If you’re thinking it’s a great time to take up real estate as a profession, think again. This is not an easy time to be new in this business. Whether I’m listing a home or helping someone to buy a home, today’s market is calling on all of my skills and expertise, and I’m glad not to be a newbie in this profession!
Let’s look at the listing side first. As I’ve written before, you can’t underprice a home now, but you can certainly overprice a home. When you underprice a home (however you and the seller choose to determine that) competitive offers will bring the price up and you may sell the home for more than if you priced it “right” and got maybe one offer — or no offer at all.
The trick is to determine what price is overpriced, and which price is just right to attract multiple offers. That’s where experience comes into play. I know that I wouldn’t have been as good at this business when I was starting out 11 years ago. Now that I’m a managing broker, I enjoy coaching my broker associates on how to find that “sweet spot” when it comes to pricing a home for sale.
Once you’ve priced the home right, you then need to evaluate competing offers and play them against each other to your client’s best advantage. It’s not just a matter of accepting the best price. It could involve convincing the strongest buyer to waive appraisal even if they are taking out a mortgage. You might be wondering, “How can you waive appraisal if the lender requires an appraisal?” Waiving appraisal does not mean your lender doesn’t order an appraisal, it just means you waive the right to terminate the contract if the home does not appraise. It commits you to bringing additional cash to the closing if that happens. And it’s quite common nowadays for homes to sell for more money than can be justified by an appraiser.
Now let’s look at the buyer’s side. If a buyer submits an over-full-price offer which waives appraisal, that goes a long way toward being the winning bidder.
But there are other areas that can be utilized by an experienced agent to win the day for their buyer in a competitive situation.
I’ve written before about Golden Real Estate’s moving truck as a tool to use in winning a bid, by offering the truck (and even free labor) to the seller, as an incentive to select our buyer over another buyer. In fact, in a recent closing, the seller told me that it was a deciding factor in choosing our buyer over another buyer.
Escalation clauses are always a good strategy in a competitive situation, but you need to know how to use them. Experience has taught me not to provide a maximum up to which the buyer will go. If the seller comes back with an amount that’s too high, the buyer doesn’t need to accept it.
Some buyers think that they can get a better deal or a better chance of being selected by not having an agent on their side, but that only means that the listing agent makes more money, not necessarily that the seller nets more money on the transaction. You’re much better off having an experienced negotiator on your side.
Also, only an agent has access to sold statistics on the MLS to help assess the value of the property you are bidding on. And your agent needs to be a member of the Realtor association — not all agents are — because only Realtors have access to the Realtor Property Resource or “RPR,” which has terrific tools for determining the value of any listing anywhere in the country.