Posted on: Saturday, August 20th, 2011
By Jason Forrest
I read a conversation among realtors on Active Rain who are a bit confused about their job description–they believe their job is to show and tell and that they should show customers home after home until the client finds something they can live with. Once they do, the answer to any concern is to then to lobby for lowering the price until the customer is willing to accept. I could not disagree more.
A realtor with this approach is FAR from earning their 1-3% keep and really makes him/herself unnecessary. Sellers may as well use a for sale by owner (FSBY) approach and buyers may as well contract on the home with the lowest cost per square foot.
If you’re representing the seller (either the builder or homeowner), your job is to find a way to sell the home at the price the homeowner wants to sell it. The whole point of your contract (and your fee!) is for you to sell the value of the home, not to spend your time convincing the homeowner that they need to lower the price.
Let’s say you get a $3,000 commission. If you spend time trying to convince the homeowner/builder that they should lower their price by $5,000 so that they can have the lowest price per square foot for what they’re giving, the total cost to the builder/homeowner is 3K to you (in commission) and 5K to the buyer (in lower price). So you just cost the builder/homeowner $8,000 out of their pockets. And for what?
They might just say, “If we’re 5K overpriced, we’ll lower it 5K and get you out of the picture. That’ll save us 3k and we can put $1,000 of that towards a for sale by owner marketing kit.” So, y taking yourself out of the deal, you save the homeowner/homebuilder 2K. Be careful what you ask for.
Now I understand that realtors and builders can be confused about the value of their homes, but this is a conversation that needs to happen before you sign the agreement. Don’t sign and then come back with your comps a month later saying it’s overpriced. Let the seller know what they’re getting into up front. And once you agree to market and sell a property, sell it at that. Don’t come back later and change the rules.
Earn your commission. Show and sell.