Great article! Thank you. Regarding cure #4, you didn't mention a termite/pest control inspection. Do think that should be done in advance? Flavia Brown, Realtor

Using the same logic, how about cutting your 6% commission to 1%?

Its funny how folks not in the business will tell you what you need to do to sell their house. (refer to the post about lowering commission) They do not know the work that goes into it, especially now. As professionals, we generally know what to do and how to do it, over just about any one not in the business. Would these same folks advise their heart doctor how he or she should do their work. Would they negotiate the surgeons fees before their wife, or child under went the knife. Absolutely no they would not! I can hear the conversation now, "Sir, would you like for me to skip the anesthesia part? It could save you money."

http://www.lassac.com/blog/the-sales-inventory-continues-to-move - I like the strategy, I short sell homes and I have a unique approach, also, that I have to get short sales approved. I'm always willing to share it with anyone that is interested. Just contact me and I would love to share it with you ...Thanks, Jimmy I'm also on Twitter @la_ssac

I don't see how you can compare yourself to a surgeon. It's not the same ballpark.

Realtors are responsible for overpricing a property because they will do anything to get a listing. They don't care if the property sits unsold, because after the property owner agrees to lower the price and the property is sold the realtor still collects a commission which in this market is overpriced. The realtor who compared himself to a surgeon needs to look in the mirror. He didn't need to EDUCATE himself for a decade to become a SALESMAN!

Great advice...especially the part about buyers not being in a vaccum!! They visit Open House and they do compare. The seller's set the price not Realtors...all we can do is advise...sometimes it takes them a while to come into reality....

I would be thrilled if my agent actually marketed my unsold home. Throwing a bunch of pictures on the internet is not what I consider selling. I am a sales professional as well, different industry. I am beyond sick of hearing about homes being overpriced, tough economy, wrong time of year to sell. Want to impress me and get referral business? do something!! Agents no longer turn to any tools other than online. Really? There was real estate success before the internet. Suggestion #5 is laughable.

Great pricing tips Tara.

This article is a Joke!! especially the realtor that says we do not know how much work they put into selling our home..Give me a break....with the internet and MLS they spend half the time on selling a home than before the internet came along..If a real estate agent wants my house as a listing they will and have come off that 6% fee..and when in doubt go low. that is easy for them to say...its not their home for sale

Readers, welcome to Real Estate in 2011. Tara, I love your posts - you always hit the mark. Overlisting and commissions are sure the hot topics of the day. In my experience they are related. One thing I would note to potential sellers. If you are in a declining market, over-listing and fishing for the market price will cost you money. A good analysis of the market (by your agent) may even reveal the monthly decline in value you could experience as it sits. It shouild be part of your decision - it's real money. On the 6% comments, I have a short note: Commission rates for selling (not just listing) your home are negotiable. My expenses and effort extend throughout the listing period, but my income is fixed at the end. I can (and often do) adjust my fees based on how likely it is your home will sell. So, we're back to listing price - the most important aspect of marketing these days. List it to sell it and move on.

It is distressing that clients think a realtor gets all of the 6% commission. Half goes to each side of the transaction. Most offices split the fee so the listing agent may receive 1.5% in many cases. Of this commission a whopping 20% goes to taxes since we are considered self-employed. This also doesn't include the cost incurred for printing brochures, placing ads in circulars and feeding folks at open houses. We also pay very high fees to keep our licenses up to date as well as local association fees, quarterly dues, E & O insurance, etc. I figure I make about a dollar an hour once I have closed a transaction.

Hmm..A dollar an hour? Better find a different line of business. We too have been very frustrated sellers with a Realtor who came highly recommended only to find out that "virtual" marketing is her "specialty". We never saw hide nor hair of her even to check on the sign condition. She showed our 300,000 home three times in 6 months and one of those was a different realtor. We can't lower our price and still give 6%. I agree with one of the above posts that it's a different market now and the Realtors need to cater to it differently and get more creative in getting buyers and selling homes! Internet is great but real people buy homes! Think outside your box! Create the market! 6% is 18,000 for my home alone....That seems like good incentive to me!

