OK that was nasty. Sorry, I just couldn't resist the wordplay.
Zoocasa just announced a rebate program for people who get an agent via their service. Herewith my take on the deal, given the currently available information.
Sorry for the lack of graphics ... I wanted to get this one out quickly.
My usual plea: yes, I'm an agent and occasionally a bit of a cynic; but I try to be objective and open-minded and I try to keep up with changes that have, do, or will influence our industry.
This Zoocasa deal strikes me as less than ready for prime time. These guys, in my opinion, actually have a bit of a track record for getting ahead of themselves. When they first started up, we actually signed on. The deal was that we would get exclusive advertising space when you searched a certain geographic area. Their job was to get all or most brokers to sign on to share their listings so that Zoocasa would become the go-to site for listing searches, with all kinds of extra features. Didn't really happen.
So now they are becoming a licensed brokerage so they can possibly get at more of the listings. That may work. If all brokers and reps agree to share all their listings with this type of data scraper. There is a trend this way, but it's not there yet.
And finally, the new exciting rebate program which promises, among other things, 15% rebate on your commission fees and a slate of "hand-picked" top tier agents that you can screen for local expertise language and more.
Oy.
Hand-picked. I'm not sure how these initial bodies were selected, but I'll bet the farm that once this thing is fully launched, the first and primary criteria will be the agent's willingness to pay the Zoocasa fees for being listed in their roster. The stated standards around experience, feedback, performance, etc will quickly default to something like "I don't see anything really awful here". Prove me wrong, Zoocasa, but as an experienced rep I have seen many many organizations whose business is "providing leads".
One news article suggested they were starting with 200 agents with more to come. I don't doubt there are more to come, but the site currently lists about 40 agents in total.
Their system for helping you choose screens for geography, language and type of home. Other than a few new-construction specialists and maybe a few downtown condo specialists the "type" screen is meaningless.
Other sites, such as royallepage.ca will allow you to sort and screen agents on these and more criteria.
I tried entering a few streets in the Beach in Toronto (just east of downtown). Of the 7 recommended agents that popped up for my Beach street, 3 didn't appear to be based even in the actual City of Toronto (2 were in Brampton!), one included the Beach in her areas of expertise -- along with Aurora and Newmarket, and only one of these top-tier agents had I actually heard of.
Personally, I think you would be way better off getting a few names from trusted local sources and interviewing for the agent that will work best with and for you.
Now, about the rebate. Again personally, I think you should select the right agent and pay them market value to do a great job for you. But if you want to negotiate a 7.5% discount, have at it. Honestly, your odds are pretty good that you can get at least your second choice for that.
I know, the articles and Zoocasa say 15%. But that is 15% of the listing broker's end, which is typically only half of the total commission. (The other half goes to the Broker who brings in the offer and represents the buyer). Even the 7.5% is a little exaggerated since it isn't all cash. A chunk is coupons/giftcard things.
So on a $575,000 listing, if you go through Zoocasa's limited set of agent's you can reduce a typical commission from $28,750 (yes, I know it's a lot of money, but that's a story for another day), to $26,594 in cash and giftcards. I know that's real money, but it doesn't seem like that huge a saving unless you can be sure it is also getting you the best advice, service, marketing, negotiation, follow-up, etc.
Since these agents don't work for Zoocasa (they are agents for the Brokers you've actually heard of), you might wisely wonder how they come up with the money to give back to you. According to one article, they take it out of the 1/3 of the listing commission that they charge the agent for handing over your name! That is presumably in addition to fees for signing on to the service.
Yup. We start with a normal 5% listing agreement wherein you pay the Broker $14,375 for his efforts (remember, the other half goes to the buyer's brokerage), that agent forks over nearly $5,000 of that to Zoocasa, who then give you about $1876 and some cards.
My questions: Why did you need Zoocasa to find an agent, and why did the agent need to give away a third of their commission to find you?
There is nothing evil here, just another company trying a variation on the business model of getting paid for referrals. But like almost anything of this nature, there are questions, issues, tradeoffs, and more. Read past the "rebate" headline and make sure you go the route that will get you the best person, service and price.
