. . .and What is the Purpose of Your Call?

August 25, 2006 |

Greg Swann from the Bloodhound blog said something that caught my attention in one of his recent posts.  Read the quote below:

The other week I had a warm call off of our web site from a potential seller. I took his information over the phone, then talked a little about objectives and time-frames. I told him we would get back to him later in the day. I comped the house and read the listings history, including a cancelled listing earlier this year. My gut feeling was that the seller was way over on price, especially for this market, but I hadn’t seen the home to know for sure (ahem).

I had to show, so Cathy did a drive-by on the home, and on the basis of that, she decided that we could not do the listing: Non-homogenous use of the land, over-improved and over-priced.

She called the seller to tell him we were taking a pass, and he was shocked. He didn’t quite come out and say so, but it was clear to Cathy that he had been under the impression that a Realtor would take just about any listing. In brutal language — that all Realtors are whores.

We are not. We turn down more listings than we take, and absolutely everything has to make sense before we will take a listing. We spend a lot of time and money to make our homes sell, and we lose a lot in reputation if they don’t. This is marketing, not peddling — and not pandering. (emphasis added)

The quote caught my attention not because of his choice of metaphor, although I find it accurate, but because it hits very close to home, and it is something that many Realtors are afraid to admit. 

When I first started my career in real estate, I assumed that it worked much like most other service/consltative industries, i.e.– when someone called you about selling a home, they wanted your advice and expertise in the matter, especially with regard to pricing, staging, marketing, etc.  I quickly discovered that this is not the case at all.  Many potential sellers aren’t calling you to ask for your expertise and advice in pricing or marketing, they are calling merely to reinforce their own opinion.  My standard comment on the matter is, "I don’t set the price of your home, the market does.  I am merely telling you what price this home will bear on the open market, not what the intrinsic "value" of the home is." 

For example, there are homes out there that people have lived in for decades, and are therefore very important to their owners.  These homes are filled with irreplaceable memories.  This makes them very valuable in the minds of their sellers.  Unfortunately, the free market is a cold thing.  The market doesn’t care what your memories are, it doesn’t care how much sweat, blood or tears you have invested in a property.  The owner may have his or her own opinion as to the value of a home, but the market is going to tell you the price.  Sometimes, those two things don’t match.  That is where the Realtor gets caught.

Sometimes, I have to stand in a person’s home and tell them that their home is worth X, when they expect the home to be worth Y.  Sometimes, X is quite lower than Y.  At this point, owners usually gets insulted and angry, sometimes even accusatory.  That’s okay, I understand where they are coming from.  But like I said, isn’t this why they called me?  The fact of the matter is, no, it isn’t.  The reason that they called is so that they could have someone else confirm their opinion, when this doesn’t happen, they get mad.  That’s fine by me.  They can try their opinion on the free market, that’s why it’s free.  The last thing I want to do, however, is take on a listing that I know is overpriced, only to have the owner come back later and get mad at me when the inevitable occurs, and the home languishes on the market.

Of course, there is the Realtor to consider in this whole affair.  As Greg points out, it costs money to market listings.  Neither broker nor agent can recoup any of those marketing costs until the home is actually sold.  Therefore, it is of no benefit to the broker, and certainly the Realtor, to take on a listing that has very little chance of selling.  Not only will it damage their respective reputations, but it will also hurt their bottom line.  This is precisely the reason why Realtors guard so closely the days on market of their listings.  They know that unsold lisitngs are a bad thing.  Of course, if a Realtor is willing to accept the risk of taking on a listing that he or she knows will be near impossible to sell, then that Realtor must also be prepared for the consequences.  The same thing is true of owners.  If they choos to ignore what the market is telling them, they must be willing to accept the consequences.

Before owners choose to sell their home, it is important that they remove all preconceived notions about their home’s price before picking up the phone, or at least before the Realtor is sitting in their living room.  They should also keep in mind that the Realtor is not obligated to take on their listing if they are going to be unreasonable as to the saleability of the home.  If they are either unable or unwilling to do this, then they should put down the receiver, and back away from the phone.  That way, no one has to get hurt.

Posted by Daniel | Filed Under Selling 

Comments

One Response to “. . .and What is the Purpose of Your Call?”

  1. Todd Tarson on August 26th, 2006 2:35 pm

    Look, the market has been soft for me as well as I’m sure in most other places than where I practice. However, early on I started to filter out potential listings. Currently I am only accepting listings from sellers who will give me a chance to provide them FACTS on the current market,first of all. Then only if they are motivated to sell the property and by sell I don’t mean by getting ‘their’ price. I mean by being willing to take what the market with accept.

    Now to some that sounds a touch harsh. But it’s the same job I had when the market was in overdrive and I provide the exact same service. While todays news might not be what the seller would want to hear, I can assure your readers that the buyers didn’t like the news during the hot market either.

    It still comes down to two parties saying yes. Where ‘yes’ is located is not entirely predictable.

    [Reply]

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