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Top 10 Mistakes Sellers Make When Choosing a Realtor
by Crissie Cudd
Selling a home should be like any other business transaction, but all too often sellers make emotional or impulsive decisions that cost them money and time. Choosing the right Realtor to market a property and negotiate the sale is the most important step in the process.
“My friend (or family member) sells real estate.”
Friendship alone isn’t enough to establish a professional’s credentials. Use tough standards when selecting an agent, just as you would when hiring an attorney, a doctor, or an accountant to handle your taxes. A true friend will understand and appreciate that this is a business decision and will offer their credentials and expect to compete for the listing. Besides, if a problem or challenge develops while selling your home, do you want to risk damaging a friendship or family relationship?
“Your presentation sounds good. I’ll list right now”
Look at more than one presentation and consider the advantages and disadvantages of each. Making an impulsive decision when caught up “in the moment” could be difficult to correct later. Since you normally contract to list your house with the agent for a specific period of time, you may find yourself unable to “switch” to another if you find yourself unhappy with the service you receive.
“You’re the only agent who agrees with my selling price.”
Some agents tell you what you want to hear. In the real estate profession, this is known as “buying a listing” and is employed by shortsighted agents who are more interested in themselves than they are in you. However good it works as a short-term “sales tactic” in getting your listing, it is an extremely poor strategy in selling a home at the highest possible price.
You see, your house gets the most attention from other agents when it is a “new” listing. If priced properly, lots of agents will show it to their buyers. If you price it too high, no one will show the house and it will sit on the market for some time. When you finally drop your price to reflect its real value, your house is “old news” and buyers may think you are growing desperate. Therefore, the prices you are offered will come in lower and lower – and you may find yourself accepting a price that is below what you could have received had the house been priced properly to begin with.
Besides, pricing your home too high will only make similar houses for sale look that much better.
“I don’t need references. I’m a good judge of character.”
A snap judgement isn’t good enough. You also need to determine if the agent is competent and the best way to do that is to check up on references. Ask for references on recent sales — check up on references of recent customers. Find out how an agent’s customers feel about their selling experience.
Remember that how long an individual has been in real estate isn’t necessarily all you should look for. Experienced agents can grow jaded and not work as hard – newer agents sometimes make up with enthusiasm and effort what they lack in experience.
“I’m going to list with the agent who has the lowest commission.”
You get what you pay for. Paying a cut-rate commission will often get you a sign in the front yard and placement in the Multiple Listing Service, but little additional effort from your agent.
Realize that agents and real estate companies put up their own funds to market and advertise your home. Marketing and advertising costs money — the lower the commission, the less incentive for an agent to put up his or her own money to market your home.
Incentive plays a very important role in sales. A “full service” agent earning a full commission will often “drop everything” to handle any challenges that come along – an agent earning a small commission does not have that same incentive.
Incentive is also important to the buyer’s agent. Since there are almost always two agents involved in every sale, they split the commission according to the listing agent’s instructions. One agent is your listing agent. The other agent is the buyer’s agent. When your listing agent dropped his commission, did he also reduce the commission that will be paid to the buyers’ agent? If so, you won’t find as many agents willing to show your house – they’ll be showing houses that offer a customary commission to the buyer’s agent.
Finally, negotiating ability is an important skill in a listing agent. Are you willing to put your faith in an agent who can’t even negotiate his or her own commission?
“The agent is what counts – not the company.”
Agents who work for large well-established companies with lots of agents do have some advantages. Large companies generally have longer office hours, so someone is always available to answer an ad call on your home. Large offices often have larger budgets and can spend more on advertising. The ad space for your particular home might not be huge, but because the total ad is so large it gets lots more attention.
Large real estate companies often have lots of agents. This is important because when your house is newly on the market, the company may stage an “office preview” where every agent in the office comes through and tours your home. Every agent who views your home and is impressed is another agent on your sales team.
Additionally, larger companies are often better at offering ongoing education to their agents. As a result, your agent may be better qualified and prepared to offer a quality service. Although most states require real estate agents to enroll in “ongoing education” to keep pace with changes in the real estate market, many agents only take the “bare minimum” in ongoing education courses. Sometimes, large offices are better at convincing their agents to go beyond the minimum.
There are exceptions to every rule, of course. Some very effective agents go off on their own and open private offices or “boutique” agencies.
“All realtors passed the same test so they must know the same things.”
The real estate profession is constantly changing and, as mentioned above, the best real estate professionals stay abreast of those changes by continuing their education. Some go beyond the required minimum requirements. Many agents acquire “professional designations” that show they took additional specialized courses.
For information about professional designations, click here.
“This agent will hold an open house every week.”
Open houses can and do sell homes, but usually not your home. Only a small fraction of the homes held open are sold as a direct result of the open house. More often, “open houses” are a way that real estate agents “prospect” for potential clients. If they develop a rapport with those visitors to your open house, they can find out about their housing needs and sell them the home that most closely matches those needs. Meanwhile, the person who eventually buys your home may be visiting someone else’s open house.
