Home Selling in 07828>Question Details

Hailfire, Home Seller in 07828

As a seller of $525,000 home, which option would have a better result, lower price by $10k or increase buying agent commission to 4% from current 2.5?

Asked by Hailfire, 07828 Tue Jul 19, 2011

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Two good ideas BUT price is the driver in this market. Here is the possible issue I see with the price reduction, a $10,000 price adjustment on a $525,000 home will keep you in the same price search band -generally people search in $25 - $50,000 increments. If someone was interested in buying your home at $515,000, I think they would bite at $525,000. If you are not seeing action at $525,000 and have been listed for more than 45 days then I think you have exhausted the $500-$525,000 market and need to consider a price repositioning to expose your home to a new set of buyers. To accomplish that you'll need to move to under the $500,000 mark.

Consider that first.

Good luck to you,
Jeanne Feenick
Unwavering Commitment to Service
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Mon Jul 25, 2011
If you are living on the street that I am guessing (based on what I see at your price on the mls) you are in competition with at least 3 other homes for sale on the same street. They vary in price from the same, less or more. If you haven't already, I would suggest touring the other houses that are your direct competition with your agent so you can look at what the buyers are seeing. One short sale on your street is 100k less than your list price. The one that is listed for about 25k more has been on and off the market for over 2 years. This is all information that any good buyer's agent would make sure their buyers know. Your competition is fierce in an already tough market.

Something has to make your house stand out from the rest and if there are many similarities in amenities, the most powerful difference is price.

I doubt this will make you feel better but my house was a little 2 bedroom cape before we renovated to a 5 bedroom colonial about 5 years ago. Our house isn't worth much more now than it was as a 2 bedroom cape before we renovated. Depressing but true.

It sucks to be a seller these days.
1 vote Thank Flag Link Tue Jul 19, 2011
Thanks to all for their answers, to clarify some points:
1) House is priced right around market using cost/square foot from recent solds in area.
2) One concern I had was that 2.5% was a little low for the buying agent
3) House is immaculate, did everything recommended both inside and out (new everything).
4) I am listed with an agent
5) My thinking was that more showings = greater probability of an offer

I gained insight from all of your kind answers thus far.
1 vote Thank Flag Link Tue Jul 19, 2011
Lower the price.

Hailfire, I know it's hard to lower your offering price, because you're almost certain that a prospective buyer is going to want to "negotiate" even further.

The thing about adjusting the co-brokerage fee is that agents tend to be binary about it - it's either about what they expect, or it's too low. Higher doesn't help, because agents don't have that much persuasive power . . .

AGENT at 4%: "Isn't this fabulous! I mean, any house can have WINDOWS, you have 24/7 ventilation!"
Buyer: I like to be able to CLOSE my windows.
AGENT at 4%: Closing your own windows is so 2010!
Buyer: I would also like walls. Especially on the exterior.

The thing about lower, which frosts my colleagues, is that not all agents who sell houses are actively working with a buyer. Many sales, at least in my market, come from an agent who will call up a prospect from time to time and try to interest them in a property, and they just don't make that call if it's not "worth it" to them.

And I don't mean to suggest that there's anything wrong with your home, I'm just trying to illustrate that agents aren't quite as persuasive as we'd like to think we are!

All the best,
1 vote Thank Flag Link Tue Jul 19, 2011
This is a very good question. In my opinion, a price reduction. I'm curious about the sold comps in your area and price range? If other homes are selling $30,000 below your list then $10,000 will not be enough. Also, is your home move in ready or does it need updates. These can all play a factor on where you should be priced and the reduction you take.
1 vote Thank Flag Link Tue Jul 19, 2011
Very good question.... What does your agent think would be better?
My guess is that the 4% would increase showings more than the 10k drop in price, since going from 525k to 515k will most likely attract buyers in the same search range they are already in, assuming your prospects are in the 500k to 550k range. As opposed to dropping to the next lower price range tier.
But this is just my guess; I could be wrong here. You could always offer buyers agents a bonus, while specifying it is only good for accepted offers received within 30 days, as a test. Then after 30 days if no accepted offers come in then drop the price 10k and instead.

Jane
http://www.RealTerrific.com
1 vote Thank Flag Link Tue Jul 19, 2011
If you want to sell the house, why do the two things have to be mutually exclusive?

Do you think it possible that Agents would bypass a good possible house if the Commission was 2.5%?
How about 3%
How about 3.5%

Do you think lowering the LISTING PRICE $10,000 (1.9%) will make it SELL?

Where is $525 in relation to the COMP's?

Did you realize that when people search for potential houses; they will put in a RANGE of prices; such as $450,000 to $500,000?

