Good Suggestions for Selling Your House in a Tough Market

Lots of good comments to my post titled Is It Worth It to Pay Your Real Estate Agent a HIGHER Commission? The post itself wondered if it was worth it to pay real estate brokers more than the going rate in order to sell your house faster. Here are a few of the comments that I thought were worth highlighting, starting with this one:

Your readers might be interested in reading all the pieces by the Freakonomics guys. I first read about this in the book, Freakonomics, but they go on and on in their blog about the value (or lack thereof) a real estate agent brings to a transaction...worth the read.

I've read the book and basically they say hiring a real estate agent doesn't help you get a better price on your home. But what if you paid a higher commission than everyone else? Would that help you break through the clutter and get your house sold faster and at a higher price? Here's what another commenter said:

As a RE investor and defense contractor that moves around frequently, I've sold many houses, and learned this lesson the hard way. IT WORKS.

The biggest bang for the buck is on the Buyers Agent side. Ask your listing agent what the going rate is in that area for buyers agents, then up your buyers agent commission by one half to a full point above the going rate. Above that is probably excessive, and brings diminishing returns. The typical buyers agent is usually on the lighter side experience-wise, and the extra commission could mean a lot to them. When they pull a list of homes for the buyers to see, your house will be near the top of the list if the commission is extra in most cases.

On the Listing Agent side, it's important to be at the going rate, but not really above it. The agent you select is probably going to use his/her existing marketing program. Do some research, find the listing(selling) agent who is the Superstar in your market. They make a lot of money, and usually are not going to work any harder for an extra half or one point commission. In a slow market you don't want to undercut them, but paying the extra isn't likely to change much here.

You can try the conditions as others have mentioned with dates and prices, but I've found Superstar agents are EXTREMELY BUSY, and do not want to be bothered or spend the time on it. Upping the Buyers Agent commission is simple, takes only a minute and they usually don't have a problem with it.

One similar note, I've had good luck with www.Iggyshouse.com. (I have no affiliation with them, just a customer). It let's you list your house and pay NO LISTING COMMISSION. It puts your house in MLS the same as an agent, the buyers agents will call you for showing instructions. You can set the buyers agent commission to what you want, I recommend putting it a little above the going rate for your area. See the site, it has all the details.

Finally, here's a useful tip -- one that says the key to getting your house sold is to find the right agent:

Great topic, esp in this real estate climate. I like the idea of doing SOMETHING different to sell your house in this market, and a bigger commission might be a nice motivator for real estate agents. Or would it? In the book Freakonomics, the authors make the point that agents would rather sell MORE houses at lower prices (and lower commissions). The volume of sales is what truly drives their incomes. This makes sense. Would an agent rather sell three $200,000 houses at 6% or two at 8% ($36K vs. $32K)? Hmmm.

So what to do? Well I just finished a year long process of selling my father in law's house. And I have some learnings. We started off trying to sell it without an agent. That turned out to be penny-wise and pound foolish because, yes, we would have saved on real estate commission, but ultimately we were unsuccessful in selling it, and we wasted a couple months. Next we hired a family friend to be our agent. And this was just dumb. We wasted 8 months with him. Turns out he's a great guy, but not much of a real estate salesman. We couldn't sell the house, and we may have ruined the friendship. Plus he had us lower the price a couple times--he kept saying, "We'll just bring it down, _,000 and that's really where it needs to be to sell." Stupidly, we listened to him, even though my spider sense was telling me that we were priced correctly and that wasn't the problem.

So finally, I decided we needed a fresh start, and that meant a new agent. This time I wasn't messing around, so I did a little research and sought out the best agent in town--and by best I mean the one who sells more real estate than anyone else. Nothing speaks like results, I figured. So I found a list of the top selling agents in town, interviewed three of them, and chose one. We made the switch, had an offer within three weeks and were closed three weeks later.

So what did this agent do differently? She doesn't charge any more. But she does understand that getting this done quickly is in EVERYONE's best interest, oh and she actually markets and doesn't just hope--what a concept.

So my $0.02 is to skip directly to this step. In my market, the Business Journal has a list of top selling agents, so finding them wasn't hard. Unlike in many parts of the market, it won't cost you anymore, and the results will likely be much better.

So maybe finding the best agent is the key to success.

What do you think?