I totally agree with Quilter.56. All the realtors we have been driving around with have no less than a 2009 luxury car of some sort. And they all have shown us houses $20,000 to $30,000 over our budget. When we gave a low ball price on the house we were looking at, she said that I was insulting the seller. Of course when a realtor sells their own house, they don't have to pay the 6%, and when they buy a house, it is usually before it hits the market, they low ball the price, and walk away with all sorts of perks.

Luther I LOVED your comment about lowering the commission!
MH

Carol, Been there, done that. I fire Realtors the second they say the first lie. I have been going through one-two per day. When I find one that tells the truth, then I can start getting serious with MY MONEY. Many of these "buyers" agents talk BIG with my money. I earn every nickel, and I hear grandiosity like " just write them a check for the full amount of the house. Well what the #@$% do I need an agent for if i just give the seller the asking price that they want? NOPE...THIS IS NOT 2005. House prices don't ALWAYS go up! MOST actually go down as the termites and wood rot take their toll. Show me a house that is priced more than the cost to build and I WALK. When you buy a car, what happens when you drive off the lot....IT DROPS IN VALUE. So why should a house made of wood, concrete, shingles nails and ticky tacky be any different? We are talking man made materials and man made labor ...why should a mere house get to increase in value as it rots in the rain? I know, iron cars can rust, but termites also eat wood.

Real estate is a business. Business takes facts into account and are the basis for decision making. As soon as emotion interferes, objectivity is lost. If you lose sight of the objective, begin at square one with the facts. Here are some questions you should answer before selling your home? Not in priority order and not all of them:

1) Must you sell into a bad housing market?
2) If you must sell, how much do you owe on the property?
3) How much equity, if any, do you have?
4) What do the comps say relative to your CURRENT home value? (Getting a professional appraisal helps to ascertain the current value.)
5) What major items need to be fixed, if any? What is the estimated fixing cost? (Get Your Own Home inspection and be preemptive.)
6) What minor items detract from the property presentation? (How does it look? How much will it cost to develop curb and interior appeal?
7) How long have a similar properties remained on the market? (DOM=Days on Market)
8) What is the listing to actual agreed upon sale price ratio for your locale?
9) Can your relatives support the price point for your property with facts?
10) What selling commission rate is required? In NYS, commission rates are always negotiable and never fixed-that's by law.

Some Points to consider:

a) It is a buyer's market--too much supply with little demand.
b) Lenders are not especially cooperative. The loan process is now torturous.
c) Appraisers are being extremely conservative. Your agreed upon sale price may not appraise. Deal over if financing is involved.
d) Good real estate people are worth the negotiated commission. If you don't believe that--market your own home.
e) When you bought, you wanted to pay the lowest price. Now that you're selling, you want the highest price.
f) If you are underwater on your loan, good luck. If it's not worth what you paid for it, why would someone give the price to pay it off?
g) Consider countering on ALL offers no matter how low.

John Kavaller http://www.catskillcountryrealestate.com

My suggestions if you can afford it don't sell (unless the loan amount is so high that you can afford a similar house cheaply).
if you sell where will you go? Rent will increase once the demand catches.
My suggestion to US citizens is to try and have the property taxes reduced. In many countries like Australia the city taxes are charged on unimproved value of the land. In Us the property values are assessed on improvements. Both have their advantages and disadvantages. At the moment the city taxes/rates should be on unimproved values. This will greatly help the property owners. Even if their property is not tenanted they can afford taxes assessed on unimproved value but on improved values the taxes are too huge to afford .Eventually
the property where so much of sweat and blood was sacrificed has to be sold.

2 and 5 seem to be the big ones right now. Just because the house is "worth" a certain amount doesn't mean anyone is going to pay that. Crazy times.

Thanks for a well writen piece!