I wouldn't begin to guess where the LISTING PRICE should be, (I cannot see a CMA), but I will tell you that when you start out HIGH and slowly lower the price; that is called "CHASING THE CURVE". And after three or four months, Buyers are asking "Why hasn't that house sold, what's wrong with it?"

Opinion would be to listen to your Agent.

Good luck and may God bless
1 vote Thank Flag Link Tue Jul 19, 2011
I would think offering it directly to the buyer is better. Lowering the price will get the house to "pop into" more searches and therefore more buyers will look at the house. You can even do a $5K reduction in the price and offer $5K as a credit towards closing costs. That helps some buyers on the fence. Let me know how I can help.
Web Reference: http://www.TJSellsHomes.com
0 votes Thank Flag Link Wed Jul 25, 2012
I would agree with the $10k price reduction, but only if that brings you into the lower end of the current market value. Ask your agent to show you the average DOM for homes similar to yours and make sure you are priced where the homes selling within 90 says are priced. If your not willing to go that low I recommend offering a straight $ amount as a Selling Agent Bonus, not a 4% commission. Best of luck!

Tara
0 votes Thank Flag Link Wed Jan 11, 2012
I would recommend lowering the price - assuming you are paying out a fair commission, I like to keep the incentives focused on the buyer. After all, that's who will buy your home.

Good luck to you!
Jeanne Feenick
Unwavering Commitment to Service, Unsurpassed Results
0 votes Thank Flag Link Tue Jan 10, 2012
Know where your home is priced among the competition and make sure it is priced competitively. If it is priced well, say that your home is priced at $150 per sq ft and others are selling for $180, have that as part of your ad. A more competitive price trumps an extra commission in my experience.
0 votes Thank Flag Link Tue Nov 1, 2011
Lowering the price hands down but it depends on your local market as to how much to lower. Also, once you lower the price be sure to let everyone know through emails, new price on yard sign, radio, print...however you market your properties. I feel that Agents want to give buyer's the home they want regardless of the commission amount. To raise the commission without a price adjustment still keeps you in front of the same buyers that have already shown their lack of interest.
0 votes Thank Flag Link Tue Nov 1, 2011
Hi there, I agree that adjusting the price is the answer and I also agree with Denise's recommendation to bring it down below $500,000 so you appeal to a new buyer group. Buyer's tend to look at properties in $25,000 increments. You've tested $500,000 to $525,000 already - bringing it down $10,000 will have you in the same buyer pool. Taking it down under $500,000 will open it up to new buyers.

Good luck to you,
Jeanne Feenick
Unwavering Commitment to Service, Unsurpassed Results
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Tue Nov 1, 2011
Hailfire,
Lowering your price is always a better idea because your home will become more affordable to a potential buyer and your home will show up in more buyer searches due to the lower price. Your price should be in line with what other homes have recently sold for in your area. Pricing your home based on active listings makes no sense because recent sold similar properties represent what a buyer will pay.

All the best,
Gary Geer

http://www.GaryGeer.com
0 votes Thank Flag Link Tue Nov 1, 2011
Offering a higher buyer agent commission simply doesn't work. Sales are price driven and I would suggest you drop to under $500k to catch buyers in a different price range. Good luck!
0 votes Thank Flag Link Tue Nov 1, 2011
If you are not getting the activity you were expecting or hoping for, the answer would be to lower the price. Talk with your agent, $10,000 price correction may not be enough. Without looking at all of the facts,you may be better at $500,000. The buyers looking from $450,000 to $500,000 will find you as well as the buyers looking $500,000 to $550,000. Good luck with your move!
0 votes Thank Flag Link Sat Oct 29, 2011
I Agree whole heartily with Jeanne Feenick, Price is everything in this market ! Believe me if an agent has a buyer they are showing it at 3% or 4% you need to be below 500K to expand your buyer pool. 10K price reductions means your chasing the market and wasting presious time, this is the biggest mistake sellers make in this market
0 votes Thank Flag Link Mon Jul 25, 2011
Definitly a better marketing strategy to reduce the price by 10k, with that being said it is also critical to consider how many showings the property has had and the feedback from the agents that have showed the property, also very important to review the market activity of both the comprable sold property as well as the active competing properties, to ensure that the price adjustment is in line with the local market trends.
0 votes Thank Flag Link Wed Jul 20, 2011
Hailfire,

Honestly I don't even look at the commission being offered to the buyers agent when sending my buyers homes that meet their criteria. I search for homes based on their criteria which includes PRICE. The homes that fit their criteria, I send to them and they choose which homes we see. It has absolutely nothing to do with what the commission to the buyers agent is. Attract the buyers with price, buyers incentive and the agents will come! If your house isn't attracting buyers you have to find out why.

