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Coconuts, Both Buyer and Seller in United States

Crazy to ask for a discount from the realtor if I list very low?

Asked by Coconuts, United States Wed Nov 28, 2007

I figure I am saving them time and money since I am willing to sell cheap and fast. Is that worth a discount? There is at least $300,000 equity and I have owned the home since 1997. The kitchen and baths were updated just before my purchase. My home is clean and I am not a pack rat. I made a decision to move back north and see no reason to drag this out. If it will not be any better in a year, then just do it and get on with it. As realtors, do you agree that having me as a client is worth a discount? How much?

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If we first assume that all Realtors actually do what they say they will do, the we can assume that most Realtors will have a marketing plan. You are only saving a Realtor money if you are reducing the costly portions of the plan. Depending how low you go, it might be worthwhile to take the listing, if for no other reason then to generate buyers off the frenzy that might ensue, if your home is what you say it is.

If you are moving out of state, I am less likely to want to discount. I would sure love to have you as a client, but if you're moving out of state, then after the transaction is complete, I'd likely lose the opportunity to continue to contact you and referral opportunities would diminish.

Given your scenario there will definitely be a few agents who'd have no problem helping you out.
Web Reference: http://www.jrjarvis.com
2 votes Thank Flag Link Thu Nov 29, 2007
Joshua Jarvis, Real Estate Pro in Duluth, GA
MVP'08
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Your options for hiring a Realtor can run the range from a few hundred to $25,000 (or more). So, the question becomes, what are you expecting as representation and what do mean by discount?

When you hire a full service Realtor, you are paying them for their knowledge, skill, advice and marketing. Much of that knowledge comes from the hundreds of hours that he/she invests on a regular basis to know the market front side, back side and sideways. Much of that skill comes from applied knowledge, practice, and those who have a knack for the business. Quick sale or long time on the market.......the knowledge base is the same for an agent. Your best bet is to hire the Realtor who possesses greater knowledge and skill.

I believe that you are suggesting that marketing costs will be contained as a result of low pricing, which you assume will lead to a quick sale. There is value in a quick sale for you, as most properties sell closer to the ask price when they are fresh on the market. The longer the days on market, the more apt a buyer is likely to assume that you need to negotiate or come down. There is value in a quick sale for the Realtor in reduced carrying costs; both in time and direct expenses associated w/ marketing.

What happens if it does not sell quickly? Are you willing to pay the Realtor more? Does that give the Realtor an incentive to wait it out? I don’t think any (or least a rare minority) would intentionally delay a contract for a higher fee. But, do you really want to offer a compensation that is based upon doing a good job fast will pay you less? This type of compensation offer might also provide an incentive for the Realtor to hold back on marketing. As a seller, it is in your best interest for the Realtor to hit the market strong and running with an aggressive marketing campaign. You don’t want a “hold back” that has an impact of a lower sales price.

Assuming you want full service and skilled competent representation, the amount of discount you might get for scaled back marketing will be a minor component of the entire fee. I would suggest that you not cut back on the marketing of your property. If getting a discount on the fee means compromised marketing, it’s not worth it.

If you can find a Realtor who will provide you a comprehensive marketing plan, and who is skilled, experienced and competent, sure, go for it. Don’t be surprised if the response from the Realtors is a cut back in what they will do to promote your property. That trade off may not be worth it.
2 votes Thank Flag Link Wed Nov 28, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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Coconuts...hi!
First off, why would you want to price your home at a price where you could be leaving money on the table? My initial reaction is to have your full service real estate professional price it at what the price to sell should be in your market, and do the marketing job on your home that a pro would do, expect a reasonable amount of time for it to sell, and everyone should walk away happy!

I wish you the best in selling your home and keeping your money in your pocket!

Thanks, Todd
2 votes Thank Flag Link Wed Nov 28, 2007
Coconuts
I love your question. As a matter of fact, I am going to share it with my class tomorrow.

The purchase of a home is an emotional process. Part business, mainly emotion. You are approaching this from the logical standpoint. Strong on brains, weak on emotion. the exact WRONG combo.

What you paid, your equity, your improvements, means ZIP to buyers, Buyers are looking for value.
So if 90% of the time a buyer sees the property they buy with a Realtor, you need to attract Realtors.

So, do you think we are stupid? Do we have time to show property that our clients do not want, do not need, and will not buy?

Mr. Coconuts, you are under the mis-understanding that you hold the cards. En contraire mon fraire, the agents with the buyers hold the cards.

So, go ahead. Play that holier than thou role. Are you prepared to amble with your equity? Probably not.

Our job (as listing agents)is to preserve your equity. Your strategy is to sell at the lowest price in the shortest time. Let me ask you this: If you see this ad "prime location, wonderful home, must see to appreciate. Offers to be submitted with pre-qualletter, FICO score, and proof of funds" what would you think?

Or this:
"Priced below market. Too many improvements to share. Seller will accept any reasonable offer, motivated".

If you were a Realtor representing a buyer, which property would you work on?

Good luck
1 vote Thank Flag Link Wed Nov 28, 2007
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
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I strongly disagree with those that tell you not to price it where you want to price it. Most of the country is experiencing a strong buyers market. You are a refreshing change to all the sellers that are still wanting to see huge appreciations in a declining market. Many sellers have not accepted to the market conditions and are unwilling to price their homes to sell.

We are trained to get our sellers the most money possible and that is what great agents do. Great agents also listen to the clients needs and goals. This is a difficult market for Realtors because we are no longer in a position of raising property values by pushing the envelope as much as possible; but instead, in a position of saving as much equity as possible and still getting the home sold. It is a hard market for sellers. It is clear that you understand you could be leaving some money on the table (and you could not be) and it is also clear that you understand the market is still correcting which means prices are still dropping. I like your comment about the bandaid. In my opinion, talking a seller into a higher price could be a huge mistake in this market and a huge liability if the home does not sell and the seller feels this advise caused the seller to lose money in the end.