Showing posts with label agents. Show all posts
Showing posts with label agents. Show all posts
Wednesday, May 22, 2013
Sunday, May 19, 2013
Assignment: Rent vs Buy? Agree AND Disagree
I may have to go back to school. I would love to take on Frank Tristiani's student assignment.
Rob Carrick, the Globe and Mail's personal finance columnist, has been on a bit of a run these days with several columns trying to get people to think more favourably about renting vs. buying. His latest article (read it here) discusses a McMaster prof who runs his students through a comparison assignment every year. Frank Tristiani, the prof, says "Over six years, no one has been able to substantiate buying as creating more wealth over the long term”.
His sample analysis involves buying vs. renting in Hamilton and leads to a renter being a half million bucks better off in 25 years.
That is a challenge. First of all, some disclosure. If you are reading this, you know I'm an agent. So you are probably expecting some half-baked biased rant about buying always being better, especially right now ... call me and I'll help. On the other hand, if you've read a couple of these, you know that isn't how we work. More significantly, we rent! Wait. A Realtor who rents. According to a couple of our competing agents when we made this move -- we must be retiring, in financial trouble, and/or have lost confidence in the market. None of those are true. The truth is the subject of a whole other discussion about life planning, some of which is covered elsewhere in this blog (starts right about here)
Back to the column. Rob's article and Tristiani's assignment are great. Tristiani is a finance guy who wants his students to apply some finance logic to what is a major financial decision. Good idea. And Rob himself points out a few of the arguable assumptions in the analysis -- like long term mortgage rates and investment returns.
But ...
I think there are a few huge "arguable assumptions" in Trisiani's sample analysis that Carrick did not mention or didn't give enough space. If you are using the above link to read the article, be sure to click on the "infographic" mentioned on the left side. This table was in the original article and you probably need it to follow along. I've also included it at the bottom of this post.
- Carrick notes that the analysis applies to "renters with steely savings discipline". I'll say. A bunch of the gain requires the renter to assiduously invest the difference in costs each month. I'd probably bet you the present value of that half million that you couldn't find me 3 people in Hamilton who could, would or have done that. Tristiani notes that owners aren't good savers either -- OK, so's your mother, but it doesn't really answer the issue. The way I read it, this alone would account for all or most of the wealth difference over 25 years.
- Here's a little one. I have no idea what research went into coming up with $1500/month (apparently with all utilities included) as the comparable to a $400,000 house. Based on my Toronto experience, it seems low.
- A much bigger sleeper assumption on the rent is that rent will only go up at 1.5% per year over 25 years, despite the other assumption that inflation is 3% per year. Since he also assumes that you make zero real capital gain on owning (house prices are also assumed to only rise with inflation) ... Never mind the rent vs. buy debate, whatever you do if you believe this: Don't buy an investment property.
I'm not convinced that landlords are going to eat half of their inflationary costs over 25 years just because they are nice people.
- Here's another huge one. A quiet little assumption in there is that maintenance on a home comes to 4% of the value of the home per year. Holy crap.
Either you bought a falling-down dump or you just like to tear your house apart and rebuild it every year or two. He does include utilities and taxes in "maintenance", but I ran the numbers for our old house for the last 8 years and couldn't get it to 2%. A quick google surf came up with estimates of 1% (before the utilities). The Feds have a worksheet for you to do your own calculation (you can play with it here) . This alone also would account for the wealth difference after 25 years
Both Carrick and Tristiani note that there are lifestyle and personal preference/value issues that are not covered by the analysis. And I absolutely agree that you should do the numbers before you make the decision.
So don't just read the headline, skim the article and glance at the table. FIGURE IT OUT. Then decide, with the financial analysis as one of several major variables.
A final example, more an analogy, from my everyday job. Imagine yourself looking at two good houses. One is going to be a maintenance headache, at least for a while, but it has an absolutely gorgeous [fill in your blank]. We don't encourage people to buy the low-maintenance option and we certainly don't promote the one with the gorgeous whatchamacallit. We do try to help you figure out how much you are paying for pretty or cool or functional or whatever-it-is. Then decide.
