Thursday, May 17, 2007

Frank, I read your FSBO blog, but still...

Question/Email:
Frank
In all frankness (which I know from reading your blog you appreciate), when I first read your email telling me to go read your blog, that thought is what crossed my mind [A-Hole]. But after reading (and then going back and re-reading) your blog and seeing how much effort you put into writing it, I find I agree with you and that it makes sense for someone to read your blog first.

After reading the blog you really have me thinking long and hard about FSBO and now contemplating the possibility that you just might be able to come in and get a bidding war started that would result in a higher "net" for me - which is really what I am most concerned with. One caveat that keeps running through my mind however is that Fairlington seems to be a pretty efficient market due to properties selling all the time, with somewhat of a cap on the top end of what the market will bear. Since my house is on the south side, in a very desirable court off a desirable street (as pointed out by many others, not just my rosy
thinking) and I have done a fair amount of upgrades, I think it would sell near the top of the price range for its model. The question then becomes could you still drive the price high enough to offset the "extra" 3% or 6% so that the net was above what I would get FSBO? If you would care to address that I would not only be most appreciative but it would go a long way towards my full conversion to believing that listing with you would be the smart way to go and could potentially result in a new client for you.

BTW, I think your point about staging is well taken. And in fact I did have a professional decorator/stager come in about 3 months ago who I had make suggestions (paint, etc) and arrange things with an eye towards putting the house up for sale.
Best regards,
Rick


Answer/Reply email

Hey Rick,

I certainly would not hire an agent just in case the agent can get a bidding war. That would be a silly longshot, not worth it in any gambler's book.

As for the rest of it, it pretty much is covered in the FSBO blog that you read. If you don't even do the 3% offering to buyer agents, you are cutting out 90% of the potential buying market, and leaving those that are oftentimes bottom feeders that are looking for THEM to save the 6%, not you.

I would recommend that you call an agent's references too, to see what they did for their last few sales. You can gain some invaluable insight into the process.

Also while NET is important, are you putting ANY value in letting the hassle factor and details be taken care of by somebody else?

And the argument that your house being different than other houses, or at the top of the bracket, that doesn't matter. In my biased opinion and experience, a good agent will net you more, regardless of your house. We just had a listing in similar community. Just happened that that day 2 other listings came on with the same floorplan. Ours was a $10k higher starting price than those other listings (nicer too), we got 3 offers, we got it bid up another $5,000 (the seller actually felt bad and didn’t want to go higher) and the other listings got no offers. No shit, true story.

So to answer your question, would you net more? NAR says you will make 23% less, but that is hogwash. Nobody really knows for 100% certainty, or even 80% certainty. I would say that the risk analysis is equal in both directions. You CAN net $10k more with an agent, but you can just as easily net $10k less without proper exposure and a smaller buying audience.

While some might say "can't hurt to try," I disagree with that too. A properly marketed home has to put ALL of its effort into the first few days (the exact best day to list is Wed night or Thurs, and I have MANY reasons for that, maybe I'll blog on it). If you FSBO it first it is hard to properly list it with a Realtor and get the same level of excitement going.

I guess to a certain degree it is like an insurance policy. If you trust your agent to fight to get you top dollar, than you can sit back and relax knowing that you did everything possible to get the highest net.

Or you can take a gamble and see for yourself. You might come back with a "I told you I could do it." or a "You told me so." The gamble is with real money, but the gamble is yours.

I might repost this and remove your name on my Questions.FranklyRealty.com , why let an hour long email go to waste!! ;-)

Frank


for sale by owner, fsbo, craigslist, flat fee mls, virginia maryland dc

BusinessWeek Blog: "Agent Horror Stories." My response.

Here you can read the BusinessWeek blog:
Anyone have an agent horror story like this one?

Here is my response:

Hey Dean,

Get prepared to get even more ticked off!...

First of all I'm a Realtor, but I hate most Realtors. But you know what they say, in the land of the brainless, the half brained man is king.

Anyhow, first to defend YOU, interviewing multiple agents would have done nothing. What would you say "Do you suck?" What people should do it interview/ talk to their references. See if you get a sense for how well they did. Or even more powerful, ask for their "last 2 clients" so they can't pick and chose their references. Heck I have a reference where I pocketed for the guy $102,000 on the sale and $50,000 on the purchase!

Or you can run my CRA report (trademark pending) where you run a Comparative R. Analysis on the agent's last 10 deals and see how well they did. Do they get list, do they get over list, do they list high, just to drop later?