Reducing your house or as Jane suggests, offering $10,000 credit in closing costs is a better incentive for the buyer. Talk to your agent about the average days on market for sold properties. How long are homes taking in your immediate area to sell? Are you really at market value or a bit higher for wiggle room? We don't use square feet/cost to determine market value. Beds/baths, style home, your immediate area - what have they sold for recently? How many days on market? Are there similar properties on the market competing with your's? Have they gone under contract? Get your home in front of the competition. Let the buyers see the value in your home vs. others. Increasing the agents commission will not produce these results.

Many of us are agents telling you that paying us more will not help.

Good luck with selling your home.

Lattimer Realty
Gina Chirico, Sales Associate
Gina@GinaChiricoRealEstate.com
0 votes Thank Flag Link Tue Jul 19, 2011
2.5% is NOT too low around our area- its more common than not and if your house sold for 500k, it would mean a buyer's broker's commission of $12,500 and if there's a 50/50 split between broker (usually better split for top producers) it would still be a significant payout. I can't imagine an agent not choosing to show a house to a buyer that might meet their buyer's needs, especially with the potential of this amount of money.

You didn't clarify whether or not you were still getting showings, how long your house has been on the market and if there have been any offers at all. As long as you are getting people in, its a good indicator that its priced well. If not, its also an indicator, just not what you or any seller want to hear, me included.
0 votes Thank Flag Link Tue Jul 19, 2011
Lower the price. We rarely use price per square foot here in New Jersey, though I have seen it used to justify a slightly higher price. Note I said 'slightly' higher. Most buyers these days are looking for a really good deal, no amount of cajoling from an agent is going to change that. I'd love to give myself and my colleagues a raise, but that's the way it is.
0 votes Thank Flag Link Tue Jul 19, 2011
Hello Hailfire!
Interesting strategy. Will more agents bring buyers out to a far-flung area if they are incentivized? I agree with others that this strategy is unlikely to work.

Price is what gets buyers to look. This is especially true in this price-driven market.

If you're not using a seller's agent, you should consider interviewing a few who can help you with pricing and strategizing. Hiring an agent can effect how long your home is on the market. These days, marketing is very important. You really need someone who understands online marketing, too.

With all of that in place, the house has to show well. It's a lot of work. Best of luck to you.

SuZ
PML of Longmont, CO
0 votes Thank Flag Link Tue Jul 19, 2011
Another option would be to offer to pay 10k toward the buyer's closing costs, in lieu of a price drop. That would attract buyers who have low start-up funds.
0 votes Thank Flag Link Tue Jul 19, 2011
How about 3% and lower it $5000?
Like the 4% commission but not really a better selling point to the Buyer!
0 votes Thank Flag Link Tue Jul 19, 2011
Absolutely lowering the price but 10k on a 525k house most likely isn't enough. In order to attract buyers (presuming you aren't getting any activity at all), you really need to lower your house significantly, putting it in another price range altogether such as 499,000. This would attract a whole other crop of buyers, presuming that would price you competitively with comparables.

A couple of things about increasing the agent commission:
Agents are supposed to show their buyers properties based on their buyers' needs, not their own greed. I'm sure that slimy behavior exists, but its inexcusable in my opinion.
Secondly, agents can attempt to lead a buyer to your house but if its overpriced, buyers won't be interested in seeing it, let alone making an offer on it. Buyers are more educated than ever these days in the market and there is too much to choose from to entice them to overpay.

I don't know what your property is so I honestly can't tell you if it is overpriced but if you aren't getting showings, I'm sure you know by now that it is almost always an indicator of your property being priced too high.

If it makes you feel any better, I am trying to sell my house in the same town as yours so I am looking at this from both the perspective of a seller and an agent.

Not easy to be either these days.
0 votes Thank Flag Link Tue Jul 19, 2011
For the best results make sure you are priced fairly and very competititvely with other area homes--therefore review comps with your agent, recently sold similar properties in the immediate area, see what the data suggests, and adjust accordingly...
0 votes Thank Flag Link Tue Jul 19, 2011
Very interesting question! Here is my personal opinion:

The main component is probably to price the house right. I even feel maybe a little lower, to generate interest from potential buyers. Assuming it's done, increase in commissions will certainly drive more traffic from agents. I would suggest to make it time limited: buyer's agent gets 1.5% extra, if contract is signed within first xxx weeks...

Just my
0 votes Thank Flag Link Tue Jul 19, 2011
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