[And finally... One reason that I keep falling off the wagon (the wagon which is this blog) is that I'm pretty sure the number of people who read it rounds to nada. At least the ones who say so, or follow, or "like". When I force friends and family to read them, they usually say nice things. I think they migh not be lying, since there usually follows a decent and related discussion. So, if this was even vaguely worthwhile, say so, tell someone, share, like, follow, something. Thanks]
And really finally, as promised, here is the sample analysis that I just kind of dissed:
So don't just read the headline, skim the article and glance at the table. FIGURE IT OUT. Then decide, with the financial analysis as one of several major variables.
A final example, more an analogy, from my everyday job. Imagine yourself looking at two good houses. One is going to be a maintenance headache, at least for a while, but it has an absolutely gorgeous [fill in your blank]. We don't encourage people to buy the low-maintenance option and we certainly don't promote the one with the gorgeous whatchamacallit. We do try to help you figure out how much you are paying for pretty or cool or functional or whatever-it-is. Then decide.
[And finally... One reason that I keep falling off the wagon (the wagon which is this blog) is that I'm pretty sure the number of people who read it rounds to nada. At least the ones who say so, or follow, or "like". When I force friends and family to read them, they usually say nice things. I think they migh not be lying, since there usually follows a decent and related discussion. So, if this was even vaguely worthwhile, say so, tell someone, share, like, follow, something. Thanks]
And really finally, as promised, here is the sample analysis that I just kind of dissed:
Saturday, May 7, 2011
How Many Houses Do You Sell in a Year?
[Part of a series on how NOT to select a rep.]
When we are being interviewed by a potential client and this question is asked, our first response is "none". That is because we don't "sell" houses. Our clients sell/buy. We help.
But the question is often asked on the premise that the more you sell, the better you are and the more you can do. Sales are results, so more sales equals better results, right?
We think not. Certainly, an agent must have a number of successful transactions per year to be considered "successful" ... and to pay bills and eat. But beyond some point, more sales may mean poorer, or at least different, performance and service levels.
There are only so many days in a year and hours in a day. We limit the number of active clients we will take on at any one time (to 10, though a constant 10 would have us lowering the number in a hurry!). If we assist in the sale of a home a week during the high seasons, we are happy and not really looking for any more business (maybe less).
Why? Because we want to have a life while providing top service. And because we decided we want to be fully involved throughout the process with our clients.
That is not saying we are the best (that's a story for a different place and time). It's just our opinion that a number higher than that requires either reduced service or a different business model.
The reduced service is pretty obvious and unpleasant. The point to be emphasized again: More is not continuously better.
The different service model can work well, but you need to understand what it means. Typically it means a small -- or not so small -- "firm" of professionals and service staff who, to a greater or lesser extent, specialize. The "names" of the firm typically do the signing up -- listings or buyers. For a listing, much day to day contact will be with a staff person. If it's a buyer, or a seller who is also buying, a "buyer agent" may be assigned to that effort.
It's fundamentally the same model as a consulting, accounting, or advertising firm. In those businesses, you only see the senior partners between signing and cheque-collecting when there is a big, BIG problem! It works great with a well-managed firm with good training and a steady supply of young keen fresh meat!
I'm rambling. The point is that that is how an agent "sells" 200 houses a year. They don't. [First, to be repetitive, an agent doesn't sell anything ... except maybe themselves]. A mini-brokerage, firm, team, whatever manages the sale of those homes.
To choose between someone involved in 20 sales or 200 or 300 sales, you need to decide on what kind of model you want and who you want to be working with. The specific number of sales itself is not relevant.
Previously in this series of posts:
When we are being interviewed by a potential client and this question is asked, our first response is "none". That is because we don't "sell" houses. Our clients sell/buy. We help.
But the question is often asked on the premise that the more you sell, the better you are and the more you can do. Sales are results, so more sales equals better results, right?
We think not. Certainly, an agent must have a number of successful transactions per year to be considered "successful" ... and to pay bills and eat. But beyond some point, more sales may mean poorer, or at least different, performance and service levels.