Comments

[LC]

I think that a good agent is helpful, but the condition, location, price, curb appeal and general appearance (staging) of a house make much more of an impact on how quickly it will sell.

[rwh]

I agree with LC. We're considering a move within our local area, and the first two houses we liked well enough to make an offer didn't work out because we wanted to make it contingent on the sale of our house.

The first place accepted a different offer with no contingency. But at least that motivated us to get our act together and meet with our banker. We're now approved for a bridge loan.

The second house we tried the same thing at first, but the listing agent (a superstar in our market) discouraged this. She offered a (standard) clause in which we would get 24 or 48 hour right of first refusal if someone else came in with a cash offer. At that point we could either accept or withdraw, which would probably mean taking our house off the market as well. We decided to pass on the property for other reasons, but it allowed us an opportunity to have a high volume agent do an analysis of our house. Of course she feels we can sell within a month at the price we need. Is she just telling us what we want to hear? Or do those 200 sales in the last year speak louder?

Meeting with a "superstar" agent did impress upon us how we might be better off listing with her than trying to sell our house ourselves or going with a lower volume seller. She has a team of assistants who really seem to know how to market properties and work darn hard at it. She was the second agent we've had look at our place and feels we can get 10-20k more than the first agent thought. Surprise, surprise!

Either way, when the time comes, the decision will be stressful. We won't market our house until we find that "just right" property and they accept our offer. But we are prepared to go without a contingency of selling our house first. That will make selling our house quickly very important.

In the interim, we continue to do all the little repairs to improve the appearance of our current house. And we continue to get rid of accumulated stuff. It's a long process that takes a lot of time and planning.

[D]

It would make sense that paying your listing agent a higher commission and offering buyers' agents a higher commission would have a positive impact on how quickly you sell.

However, in my mind, it would be completely unethical for an agent to perform worse due to the commission. A comparison might be a doctor who's level of care is soley based on how much your insurance company will pay him.

Agent's determine the commission when they agree to represent you. The quality of their work should be as high as possible from the moment they make that committment.

From the buyer's side, think of it this way: If my agent will only show me houses where he gets the highest commission is he really working in my best interest? Am I really seeing the best houses for me? Or, am I missing out on great opportunities that might suit me better because the agent is only looking at his commission and not at creating a life-long relationship with a buyer.

To me the idea of simply increasing an agent's commission is very short-sighted thinking.

Now if an agent, from the outset says that he requires a higher percentage than the norm for that area then he better prove that it is deserved in both his past sales and his service and ability to get your house sold.

[Jason]

I tried to sell my home without a Realtor and just have home in MLS. This got the showings, as the pictures were pictures we took and submitted to the broker who only puts what you say in the MLS listing. We found that other Realtors don't like working directly with the owner/seller and tend to tell the potential buyer that the seller does not know what they are doing, and that the potential buyer should move on. We finally worked with our past Realtor, and she was able to get our home sold. My wife and I are both now Realtors (yes, we actually enjoy the real estate, especially when its not your own) We never imagined how much was involved in selling or buying a home that the Realtor does for you. (not to mention all the never ending fees, subscriptions, dues etc that you pay to stay a Realtor) Ask a Realtor what they plan to do for the 3% selling commission. If a client ask for a 2% commission vs. 3% I explain that the marketing of their home will be limited to Open Houses, and not $500/mo in the big "Parade of Homes" or whatever. They understand that a $3000 commission is easily "eaten up" by expensive publications. If your home needs to sell now, a high dollar, or in a market with allot of competition, pay the 3%! offer buyer incentives (closing cost, Realtor bonus, etc...) Super marketing of a home that is a terrible home still makes a home terrible. The end of the first post stated that the family friend was no good and the other Realtor had a offer in 3 weeks. Other than online, not much marketing could have been published in that time, so the fact that the home was relished in MLS as a "NEW" listing is one of the best ways to sell.(But a top Realtor does have many people that are in need of homes, so this would help) Price does make your home stand out.I agree with the post from LC, also. Have a home that is avg, in an avg market, it will take a better than avg price to make it move faster than the avg time. And don't forget your home may be "worth" what you are asking, but if no one is willing to pay that, then is it worth paying a mortgage every month holding out for your "worth" price? And don't forget if you have allot of builders with excess inventory, your going to get beat every time trying to sell.