 750 Listings…..So they must be the best! (Part 1)

Mirror, mirror on the wall…who’s the fairest listing agent of all…Part 1:

Mirror, mirror on the wall…who’s the fairest listing agent of all…Part 2

© 2009 Ruthmarie G. Hicks http://thewestchesterview.com

What Does the Brokerage Bring to the Table?

With the Westchester NY real estate market in a downward trajectory,  sellers realize that they need more than a sign in the ground to move their property.  In truth, this was always the case, but these days I’m getting more and more questions about marketing the listing. One of the biggest issues  I encounter on listing presentations  are questions regarding the brokerage itself.   Most questions revolve around marketing.  What does the brokerage do in terms of marketing  for the listing?

I think that most sellers assume that since the brokerage is “big” and has capital behind it, that they are the ones spending  big bucks on marketing the home.  But this is rarely the case.   Many big-box national brokerages build on that confusion and perpetuate the myth that their brokerage “brand” makes a significant difference in selling a home for top dollar.  They also tout their “marketing package” in terms of the amount of support they offer.  Some actually stress that the number of agents in the brokerage somehow makes that brokerage better or somehow more able to move the property.   With all the hype and misinformation out there it is small wonder that sellers are confused.

I  would challenge these large brokerages who claim that their numbers speak for themselves  to enumerate exactly WHAT  they do to justify their claims?  And while they are at it, I would like to have some hard numbers to back up their success stories.  I haven’t seen any of them come up with any marketing advantage that holds up under scrutiny.  Most of the time they appear to be blowing smoke.  Don’t get me wrong, I’m not slamming big brokerages. That would be rather foolish since the brokerage that I am currently associated with is quite large.  What I am trying to do is cut through the hype.

Follow the Advice of Deep Throat:

Who actually sells the listing? The agent or the brokerage? To figure that out you have only to listen to the words of “Deep Throat” in All the President’s Men.   He told Robert Redford to “Follow the money!”

If a brokerage has  hundreds of agents, it is likely that they have close to 1000 listings.  Brokerages are business to make money on sales.  For a big brokerage like this – the listings are a numbers game.  Throw 1000 up against a wall and maybe half will “stick.”  So how important is your individual listing going to be to that brokerage?  Answer: not very.

But what about the agent? Most agents have just one to two listings at a time.  Others have more like 20-30.  Agents are paid on commission.  If the property doesn’t sell – all the work they did is down the drain….and  there is a lot more to than sticking  a sign in the ground.  When a listing fails to sell an agent is out usually well over 150 hours of time AND they are generally out a good deal of marketing money as well.  Do you think that agent cares if your home sells?  You better believe it.

Take Home Lesson:  Look to the AGENT to market and sell your home.

Stay tuned for part 2 – where some major marketing myths will be revealed.

Further Reading:

Mirror, mirror on the wall…who’s the fairest listing agent of all…Part 1:

Mirror, mirror on the wall…who’s the fairest listing agent of all…Part 2

© 2009 Ruthmarie G. Hicks http://thewestchesterview.com.  All rights reserved.