Nothing from Nothing Leaves Nothing
“And that ain’t nothing, believe you me” is a refrain of a popular song from my youth. Who knew they were talking about
real estate commissions? In today’s tight market it behooves you to start with the end in mind. Literally. It would seem obvious that
licensees would always do that since they’re self-employed, paid only via commissions. Unfortunately, keen observation signals that far too often REALTORS® focus on the accumulation of listings without focusing on the realistic possibility of a completed closing. They bought into the myth that whoever has the most listings is the winner of the trophy and therefore is most productive.
Something is Wrong With This Picture . . .
Can you imagine an agent who regularly carries an inventory of 25+ listings (average price $125,000) but is seriously struggling. Obviously, the agent has no problem convincing folks he can sell their home. The problem lies in failing at some other very basic issues which are likely to prevent someone from converting a listing into a “closed” transaction. Let’s consider the most likely culprits.
Silly Details
This will surely not be stepping on your toes to mention “silly” reasons why a listing is unlikely to result in a sale.
- The owner filed bankruptcy, two weeks ago
- The spouse never signed the listing contract
- The lender will be “short” and no one mentioned it
- The house is already scheduled for a sheriff’s sale
- The paperwork for a deed-in-lieu was mailed the day you had your listing appointment
- The “summons” was received two (2) days before they called you
Shame on YOU
In today’s market it is not intrusive to conduct a thorough analysis of the reasons why a potential seller chooses to sell at this junction—that just reflects market savvy. Further, it is a disservice to the potential client and to your agency/yourself to list property without addressing the most common reasons why real estate becomes “unavailable” for the completion of the transaction in today’s market. What a shame to have unearthed the proverbial needle in a haystack (a qualified, ready and able buyer) only to discover you don’t have anything to sell. If you are lucky—really lucky—this qualified buyer will be too busy to sue your client for “failure to perform,” with yours truly as a co-conspirator.
Price ‘em RIGHT…from the beginning
The operative word is RIGHT. The correct view is from a buyer’s prospective. Must I tell you I mean for today’s market, not the market THAT WAS—which is no more. If you’re not able to convince a potential seller of the appropriate listing price based on your
BPO/
CMA and supporting documents, are you a good enough salesperson to convince someone to buy it at the inflated price you listed it for? Think about it.
Is the owner committed?
I’m sorry, I didn’t mean “should the owner be committed” or perhaps, “the owner plans to get committed.” I mean, IS THE OWNER, TODAY committed to selling their home? Well, how can you tell? That’s easy. An owner who is committed to selling has some basic awareness of the market and will be receptive to your education/documentation of current value. They will already be working on getting their home ready for showings and quite willing to set a definite date when those preparations will be complete. A committed seller is not “testing the water.” They have concrete plans for moving. In other words, they’re an active participant in their real estate process, not your reluctant sidekick.
Ready for the debut?
Not you, the house. Too often, in their anxiety to seal the deal and tally another listing, agents list homes which are not only not ready for
showings (clutter, minor cosmetic issues which need to be addressed, lack of curb appeal, etc) but whose owner has demonstrated a lack of commitment to making them ready. It’s such a simple practice to ask “How long will it take to get your home ready for showings?” (Notice, I did not say for listing). Then clearly say, “Call me when it is ready for showings. We can then do the paperwork needed for the
listing agreement and I will take photos for marketing.” There, wasn’t that simple? Don’t list a home you are ashamed to have viewed. Day One. Dot. Period.
The Four Rules for Listing
The “rules” I encourage you to implement assume your relationship with your client is strong enough to have resolved any issues related to:
- a. Appropriate market-based pricing
- b. Acceptable condition
- c. Provisions for showings
- d. Possible impact of “undisclosed pertinent information"
- e. Any “other” current realities
Rule #2—List at no more than 3-5% above the current market (short sale is an exception to this rule)
Rule #3—List only when the home is “camera ready”
Rule #4—List only AFTER the seller has demonstrated they are committed to selling
Closing = Commission Paid
Now for the first and most important rule. The FIRST rule for listing should be: Don’t list anything you don’t REALISTICALLY believe you can close. It was a good rule to live by when I started my real estate career in the early 90’s. This was not a company rule, but my personal standard in order to become a successful REALTOR®. My logic was that if I closed everything I listed, then folks would believe that I was a good REALTOR®. Such a novel idea. But it worked. My fall-thru rate with buyers was less than 5%, almost always because of inspections issues. My expired listings—less than 1%. Time on market—well below the average for the market then. I appreciate that times have changed. Nonetheless, it was an excellent idea then. I encourage you to consider adopting it as your personal mandate today. You’ll accept fewer listings, but if you close 90-95% of what you list, will you be better off in 2009 than you were in 2008? You do the assessment. It’s a business decision. Marketing listings which are not likely to sell is costly.
6% of Nothing is Nothing
One of the prime reasons I teach and write is because I recognized that the strategies which are being used by many agents are counterproductive and therefore, very frustrating. Handling foreclosed properties for Fannie Mae, after some well-meaning agent had tried to sell them—the traditional way—predictably resulting in foreclosure—I decided to teach agents how to better understand the
lender/
insurer’s position, and how to successfully structure a short sale. It works, IF YOU WORK IT.
Getting to the closing table is the ultimate goal for all real estate professionals. Strategies for posturing yourself, from the inception of the transaction, with the goal of getting to the closing is the cornerstone of the foreclosure related classes taught by HOM. The (FIS) certification is wholly focused on GETTING TO THE CLOSING TABLE.
Want to learn more?
Web: www.HomeOwnershipMatters.com.
Blog: http://www.HomeOnwershipMatters.blogspot.com/
Mildred Wilkins
President of Home Ownership Matters
Author of “Your Real Estate Advisor”
available at: www.DovePublishingHouse.com
Toll-free 1 (866) 507-5105
Copyright © 2008, Home Ownership Matters, LLC. All Rights Reserved.
(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have! We appreciate all comments and feedback, so please don't be shy.)
Posts