Talk about realtors, I recently sold a home in Jacksonville, and my lister claimed to be "Top Lister", well you can list all day long and never sell, however, it was sold by another realtor and the "Top Agent" still got her share, what a shame, she did nothing, but claimed she was working all the time. The house had over 500 hits on the computer it was over 3000 sq.ft. and sold for $148,000. We entered into a contract for $161,000, but when the appraiser came (a woman) she did not like the kitchen color, even though fixtures were changed in the bathrooms (3) she claimed that they were not updatedd and appraised the house at $148,000 way below the value and of course the buyer was not going to pay the $161,000. Did the realtor come down on her 6.5%, NO...I think this was and eye opener for me. Realtors whether they are top listers and sellers, are in it for themselves and could care less about what the house sales for but how much they can make off you...you've heard the expression "RIP OFF". I have a home for sale now in Tallahassee, and have a for sale by owner sign in the yard, and if it sales OK, and if not I will rent it. The housing market is tuff, but why should I take a cut and the realtor still get their 6.5%. Oh and all the add on fee's they come up with, brings the total up to 8%. I say if you list it you sell it, not have everybody from other realtors involved and have to pay them as well, and if any fee's are above the 6.5% let the realtor pay for it, they contracted for you. These realtors are so cheap that they want pay for signs to put in locations because they have to pay the city $35. We get off it and go to work, not sit in an office and look at a computer and not know who is on the screen looking..work for your money not still it.

Sorry, sometimes the truth hurts…
I do agree with Ronnie and feel that Realtors are part of the problem with keeping the housing prices low. Just by listening to my relatives who are in real estate and some friends in real estate, they have a tendency to panic.
This is their income, their livelihood and they panic when the market goes down and they do have the power to keep prices low especially in certain communities.
Yes, the economy, banks, and mortgage companies can start the fiasco, however, the real-estate community can have it drag on by keeping pricing low or by keeping every owner in the same category whether they have upgraded, or a home is dilapidated.
Additionally, (some) realtors either do not do their homework, or they are consciously twisting information on a home to also help keep pricing low. In my community, realtors have our floor plans (I live in a condo community) all over the board as far as square footage and my 1340 sq. ft. unit, that we purchased as a 1340 sq. ft. unit, was now a 940 sg. ft. unit. Due to this discrepancy and the realtors insisting it was correct, I hired a professional to come out and measure, and sure enough, it came out to be 1340 sg. ft. This is only one example of the many tactics (just in my community) that the realty community has done to keep (at least in this community) prices low.
Yes, no one ever expected the market to take a hit like this, but realtors, banks, mortgage companies and the government need to step up, take responsibility for their part in this mess, and quit blaming and expecting the homeowner to take all the hits and blame in this.

Thanks Tarat! Once again, you provide an excellent blog post!

Tara, your excellent post has generated a great discussion. It is obvious to me that many folks do not understand the splits, or how time consuming the work is. Helping people sell the largest asset most will ever own is not simple and real estate agents are far from salespeople. We do in fact operate as a small business. Meanwhile, sellers control the price, condition and availability for showing, among other things. The realtor's job is marketing and promotion--to make sure the property is found where buyers are looking, presented in a way that appeals to buyers and that features are described correctly and creatively so buyers want to come take a look. We make showing arrangements and when a buyer is found there are more time-consuming duties. Research shows that buyers are looking on the internet so it makes sense that properties are advertised there. As for brokerage fees, they are and always have been (as long as I have been in the business) negotiable. Diana Marshall, Realtor, People's Choice Realty Services, Tampa, FL, dmarshall5@verizon.net

Dear Nettemor4, I do not believe the majority of home seller's (especially now and prior to the "Big Boom" of the early 2000's) think their home is a "Lottery Ticket" to the big pay-off in life. For the investor in real estate, yes, however, most people (especially prior to the boom) were lucky to buy just one home. Once the boom hit and people were able to sell for the biggest profits ever in real estate, the average homeowner was now able to afford that rental home or vacation home.
Unfortunately, most homeowners were duped into these interest only loans due to pie in the sky enforcement by realtors and the mortgage companies that all would be fine, no worries, no problems, and all in the name of “Money.”
This mortgage fiasco reminds me of the fiasco that came about from the "Leasing of Vehicles" instead of just buying. Contracts are so long, so confusing from the legal verbiage to the not to the point issues that these contracts leave people confused about. So what does the buyer/homeowner do? They ask questions of the "experts" they think are helping them. However, what they got in return was only the "it's all fine, nothing to worry about" spiel. Now the purchaser of that leased vehicle and the duped seller of the mortgage fiasco is the "PROBLEM" and are now paying the price for dishonest dealings of others again.