Good agents know better than to pin all their selling efforts on an open house. They use their time in more effective marketing methods. The most effective marketing is not directly to the public, but to other agents. By getting other agents interested in your home, your listing agent multiplies your sales force beyond just one individual.
“I want an agent who lives in my neighborhood.”
Knowledge of the local market isn’t only acquired by living in the immediate neighborhood. Sure, your agent should have intimate knowledge of recent sales, models, schools, businesses, and so on, but that is easily achieved through extensive research. Convenience shouldn’t be the primary reason for choosing an agent.
“This agent sold more homes last year than anyone else.”
That should only be the beginning. What is more valuable — an agent who listed 32 homes and sold 25 – or an agent who listed twelve homes and sold all twelve? So you need to ask some questions. How many of their listings did not sell? How many were reduced over and over before they sold? How long were the houses on the market? How smoothly was the process handled? How accessible was the agent when there were questions or problems?
Quantity is important, but only if all of the quality questions have been answered satisfactorily.
The best agent is the one who will do the most effective job of marketing the property, negotiating the most favorable terms and conditions, and communicating with the seller to make the process as smooth as possible.
The U.S. economic recovery has been an uneven one. Overall, the recent numbers look great. The Bureau of Labor Statistics announced U.S. employers added 288,000 jobs in June. The unemployment rate fell to 6.1%, the lowest it has been since the financial crisis peaked in the fall of 2008. A total of 1.4 million jobs were added in the past six months, which marks the best showing since 2006. The stock market has continued its meteoric rise, with the Dow Jones topping 17,000 for the first time on the news.
But the news is not great everywhere. Unemployment remains stubbornly high in some areas, with a dozen metro areas still mired in double-digit unemployment — dozens more if you include the underemployed. Income growth has been almost nonexistent over the past five years, with more than half of the metropolitan areas in the U.S. showing negative real income growth.
Forbes crunched the numbers on every metro area to figure who has the best and worst business climates. The result is our 16th annual look at the Best Places for Business and Careers.
Raleigh, N.C., ranks first this year, moving up from third in 2013. The North Carolina capital previously ranked first in 2011 and had a three-year run in the top spot from 2007 to 2009. It is the only East Coast city that made the top 10.
Fueling Raleigh’s consistent results are business costs that are 18% below the national average, and an adult population where 42% have a college degree, the 12th best rate in the U.S. (30% is the national average). Raleigh is home to North Carolina State University and nearby schools include Duke University and the University of North Carolina at Chapel Hill. The area’s appeal has led to a strong inflow of new residents to the city, which boasts the sixth fastest net migration rate over the past five years.
Research Triangle Park continues to fuel significant development in the area. The park is located at the core of the Raleigh-Durham-Cary Combined Statistical Area, and it is the largest research park in the country. It features roughly 170 companies that employ 39,000 full-time, mostly high-tech workers. There have been 1,800 start-up companies created at RTP since 1970.
Networking giant Cisco Systems CSCO -4.00% announced plans last month to add 550 jobs in RTP by the end of 2017, in addition to the 4,600 already in the area. “By expanding our presence and hiring the best talent, we will continue developing technology solutions that will enable the Internet of Everything and fuel innovation here in RTP,” said Cisco President Gary Moore in a statement announcing the news. Other top employers in the park include IBM IBM -0.68%, GlaxoSmithKline , Fidelity Investments , Biogen Idec BIIB -1.00%, Credit Suisse and BASF .
Raleigh also prospers from small businesses facing low regulatory hurdles compared to other cities. Projected annual job growth for the Raleigh area is 3.7% through 2016, which ranks seventh best among the 200 biggest metro areas (see “Naples, Austin Head List Of Best Cities For Job Growth”).
Last year’s top-ranked city, Des Moines, drops back to second. The Iowa capital is a financial services hub with major employers including Marsh, Nationwide, Principal Financial and Wells Fargo WFC -1.89%. High tech firms have also been making their way to the heartland to take advantage of Iowa’s low energy costs. Microsoft MSFT +0.00% announced plans in April to invest $1.1 billion in a new data center, which brings the company’s total investment in West Des Moines to nearly $2 billion. Facebook has four data centers in the area.
Des Moines employers and employees can take advantage of business costs 17% below the U.S. average and living costs that are 6% lower than the national average. The city’s $38 billion economy is projected to grow at a robust 4% annual rate over the next three years, according to Moody’s Analytics.
Provo, Utah, ranks third overall this year and leads a trio of Utah places near the top with Salt Lake City at No. 8 and Ogden ranked No. 11. Brigham Young University brings a stabilizing presence to the $19 billion Provo economy. Job growth for Provo was tops in the country last year, and it ranks seventh best over the past five years. Global multilevel marketing firm Nu Skin Enterprises, which is based in Provo, opened a new $100 million headquarters in the city in October.
