How Weak Agents Can Cost Their Sellers Plenty
When it comes to marketing your home which is usually most people’s most valuable asset, choosing a friend, relative, or neighbor to represent you because you don’t want to offend them can cost you a $100,000 or more. In today’s challenging times, you need the most competent agent you can find. If not, you can very well end up like a number of my neighbors, one of whom left over $150,000 on the table because they hired a weak agent. Learn how to avoid having this happen to you.
Here are five case studies that illustrate how costly working with a weak agent can be.
Scenario #1: The pocket listing queen
An agent who does a substantial amount of business in our subdivision touts her “private buyer” list composed of people who want to purchase here. While sellers like the idea of being able to sell quickly, most are unaware that her listings seldom hit the MLS and if they do, the property posts “pending” almost immediately.
Our advice to anyone who is selling is to always interview three agents. During the interview, the sellers should inquire about how the agent will market their property in print, online, on the social media, and using video. It’s also smart to ask for specific examples of previous marketing campaigns to back up the agent’s claims about what they do.
It’s especially important that they inquire about the agent’s list-to-sell ratio. For example, a weak agent might sell a $400,000 at full price. Their list-to-sell ratio would be 1.00.
In contrast, a strong agent who implements a robust marketing plan that gives the seller maximum exposure to the market, may sell the same house for $450,000 in an increasing market. Their list to sell ratio would be 1.125 ratio i.e., 12.5 percent higher than the agent who sold at full price.
On the other hand, due to weak marketing, poor market conditions, or long market times in a declining market, that seller may only get $350,000 (list-to-sell ratio of .875) vs. a strong agent who prices the property right and sells it quickly who gets $380,000 (list-to-sell-ratio of .95).
To illustrate how powerful this approach is, two of our friends searched for strong agents rather than using their friends and both set record sales prices earlier this year, one for a townhome and the other for a villa (free standing house.)
Scenario #2: I got a lot more than I paid
A different friend decided to sell his 1,512 square foot townhome and move permanently to his ranch. I encouraged him to make sure his listing agent put the property on the MLS rather than selling as pocket listing.
His agent persuaded him to list at $425,000 and he ultimately sold for $415,000. Since he had paid $295,000, he was satisfied with the price.
His listing agent made two key mistakes, however:
• She encouraged him to take the first offer that came in almost immediately rather than waiting until the listing to hit the MLS.
• She also failed to take into account that the prices throughout the area were rapidly spiraling upward. Instead, she priced the property on the older comparable sales that were 60-90 days old.
Based upon five different condo sales that took place within 60 days of his sale, my friend should have gotten at least $441,000 which included the price per square foot the condos were closing at ($292 per square foot) plus an additional $50,000 for the fact his townhome had a private patio, opened to a large green area ideal for dogs to play, and a two-car private garage rather than a single-car subterranean parking space. He left at least $26,000 on the table.
Scenario #3: I didn’t want to hurt my best friend’s feelings
As evidenced by what happened a few months later, the weak agent cost that seller a lot more than $26,000.
In April another friend listed her unit with the same floorplan. Her dilemma was choosing between her closest friend’s daughter and another close friend, neither of whom had ever sold a home in the area. She was more worried about losing a friendship as opposed to how much she could potentially lose by listing with a weak agent.
She decided to list with the friend’s daughter who advised her to list at $415,000. My friend soon discovered she had made a tremendous mistake.
Fortunately, her son is a high-profile executive who had been tracking how Austin prices were exploding. He stepped to protect his mom and insisted on a higher listing price, a professional marketing program, and waiting to let the marketing work.
When several offers came in, he handled the negotiation as well. The property closed for $595,000, only four months after the $415,000 sale. If her son hadn’t intervened, this single retired woman who lives on a fixed income might have sold her home for $180,000 under market value.
Scenario #4: We can’t fix anything!
Sometimes owners are unable to fix up their properties due to financial, health, or other types of difficulties. When this happens, weak agents cave in and put the property on the market without addressing what could have been done to work around the problem.
One of our neighbors was having to move into assisted living due to declining health and mobility. To make it easier over the last few years for the owners to stay in their current home, they installed a doorway (with no door) between the front entry and the laundry room. That meant the first thing you noticed when you walked into the entry was the washer dryer.
To improve accessibility, they also removed all the doors in the master bedroom and bath as well as most of the doors on the kitchen cabinets.
The owners decided to list with a neighbor who obtained the bids to do the work but was unable to persuade them to do it. The house is still languishing on the market nine weeks later, even with a $25,000 price reduction.
Three ways this issue could have been resolved include:
• Virtually stage the property with a company like BoxBrownie.com
• If available, use Curbio.com to get repairs done quickly and have the expense deducted out of their sale proceeds. Show the sellers the Curbio statistics that show their average profit increase for clients who use their service is $50,000.)
• Greg McDaniel’s approach is to take care of up to $10,000 of work as needed for staging secured with a mechanics lien on the property. This guarantees he will get his money back at closing.
Scenario #5: The do-nothing bunko-buddy agent
Another property came on the market where the owner had just lost her spouse and wanted their house sold as quickly as possible. The house had the most popular floorplan in the subdivision, one of the largest yards, and was in mint condition except for the bedroom carpets that needed cleaning.
The owner listed with one of their bunko buddies. The agent’s marketing efforts consisted of:
• Putting a brochure box up on Friday that only had one brochure taped to the front of the box.
• Only posting six blurry pictures on the MLS taken with her cell phone, none of which included the large backyard, a major selling feature.
• Holding an open house on Saturday and Sunday.
They received only one offer and took it. The house showed as pending on the MLS on Monday morning.
A week after this property went under contract, I found the same floorplan around the block from the bunko-buddy’s sale on an off-market property. That number was what one of the iBuyer companies would have paid which was almost $200,000 more than the bunko buddy got for her sellers. In fact, even if the property sold at full price (and it didn’t), they would have still gotten $150,000 less than they would have had they listed with a competent agent.
How can you make sure you hire a strong agent?
First, interview three different agents. Second, go online and search their testimonials as well as if there are any complaints about the agent. Third, ask for a detailed marketing plan. Fourth, if they currently have any active listings, have someone they don’t know call their office and inquire about that listing and see how long it takes the agent to get back to the caller.
If you decide this is too much trouble or are worried about hurting someone else’s feelings, just consider how long it takes to earn $50,000 or $100,000 and then decide.