To all the na-sayers regarding the fees a Realtor EARNS. Please limit your comments to a field of expertise that you actually have some knowledge of. Here's your first lesson . . . A listing agents job is not to "sell" your home, it's simply to generate a list of buyers and show as many potential buyers your property as possible. The home and price will do the "selling". The other option is to sell it yourself, BUT, where is your buyer's database? Where do you find them? Oh well, guess you do get what you pay for.

What matters is not the price, condition, site or comps. It's simply the Realtor who shows the home to potential buyers. I've had my home on the market three consecutive six months a year without a sale using three different Realtors. What it came down to is each Realtor showing the house has his/her own listing and veers potential buyers to them. They trash your home so they can make a quick profit with their lower priced listed homes. Your home becomes a prized showcase that, even though not overpriced, following comps, stands idle in the market to make money for the many Realtor's who show it. If we eliminate agents from different Realties and make it mandatory, by law, who is selling your home shows your home and only your home during the contract period, you'll see many homes being sold at a faster pace. I wouldn't mind paying the asked commission or even more if I know my home will be sold faster than the one down the street---there'll be real Realtor competition selling my home. Case in point; I had buyer's wanting to see my home more than once yet my contract Realtor's were not there to show positive aspects of my home compared to the buyer's Realtor's listed homes. Realtor's take heed; If you don't personally show the one listing you have contracted, you have no business being in the home selling market.

Hi Tara, I really look forward to reading your articals, and I usually never leave a comment, but this artical has me so pissed off I just had to post my thoughts. First of all on what planet are these people from? Why on earth do they think Realtors should cut thier commission for listing the home? This is our J.O.B. !!! Do they ask the plumber to cut his price for fixing thier toilet???? Or what about the painters, car mechanics, lawyers, Doctors, teachers, or any other professional or buisness person??? I am outraged at the mentality of these folks that think it is okay to ask someone to cut thier paycheck for what they are licensed to do. How would they like it if they went to work and were told by other people that they earn to much and that they are not worth the money they are making? Most of these people probably have desk jobs where they are off on the weekends( which we never are), get two-three week vacations (which we never do) and work when everyone else is at home with thier familys. And let's not forget that most of these folks at one time had to use a Realtor to buy thier house. They did not have to pay that Realtor one dime for all thier hard work.. They were taken to dozens of houses most using the agents gas, sometimes for months on end, till they found the PERFECT home. You NEVER hear any complants about us then. What other buisiness do you know of where someone does not pay a penny for months of service??? It would be considered stealing, wouldn't it? How much were we worth to them then??? I don't think they felt sorry for the sellers who were paying the buyers agent back then...my how fast they forget. Anyway to all my fellow Real Estate agents my advise is the next time your client asks you to lower your price, look them straight in the face and say "Excuse me"!!! And try to give them the benifet of the doubt that they forgot the zero dollar amount they paid the agent that took them to find the home they are living in and selling today. You need to remind them that NOW is thier time to pay the buyers agent thier 3% commision who will have to split that with the company they work for and that that leaves 3% that you in turn need to split with your company. If they still don't get it you can always do what allot of other agents do who are talked into cutting thier commissions and say "sure what part of the marketing fees would you like cut out? Although I don't recommend that because you'll just have a sign in the yard with your name on it that probably won't sell. Do yourself a favor and say "NEXT"!!!

There is no arguing that the market is, indeed, "tough." As a seller in this momentous era, I have read many articles on how to prepare and stage my home. I took this info. to heart and keep my home in pristine condition for every showing. I have "invested" in remodeling my 1980 home since the day I purchased it nine years ago. I empathize with the sellers who "dig in their heels" on pricing when the comps offered are not really comps at all. If a seller has spent ten, twenty or fifty thousand dollars on updates, improvements and remodeling--only to be compared to the dump down the street still sporting pink sinks and violent green shag carpet--the seller's frustration is understandable. I contend that agents might do a better job in helping buyers understand the true value differences between homes. Buying the lowest priced home is definitely not the best bargain in the long run if the "bargain" will require another 50K to get it in shape. An agent who has learned the buyers needs can point out that, with historically low interest rates, it can make sense to buy a home that is move-in ready, even if it isn't the lowest priced option available. Unless the buyer is flush with cash, how are they going to fund all the repairs and updates that their "bargain" needs? There is more to marketing than pointing the "over-priced" finger at sellers who have truly clean and well-maintained homes to offer. If it really is only a matter of price, why should we spend the money and effort required to make a home move-in ready?

