Most real estate markets in the US are buyerâ€™s market most of the time. By definition that means there are more homes for sale than buyers to buy them. The ownerâ€™s job is to find a way to expose the property to the maximum number of buyers and attract a buyer who is willing and able to close escrow.
The perception of the public is that a property is listed for sale, the Realtor puts it in the MLS, they have a few open houses, and someone buys it. If that was true, there would be fewer Realtors leaving the real estate business because anybody could do it.
The ownerâ€™s goal is to sell the property for the highest possible price and on their terms.
The buyerâ€™s goal is to buy the property at the lowest possible price and on their terms.
If there is more inventory than buyers, in whoâ€™s odds is the market going? The buyers. Most buyers will use a Realtor because the cost of the commission is borne by the seller, so from the buyerâ€™s perspective, the Realtor works for â€œfreeâ€.
Characteristics of a good Realtor representing a buyer:
1. Understands what the buyer wants and their priorities.
2. Knows the local market conditions.
3. Knows the existing inventory
4. Is able to sift through the inventory and show the buyer the homes that most closely match the buyerâ€™s needs, which are usually location, condition, and price.
5. Shows the buyer the prospective homes and points out the pros and cons, particularly the value so the buyer understands when he is looking at a â€œgood dealâ€
6. Negotiates effectively for the buyer, using the leverage of the market to get the best price and terms on the home the Buyer would like to buy.
7. Advises the buyer on the merits of offers, counter offers, etc.
8. Effectively guides the escrow process. Any Realtor with experience will tell you: Anyone can open escrowâ€¦itâ€™s closing escrow that counts, and THAT is where the Realtor earns their fee.
9. Coordinates the buyerâ€™s move, helping to avoid legal entanglements, complete inspections and duties in a timely manner, and negotiate repairs and transfer of possession effectively.
The Realtor who lists the home has a similar set of responsibilities, mirroring those of the Realtor representing the buyer. Fundamentally the listing agentâ€™s role is to expose the property to the market at large and negotiate effectively, preserving as much equity as possible and helping the owner understand the current market.
As the market changes, the listing agent helps the owner understand the market shifts so the ownerâ€™s home can be marked competitively and sell for the highest price possible.
In markets with significant inventory (more than six months of homes on the market), the market is rarely static. That means as different homes are sold, enter escrow, reduce price, increase offerings that buyerâ€™s want ( such as help with closing costs, assistance with financing, etc.), homes expire (and donâ€™t sell), the listing agents advises the owner on strategic actions that the owner can take to increase the perceived value of the property.
A MILS-only broker simply lists the property.
A limited service brokers will provide more assistance with marketing.
Full service is what it says: Complete service.
Let the numbers speak for themselves. Reviewing the statistics for my market area since January, 2007
Type Limited Full Service Variance Difference
Listings SOLD 1 932 .01% 931
List Price vs. Sale Price 96.1% 97.69% 1.65% 1.59
Expired 6 782 7% 776
Sold Vs. Expired Listings 17% 119% 600% 102
iTech MLS data is not guaranteed, is not verified, and is subject to change.
1. There were no MLS ONLY listings that either SOLD or EXPIRED.
2. There was ONE Limited Service listing that sold, 6 expired, so there was a one in seven chance of a Limited Service listing selling.
3. Compared to Full Service listings, your chances were five out of four of your listing selling, much better odds than 1 out of 7
4. The one Limited Service listing that sold did at 96.1% of the list price. The Full Service listings averaged 97.69% of List price, or about 1.65% higher.
So listings listed with a full service broker will sell for more, and the odds are that they will sell. Listings with a limited service broker will probably not sell at all, and if they do, at a lower price.
What do you think you should do?