Agent A or Agent B: Who Should List My House?

If you could be a fly on the wall, listening to a coffee break group of Realtors, you might often hear "war stories" of how they lost a chance to list a property because another agent promised to sell the owner's home for more money than any other agent did. It's referred to as "buying a listing" in the trade.

There is a basic fallacy involved in such a situation: no agent can "make" the buying public pay more for a property than any other agent. The real estate market does not place price stickers on the side of a house or condo building, expecting the consumer to pay the marked price. Just the opposite is true: the CONSUMERS will determine the selling price of a property.

When an owner decides to sell his/her home, it is common for that owner to meet with one, two, even three agents to determine which of them is best prepared to list and sell the property.

For the owner to decide which agent to hire, based on the anticipated selling price that each agent might promise to deliver, is faulty logic. Why? Again - the CONSUMER will determine the value of the property, and therefore its selling price. But far too often a seller chooses Agent A over Agent B, because Agent A states "I can sell your house for $500,000!" Agent B, however, states "Your home WILL sell for $470,000." So the owner thinks "Hmmmm, this seems to be obvious; I should hire Agent A because I will gain that extra $30,000 by doing so."

This is how that listing typically plays out; owner hires Agent A, and lists the house for $500,000, perhaps even $510,000. The first week on the market, agents come to the brokers open house to view it, and report back to their buyer clients "This house is overpriced. We'll wait for the price to be reduced." The first public open house attracts some curiosity seekers, but does not generate an offer because the price is too high for the property's true value. One week passes, then two, then three, and the private showings have dried up. Agent A says to the owner, "We should consider a price reduction! Nothing is happening!" The owners says "Gee, ok, but not a big reduction, because we expect to sell it for the $500,000 you promised us." So the price goes down by $8,000. Another week, or 2, or 3 go by. Repeat. And so on. A highly qualified buyer who loved the property made a reasonable offer, and was rejected by the seller. The buyer found something else to buy the next day, and closed on it in 3 weeks.

Eventually the price is reduced to $469,000, and finally an offer is made on the property. It sells, finally, for $459,000 after six months on the market. The owner in the meantime has been paying the property taxes, utilities, insurance, mortgage, fixed the hole in the roof, the leaking water pipe in the front yard ($4,000 repair bill), and so on.

When the selling price is recorded in the multiple listing service, the agent who did not get the listing looks at the $459,000 number and can only sigh.

TWITTER in Chicagoland

Astounding what I saw online today in the Sun-Times; of all the cities in the world, Chicago has the third highest number of people using Twitter.com to communicate online. Only London and Los Angeles have more users than Chicago does. Go, Chicago! Even techy Seattle did not beat us.

My tweet-feed is automatically loaded onto my blogs, so follow along if you like. (Geez, I have to remember to keep it interesting, don't I?)

Home Values Just Keep Getting Better!

Shopping for a new home anytime soon? Aren't you the smart one! The prices keep falling in these parts. I noticed today that a nice condo in Evanston that was selling due to a corporate relocation has yet again dropped in asking price. It started on the market in August 2008, at $205,000. Today it is going for $166,000, nearly a 20% reduction. Similar units in that building (on Central Street in Northwest Evanston) were selling in the $220,000's back in 2006.

Values are very good for buyers right now. The key to buying well is to buy "smart." First things first - talk to a lender to find out exactly where you stand on getting a mortgage if you need one. Yes, there is mortgage money to be loaned, IF you are qualified. Condo loans have become more difficult of late, with most lenders requiring at least 10-20% downpayment from the buyers. Smaller downpayments are available if the building you are fancying is FHA approved; those loans require only 3 1/2% down. And today my in-house mortgage expert sent out a message that my company's mortgage division can now offer 95% financing through a special program on conventional loans.

The second step in buying "smart" is to find and work with an experienced agent who can guide you through the process of home buying, whether it is a condo, a co-op, or a single family house. The expert agent will be able to research pricing history for you, the background of the specific property you fancy (is the seller in pre-foreclosure, for example), any local issues that impact your decision, local grapevine chatter amongst the Realtors in the area that can shed light on your decision making, and more. So how do you find that good agent? Recommendations are King! Don't just react to fancy ads and boasts of the volume of listing any agent has sold in the past. What kind of service does the agent provide? There's the criterion you need to choose a Realtor!

And finally, look to your agent for guidance in selecting a terrific real estate attorney, home inspector, and other local service providers to make the final days of your transaction and moving experience a good one. Homebuying is typically stressful; that's a given. But with the right help, it can also be productive and exciting.

The Death of Newspaper House Ads? You Betcha!

("Let's see, how many of these house ads match our price range, and bathroom requirements, and are in our kid's school district, have lots of inside pictures of the house, and can be ready without a magnifying glass?") ANSWER: NONE

A common point of discussion at my office sales meetings over the past couple years is the usefulness of local newspaper ads for our property listings and open house announcements.

The debate is this: some agents feel that the local newspaper ads are absolutely necessary to maintain a presence in the local real estate market and the consumers' minds. The managing broker (our boss) and the real estate company (Baird & Warner) are making decisions that are shifting our advertising resources AWAY from print newspapers and INTO the internet.

The reality is indisputable; most buyers start their home search on the internet. Most buyers have already done much research into a home search ONLINE before they set foot in an open house, let alone contact a real estate agent. And the demise of the traditional newspaper is either on the horizon for some papers, or already here for others. And for those that are still functioning, their size and volume of advertising is dramatically down. Our local weekly paper, published by the Pioneer Press, has shrunk to a mere shadow of its former self. Indeed, the Pioneer Press organization has recently SHUT DOWN several of its northwestern community editions! The Chicago Tribune, the historic daily paper, is also unrecognizable to me any more. The world has shifted to online news and advertising. Period.

So, why is this important in the grand scheme of things? Because most sellers of homes still want to see their property in a print ad in a newspaper; they think it makes a difference in finding a buyer. The print ads are very costly, and in fact provide very little results to the seller or his listing agent/broker. Put that same property into the MLS with a full service brokerage, and that property will find its way into dozens of websites that are searched daily by home seekers. If that home seeker sees an online ad for a home that provides the listing agent's contact information, the home seller has just had the best possible exposure - an interested buyer speaking directly with the listing agent.

It's time to let go of the notion that newspaper ads sell homes and tape-playing Walkman's are the best way to take your favorite music with you.