Thanks Tara! Well, I must say this has been an interesting group of comments.While we have all of this accurate information on the current market conditions . Sellers don't sell! if you don't have to! Buyer's, there are some good deals to be found, but enough with the low ball offers! You waste my time and yours! Buyers & Sellers how can you expect, that we as proffesionals, are suppose to do this for free? Mr. Seller, if you feel you can sell your own home, go for it! Get that legal contract, do it yourselves or hire an attorney, (whom will not do it for free either)! I would think that your home is at the top of the list of being an important asset and you would want someone that has knowlege, training, and a license in Real Estate to carefully write that binding , legal document for you!! This is a challenging business, and I really enjoy what I do, expecially when I have clients that listnen! Commisions are negotiable where I live. If it means that I need to give a little, and" I haven't spent a month driving them around" I'll pitch in at the barganing table to make everyone happy, I'll do it, but can't afford to take a pay decrease on all transactions! Everyone has a huge amount of pressure in this market ! My advice is to be civil, be honest, accurate,and proffesional!! Do your comps and hope that this market turns around! Just don't ask us to work for free! I'm sure you need a pay check to pay that house payment, just as Realtors do!

Great Advice. Now to get your clients to listen is the hard part. The best things we as realtor's can do is advise, listen, listen, and advise..

great article. funny i read a blog a few months back that related to taking the "first offer, because it is always the best offer." Here is link to the other blog, good read. http://wp.me/p1MLJl-2p

Great blog. Now getting the seller to buy in is the achievement.

I too agree with some of the other comments I have seen on here. This post is very good and informative with the exception of opposite ended pricing. Although housing markets are going to very from region to region, I have found that in Indiana in our market, the wisest thing that an agent can do is get the true market value of the home. If the seller markets the home two high then they will limit the amount of buyers viewing the home not to mention when an offer comes in, and you go through the process of negotiations, inspections, repairs and then you get to the apraisal and the property won't mortgage out and your buyer may walk away. On the other hand if you price the property to low you may get more buyers in but it is unlikely that you will get multiple offers and in my experience in todays market any offer that comes in regardless if the property is priced to low ,or market value, or high buyers are going to negotiate the price down some a little and some alot. After all it is a buyers market.

http://www.realestatebyjenterry.com

Doing inspections ahead of time is an excellent idea! In performing inspections sellers become aware of issues that could possibly derail a settlement later on down the road. A true real estate professional is proactive in this way and also deliberate in informing sellers. A good agent will not walk out of a listing appointment until it is perfectly clear what the home SHOULD be listed for, whether the agreement is signed or not. Some agents do sellers a disservice by letting the homeowner set the price with no fundamental reasoning or market data involved in the decision.
http://www.SoldByJustinGriffin.com

Great post!

As always...brilliant! One of the most difficult things for sellers to come to terms with and understand is #5 in my opinion. They still feel they should start high and that there is always time to come down. What many still don't realize is that this causes their neighbor to sell their home first when buyers compare (as they do and you so well explain), when they could be drawing attention to their property instead and possibly, even elicit multiple offers when you undercut your competition.

By eddie.palmer11, Mon Dec 12 2011, 05:11
I have adopted a new set of guidelines based on my past experiences with homes prepped to sell and those that are not. After a Comparative Market Analysis, used as the midpoint of pricing, I go 20% below CMA for not being clean and uncluttered, CMA for clean and neat, 20% more for those clean, uncluttered, and repaired. Watch clients then get the home in "showing condition!" Further, it is our role as listing agents to work for the best price for our side of the sale. That may look to be overpricing to some, but we sign contracts to promote their property for their benefit! As for the commission, would you work (whatever your set of parameters are for definition of work) for a job with absolutely no guarantee of wages? If your expenses fail to exceed your income, IRS will audit your self-employment status, to include deductions for mileage, fees, etc. Then, lastly, try selling homes in a "no-job available" market of second homes and retirement homes. Not much to offer in the job arena will lower your home price. Despite best efforts to price accurately, many factors will influence how many buyers will walk through your doors. We try!

As always, Tara, excellent advise!!!