And that agent that said "Honey you gave away your house," I'm sorry but that happens ALL the time. Ignore her. Agents get jealous that they didn't get the listing, or they don't like the listing agent (maybe lost other deals, etc). If she had a buyer, and she was any good, they would have put their money where their mouth was and made a back up offer.

Ok, now to the part that will piss you off...

You are right, most agents don't fight for that last $10,000 since it makes them only $300 and they would rather use that time to sell another house. (blatant plug: This is how we differentiate, we DO fight for that last $5k and $20k, since it is real money, your money. We don't do it out of charity, or our good nature, we do it to make more money for us, via more future referrals from our clients)

The deal is NOT over when you have it under contract. A good agent will "dial for dollars" when the offer comes in to get more. THEN if it goes under contract, a good agent will STILL work the deal. If he can get a higher back up offer, there are about 10 days to make the back up offer win. All legal and all ethical ways.

For example, if you have a back up offer you can:

1) Reply NO to the Home Inspection items (and don't let the agent pay for it). This might trigger the buyers to walk.

2) Look for Kick-outs. Many people don't understand contracts and how the buyer has contingencies that if not removed in 3 days, can nullify your contract (I am not a lawyer, please consult with a lawyer for details)

As for “getting over it,” that is 10,000, no way! That $10,000 would have gotten you another $50,000 in leveraged buying power for your new home. That $10,000 can buy a nice vacation. That $10,000 can be donated to charity. Heck give half to your great agent! ;-)

I recently had a seller that felt BAD that we fought to get him $7,500 over list. I said "take the money, and donate it to a charity, then you won't feel bad."


Frank Borges LL0SA- Va Broker/ Realtor

703-827-4OO6

"Trust Me, I'm A Realtor"

http://blog.FranklyRealty.com

Sunday, May 13, 2007

Emailed Question: I'm considering selling. What price would you put for my XYZ St house?

Hey George,
We don't quite work that way (but most Realtors do). Have you read any of my blog? I think this question would make for a GREAT blog! I see if I can touch upon the important points here and then do a more detailed blog later.
The problem with taking the approach of asking agents "what would you sell it for" is it results in two things, and both are counterproductive to getting you the highest net:

1) It encourages the agent to come forth with a high price. When I grew up in Real Estate, my parents learned this the hard way. They tended to go with the agent that told them the highest amount. The result was the house would sit and probably end with a price far lower than if it was property priced in the first place (80% of your potential buying pool will see your place in the first week)

Now that I'm on the inside, I see how it works. Agents that are less experienced will fluff the number in order to get the deal, knowing that it is overpriced and the seller will eventually have to drop and the agent will eventually get paid.

2) It encourages a bunch of agents to spend only 15-20 minutes coming up with a price. Instead I like to literally spend 5-10 HOURS getting the information for finding the perfect price. In part by actually going into each and every competing listing (sometimes with the seller). And then together WITH the seller, we come up with a price. That steps occurs AFTER we are hired.

Otherwise I might say "If I could tell you that I could get you $200k over what that other agents said you could get, would you hire me?" the answer might be "yes" and that is exactly why we won't do that. We won't use that trick to get your business since it harms you in the long run. (overpriced listings sit forever and tank faster, resulting in a lower net)

Also I haven't seen inside your home, and the stager will have to take a look too. We won't list a home unless it is staged. (you can read more about this on the blog at http://blog.Franklyrealty.com ) because it NETs the client so much more, time and time again. The emotional reaction that buyers get when they walk into a place needs to be maximized (cough cough manipulated) to the fullest to get you top dollar.

What I can tell you is that Capitol Hill is hot now. We had one buyer that lost out on five places. So make sure you pick an agent that is good at bidding wars. Bidding wars are VERY difficult and can take 8 hours straight to perform well. Many agents won't hassle with trying to get that last $10k or $20k because the incremental commissions isn't worth it. That is what I pride my firm with, getting our clients a new car because they used us. (we got one place bid up 20%! or $102,000, that was not easy)


Frank Borges LL0SA- Realtor/Broker
www.FranklyRealty.com
http://Blog.FranklyRealty.com (can I sign you up? Via Feedblitz, spam-free and not too frequent)
703/827-4006 AIM=FrankLLosa
2003 NVAR Rookie of the Year
$150M+ Personally in 2004-6
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