The housing market has really been slow the last couple of years in the United States, but you wonder if it could have recovered faster if real estate agents would do their jobs.
In Illinois, real estate agents range from very good to very poor. Some have no sense-of-urgency in respect to getting back to customers as well as insuring that a showing of a house they have listed is successfully completed. Others don’t seem to respond to inquiries about the properties.
Why set up all the electronic listings, if you don’t respond to an Email? Some seem to think the commission comes without doing any work.
REAL ESTATE PROFESSIONALISM? JUST AN OXYMORNON
Here are just some examples we have run across in the last three months of looking for a house:
- The house is listed and the real estate agent has confirmed the showing only to find out there is no key or keybox at the home.
- Slight variation on the first example, the lockbox is on the door, but no key is in the box. (our real estate agent has said he has seen this happen as one agent might have a sale pending and they don’t want anyone else being able to walk through it as their client gets their offer in order)
- The house has gone under contract and they have not put out any sign saying “Sale Pending” or upgraded the listing on all the online data bases as ‘under contract” or other “pending” status.
- You call or Email a realtor on a specific house, and they don’t get back to you. I enquired on a house over two months ago. I never got a call back. (All the new websites and social media tools are worthless, if an agent does not respond to an inquiry or change status of a listing.)
What happened to having a sense-of-URGENCY to get the job done? What happened to having follow-up in a timely manner? It doesn’t matter if it is a phone call or an Email, if they don’t respond, they won’t get the sale.
Before all the websites of house listings and virtual tours, the “Foreclosure List” used to be a highly guarded secret as only a few with inside information would be able to know what was going on and bid on houses that could be had for nickels on the dollar. This was considered a very shrewd approach to buying real estate.
Today, there are so many more foreclosures than there are buyers and if you don’t get the one you are looking at today, you will find another house fairly easily tomorrow. In some markets, the real estate agents just want to flip the houses for whatever quick sale is out there.
There must be something wrong with a person who is willingly giving up their property for a cheap price, but they get a lot of pressure from some real estate agents.
DROP THE PRICE? DROP YOUR COMMISSION
The universal solution for a house not selling is, “it is priced too high for the market, so cut the price”. Is it? Or, is it because the agent isn’t doing their job in marketing and trying to find a qualified buyer? Most sellers don’t realize how fast all their equity goes away when a real estate agent tells you to keep dropping your price.
At a 6% commission rate, here is who wins and loses when you cut your price:
| DROP THE PRICE BY | OWNER LOSES | AGENT ONLY LOSES |
|
$10,000 |
$9,400.00 |
$600.00 |
|
$20,000 |
$18,800.00 |
$1,200.00 |
|
$30,000 |
$28,200.00 |
$1,800.00 |
|
$40,000 |
$37,600.00 |
$2,400.00 |
|
$50,000 |
$47,000.00 |
$3,000.00 |
|
$100,000 |
$94,000.00 |
$6,000.00 |
As you can see, dropping the price makes it a lot easier for the agent to flip the property within the market, but you lose a lot of equity for every $10,000 they shave off the price. For the agent, cutting down the price but being able to flip the house in 30-60 days instead of 180-210 days is more beneficial to them, than it is to you.
Say you are at $290,000 and the real estate agent tells you to drop the price by $20,000 in order to get it “into the market pricing”. That is a loss of $18,800.00 to you but only $1,200.00 to the real estate agent. Another month goes by with some activity, but the agent wants to move on.
Their solution? Drop the price another $10,000. It’s only $600 less to them, but another $9,400.00 less to you.
So it sells fast. For $260,000 the house sells and the agent makes $15,600 instead of $17,400 (commission on the original price of $290,000.00). So they get hit for $1,800.00 but you got hit for $28,200 in lost equity.
In another month, you may have gotten that $270,000 offer or even more, but for an extra $600 commission to the real estate agent, it is not worth the extra one-month effort. You just lost $9,400.00. That’s about double of what you would pay the movers to move all your articles out to the next house.
When you select a real estate agent, find one that’s good. If you’re a real estate agent, make it known that you follow-up with both buyers and sellers and you will always be in demand.
CARLINI-ISM : The listing services on the internet are revealing both good and bad real estate agents.
Follow daily Carlini-isms at www.TWITTER.com/JAMESCARLINI
Copyright 2013 – James Carlini
Watch this Video on A Better Way To Fight Harmful Free Radicals
40 plus years in commercial /investment real estate/worked alongside some of the best realtors in all chicagoland–many are slow, but the stars and hard workers are easy to find–ASK who is a million dollar seller in any office–and truthfully today there are MULTI-MILLION dollar sellers–they sometimes outsell the whole rest of their offices
Real estate expertise is left to those who spend time and money to RESEARCH, not hearsay –even from realtors–some are great, many are average, some are awful–BUYERS/SELLERS BEWARE!
good article James!
Interesting article. Being a Canadian Realtor, I can say that some of the things you mention happen up here too. Although, by the sounds of it, we may have some tighter controls on ethical behaviour. But one thing for sure, you mentioned about making sure you hire a good Realtor. That is so important! Getting a licence is easy, being excellent, successful and making it a true career is the difficult part. Don’t go by the signs you see in a neighbourhood, or the perception of high quality for a low price. Interview several Agents and try to get reliable referrals. If an Agent makes promises, have him/her put it in writing! If they mean what they say, they won’t mind doing it. A true professional will always put the clients best interest above his or her own. Base your decision on value and reputation, not price. Yes, there are horrible Agents out there that should find another line of work ( and many end up having to) but fortunately, I have met absolutely fantastic Agents from all across North America. Those are the ones you need to find. It can be such a pleasure to work with a truly talented, professional Realtor. And please, when you do find a great realtor, help him or her out and let people know! Refer them! They won’t let you down. 🙂
James, you hit the nail on the head again. I live in AZ and flipping is rampant and believe me the real estate agents are in on the scam.
Thanks Wayne. It is always interesting to hear about how other parts of the country are faring. The real losers are those who lost equity in their houses as they never missed a payment or overbought.
Those who were conservative and bought what they can afford are now being told their houses are worth 50-60% less. Those who created the subprime mortgage debacle should all be going to jail and not be asking where their year-end bonus is.
House thieves should be treated like horse thieves from an earlier century – hung.