Consumers in general are starving for immediate gratification and information. The world of Zillow, Open Door, etc…is capitalizing on these consumer needs. The problem for consumers is that most real estate sites are set-up to capture information and to sell leads. Sellers are a great example of a consumer category that believes with one click on Zillow that their Zestimate, which is delivered 3 seconds later, is accurate. We are working on technology that provides a platform for free information that is actually regulated. Until then, the safest places for better or for worse to get informed is realtor.com and the MLS which is currently a monopoly. There is a ton of noise in the marketplace associated with saving sellers commissions and closing fees that sellers bypass the most important part of their process which is a market valuation. Sellers are so thrilled to save on fees they fail to realize they are quickly selling their property to an investments company buying it for immediately profit, so although real estate agents are not “profiting” from them these large investment firms are making double or triple what they advertise they will save sellers.
In most market scenarios the first thing we do as we begin the process with a seller is to get them to stay away from the internet for information and valuations of their properties as it immediately sets improper expectations. The other tragic part of the process is the uninformed consumer typically hires the agent that tells them their house is worth the most amount of money only to later sell the property for far less than market value. The property then lingers on the market for an extended period of time as the agent waits for seller fatigue.
We recently took a listing at one of the more exclusive neighborhoods in Scottsdale called Estancia. The neighborhood is made up of proud and wealthy individuals. The current price to join Estancia Country Club is $150,000. Unfortunately, the real estate is starting to lose its luster as the homes are ten plus years old and the interiors, like the owners, are starting to show their age. We had a listing appointment via a referral about 3 months ago. Keep in mind there is one agent that controls 70% of the listings in the neighborhood, giving off a perception that if you don’t list your home with her it won’t be shown which is a completely inaccurate. Most agents simply want to get paid as quickly as possible and the idea that one agent can falsely prop up values is simply a fairytale. Upon arriving at the listing I knew I had to be prepared to answer as to why pick us instead and we had to be prepared with telling the seller the truth about values relative to the list prices of most of the homes in the neighborhood. Also, the seller has smoked in the home for the entire time he has lived there so we had to address that issue. We toured the home and sat down with the seller who is roughly 75 years old and educated him on the market for thirty minutes. After all of that information he told us he already had a number in mind and surprisingly it was in line with the pricing of the homes in his area that are not selling. At this point we typically have two choices: we can accept the listing at a price we know will not sell or tell the truth. As always we go with the truth first, which is uncommon, as we focus on productivity and results. I expressed that we are willing to go out at his price but he must agree to an aggressive pricing reduction plan or we would have to pass on the listing. We also told him that he needs to allow us to assist with essentially fumigating the home and staging it. A few days later he agreed to our plan and we agreed to reduce our fee 30% as I knew the home would have an offer in thirty days or less. The less time we have on a listing the less we need to charge.
We had an offer we were not interested in and walked away after roughly 10 showings. The buyers came back a week later and agreed to a price with $20,000 of what we told the seller it would sell for. We closed at $1,300,000 the next week and the fee to EIR was 2% or $24,000. We also assisted the client with a rental as we wait for the market to adjust down.