In this market, Buyers are looking for deals so I do not think that one person will think there is something wrong with your home. They will know that you are a great deal. Just hire a great agent... the right agent for you. If you have a great agent and you are priced great the buyers will see it and give you your price or close to your price. Additionally, pricing a home at a bargain price could result in multiple offers and a contract for higher than list price. This is still happening in my state and in many other states.

I know you did not like my comment earlier on asking an agent to reduce their commission and that is okay. You have created a win for an agent by deciding to price your home to sell, I am sure that an agent would be willing to create a win for you.

Best of Luck!
1 vote Thank Flag Link Wed Nov 28, 2007
Watch out for pricing it too low.. buyers and agents may think there is something wrong with it. It may just sit on the market longer for that reason. A lot of buyers don't like to deal directly with the homeowner either in this market.

Whatever you price it at, you will probably have to come down in price when you get an offer. Buyers are controlling this market and they need to feel that they are getting a good deal by not paying full price no matter how low you price it at.
Web Reference: http://www.sumnerrealty.com
1 vote Thank Flag Link Wed Nov 28, 2007
Why so cheap? You can get a licensee who will stick it in the MLS for $500.00 and you do the work yourself. If price is the only factor, both home price and brokerage fee, don't cut yourself short!
But if you want the best price for your house, choose a negociator who not only can protect YOUR price but also the wage they bring home to their family. Because if the first thing they do is capituate on their brokerage fee, protecting YOUR money will not be paramount in their dealings with you.
1 vote Thank Flag Link Wed Nov 28, 2007
I have a listing that EVERYONE thought would sell really quick. It's priced below all the competition, has a water view and is close to the beach. It's been shown about 50 times. Not one offer. They're priced very low and don't want to come down anymore and will probably take it off the market. I've advertised it, had open houses, etc. It's the luck of the draw, Coconuts, if you were this seller would you consider reimbursing me for the money I've spent up to now?
1 vote Thank Flag Link Wed Nov 28, 2007
I'm sorry... I missed something...do Realtors get paid by the hour? It was my understanding that we get paid for our knowledge, representation, and results among so many other things. Do you really want us to start billing like attorneys? I can assure you that we would get the better end of the stick if we did.

With that being said, I admire the fact that you are only asking this question because you feel you are offering an agent a home that will sell and sell fast. There are no guarantees to what cheap means for buyers in this market. Please remember that you are paying for expert service and knowledge not for time. And please put your foot in the other shoe. How would you feel if you boss asked you to lower your paycheck because he thought he was giving you a task that would take less time, not less skill?

You should price your home to sell because you want it sold when so many other homes are not selling. If you want an agent to take a lower commission then how about pay them the commission upfront since you are basically stating that you know 100% your home will sell fast. Has that confidence level dropped? And if you home does not sell so fast at this "cheap" price because the buyers disagree... are you going to pay your agent for all the additional time, marketing, and advise it takes to get it sold?

Nothing is a slam dunk in this market!
1 vote Thank Flag Link Wed Nov 28, 2007
In a seller's market, I would say yes. In this market it is tough. I have priced my home 10% below my realtor's recommended price and I am offering an extra 1% commision. I am trying to attract the buyer brokers with the extra 1 %. I did the math, and I think full commision is the cheaper way to go in this market.
1 vote Thank Flag Link Wed Nov 28, 2007
Alot depends on where you are, how many solds there were recently, and so on. If the Realtor still has to market the property, advertise in mags and newspapers, etc, then there is not a reason to discount. If the broker is just going to input your house info in the MLS, and nothing else, then some brokers may give a discount.
Web Reference: http://www.iansellsnola.com
1 vote Thank Flag Link Wed Nov 28, 2007
Hmm... tough one. While it sounds like you are realistic and have enough equity to move your property fast, no one can predict what will happen once you put the house on the market. Generally sellers put a higher value on their home than what the market will bear so what you might think as a very low price may not be.

I see properties that are priced right, in good locations, almost brand new and still buyers are hesitant and that's the reality due to low consumer confidence, sometimes its very irrational. If you have a realtor that you have chosen, you might talk about this issue and maybe find a solution that you can both agree with. However, human nature is when you know you're going to get paid less on something, you tend also not to want to work it as much. If you list very low, then the commission will be low too and then you're asking for a discount on top of that. I don't know. If it requires virtually no marketing at all, maybe, but I highly doubt that in this market. Not trying to discourage you, everyone should look out for their best interest so I understand where you're coming from.

Good luck to you and hope you sell your house fast!
1 vote Thank Flag Link Wed Nov 28, 2007
Coconut: This is a loaded hypothetical: Let's say your house is worth $500000 and really is the Taj Mahal you represent it to be. You want how much discount? Let's work with a hypothetical 7% listing. I will offer 4% to a buyer agent. I have 3% left for my broker and my share. If you want me to come off 1%, that is a 33% pay cut for me (let's assume my broker permits that discount). You come off a third of your $ value, $150,000 and I'll do that deal all day, unless of course the competing listings in the area are priced lower, then I would expect you to be a third lower than your competition.
Web Reference: http://www.ERAHouston.com
0 votes Thank Flag Link Wed Nov 28, 2007
I have not had problems with sellers pricing too low. When my sellers price aggressively, we aggressively promote that and generate market interest. We have seen properties bid up, even in this market, as a result of the combination of marketing and attractive pricing.
0 votes Thank Flag Link Wed Nov 28, 2007
Deborah Madey, Real Estate Pro in Red Bank, NJ
MVP'08
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