Rounding out the top five are a pair of Colorado metro areas: Denver and Fort Collins. Both feature highly educated workforces and strong net migration patterns. Denver’s business and living costs are higher than any other city in the top five, but its diverse economy and significant outdoor recreational options continue to attract educated, young professionals. Many high-tech companies including Hewlett-Packard HPQ +3.57%, Intel INTC +3.57% and AMD have relocated operations to Fort Collins in part to take advantage of the resources of Colorado State University and its research facilities. Fort Collins has the highest level of high school attainment (95% of the adult population) and ranks ninth best for college attainment at 45%.
To gauge the best places for business in the U.S., we rate the 200 largest metro areas on a dozen factors related to jobs, costs (business and living), income growth, quality of life and education of the labor force. Forbes uses data from economic research firm Moody’s Analytics, the U.S. Census and demographer Bert Sperling, who runs Sperling’s BestPlaces (click here for a more detailed methodology).
Atlantic City brings up the rear for the second straight year, ranking No. 200 (see “Atlantic City Heads Worst Cities For Business And Careers”). The New Jersey gambling and convention destination was hammered by the economic downturn and increasing gambling options in surrounding states. AC gaming revenues are down 45% since their 2006 peak. Potentially four of the city’s 12 casinos will close in 2014. There has been a steady net migration out of the area since 2007 and it is expected to continue through at least 2016.
At a Glance
- Metro Population: 1,245,800
- Major Industries: Technology, Health care, Education
- Gross Metro Product: $64.3 B
- Median Household Income: $62,404
- Median Home Price: $200,700
- Unemployment: 4.2%
- Job Growth (2014): 3.6%
- Cost of Living: 1.6% above nat’l avg
- College Attainment: 43.7%
- Net Migration (2014): 4,170
Be wary of these pitfalls if you want to get the most money out of your home sale.
After years of bad housing news, most of America’s markets have begun to turn around. With the trifecta of increasing prices, historically low interest rates for buyers, and the approaching summer sale season, selling sounds pretty good right now.
But before you list, it pays to do your homework upfront. We’ve put together 10 of the most common seller mistakes to help you save thousands — even tens of thousands — of dollars.
1. Selling your home on your own
Trying to sell your home by yourself is sheer madness. You need the expertise of a professional. And the numbers don’t lie: homes without representation remain on the market longer and end up selling at a lower price than those with a pro at the helm.
2. Mispricing your home
Overpricing or underpricing is a huge and costly error. It’s critical to understand your market: become familiar with comps currently for sale (and those that have recently sold) to understand exactly what price tag your home needs.
3. Neglecting necessary repairs
You will lose money if you don’t remedy repairs before you list your house. It’s less costly to fix things ahead of time, rather than have buyers see all of your home’s faults at the open house. If you don’t, you’re almost guaranteed that prospective buyers will offer less or ask for a credit back for the work that needs to be done before the deal closes.
4. Refusing to tidy up before listing
Clutter eats equity and kills deals. Create a sense of spaciousness by decluttering. From the kitchen countertops to the overstuffed closets to the trophy-lined shelves in the den, it’ll cost nothing to get rid of all that stuff. But it will reap big rewards when it’s time to sell.
5. Listing a vacant house
Viewing an empty house makes buyers feel the same way: empty. Most real estate pros are firm believers that a home should be dressed or “staged.” Don’t worry, you won’t need to go out and buy new furniture and accessories. Chances are, you already have plenty to choose from.
If your furniture is being used in your new house house or is taking a cross-country trek, it might be worth making the small (but mighty) investment in a local staging company.
6. Letting your ego get in the way
Many sellers take negotiating personally and lose out on creating a win-win deal (if not the entire deal). Remember, this is a business transaction — perhaps the biggest one of your life. Take your ego out of the equation and put your head back into it.
7. Failing to complete a full set of disclosures
Too many sellers lose big bucks because they were afraid to disclose their home’s imperfections. Be upfront and forthcoming about all of your home’s issues. It will save you money and time, especially if the buyers end up uncovering problems themselves — because they will.
8. Mistiming the sale
Even a sale that misses its schedule by one day can cost you tens of thousands in extra taxes. Don’t be left a day late and many dollars short. Talk to your accountant well in advance to determine if any long-term capital gains tax breaks apply, and time the sale accordingly.
9. Overlooking extra expenses at closing
Home sellers throw thousands away by not requesting and confirming a list of fees and expenses prior to closing. Review the estimated closing cost statements with your real estate agent well before it’s time to hand over the keys. Don’t expect any discounts and credits on closing day if you overlook this step.
10. Using lousy photos
This is a pet peeve. Too many for-sale homes feature amateur iPhone photos in their listings. More than 90% of all buyers start their home search online, so you’d better make sure you and your agent nail your home’s close-up! You won’t ever get a second chance to make the perfect first impression.