There are only so many days in a year and hours in a day. We limit the number of active clients we will take on at any one time (to 10, though a constant 10 would have us lowering the number in a hurry!). If we assist in the sale of a home a week during the high seasons, we are happy and not really looking for any more business (maybe less).
That is not saying we are the best (that's a story for a different place and time). It's just our opinion that a number higher than that requires either reduced service or a different business model.
The different service model can work well, but you need to understand what it means. Typically it means a small -- or not so small -- "firm" of professionals and service staff who, to a greater or lesser extent, specialize. The "names" of the firm typically do the signing up -- listings or buyers. For a listing, much day to day contact will be with a staff person. If it's a buyer, or a seller who is also buying, a "buyer agent" may be assigned to that effort.
It's fundamentally the same model as a consulting, accounting, or advertising firm. In those businesses, you only see the senior partners between signing and cheque-collecting when there is a big, BIG problem! It works great with a well-managed firm with good training and a steady supply of young keen fresh meat!
I'm rambling. The point is that that is how an agent "sells" 200 houses a year. They don't. [First, to be repetitive, an agent doesn't sell anything ... except maybe themselves]. A mini-brokerage, firm, team, whatever manages the sale of those homes.
To choose between someone involved in 20 sales or 200 or 300 sales, you need to decide on what kind of model you want and who you want to be working with. The specific number of sales itself is not relevant.
Previously in this series of posts:
Sunday, April 17, 2011
Days NOT on Market
I'm reviving a series on how NOT to select a rep. The intro was posted previously. You can find it here. There was also a chat about the not-validity of evaluating an agent by the ratio of sale price to listing price (You know the drill: "SOLD OVER ASKING!!") ... That piece is here.
Another common suggested criteria is "Average days-on-market". A low number is deemed an indicator that the agent prices and markets well, allowing properties to sell high and quickly.
We agree that a properly priced home will generally attract the right buyers and receive the best offers. And, as a result, it will typically mean a prompt sale. But list price is ultimately the seller's decision and there can be reasons to "test" higher prices. We can (and will) decline the listing if we have major problems with the plan, but sometimes the logic is there.
For example, a common reason for "testing" a higher-than-likely price is an estate sale. An executor may feel pressure to demonstrate to the heirs that every attempt was made to attract the highest price.
All that said, the ultimate "days-on-market" stat is often deceptively low for much the same basic reason that sale:listing price ratios are meaningless.
Another common suggested criteria is "Average days-on-market". A low number is deemed an indicator that the agent prices and markets well, allowing properties to sell high and quickly.
We agree that a properly priced home will generally attract the right buyers and receive the best offers. And, as a result, it will typically mean a prompt sale. But list price is ultimately the seller's decision and there can be reasons to "test" higher prices. We can (and will) decline the listing if we have major problems with the plan, but sometimes the logic is there.
For example, a common reason for "testing" a higher-than-likely price is an estate sale. An executor may feel pressure to demonstrate to the heirs that every attempt was made to attract the highest price.
All that said, the ultimate "days-on-market" stat is often deceptively low for much the same basic reason that sale:listing price ratios are meaningless.
Sunday, March 13, 2011
What should you do?
A (not so much fun) day in an agent’s life.
1. The seller paid to have the knob and tube wiring removed when a kitchen reno was being done. But the home inspector finds that the knob and tube is still extensive on both the first and second floors. What do you do?
2. A sale is firm, but on the same day as a buyer visit there is a substantial winter rainfall and the basement floods. What do you do?
3. There is a verbal agreement on a sale. As both parties are out of town there is a 24 hour delay to get it all in writing. The buyer’s wife wakes up with very cold feet and they want out of the deal. What do you do?
Going back to bed and pulling the covers over your head is not an option.
1. The seller paid to have the knob and tube wiring removed when a kitchen reno was being done. But the home inspector finds that the knob and tube is still extensive on both the first and second floors. What do you do?
2. A sale is firm, but on the same day as a buyer visit there is a substantial winter rainfall and the basement floods. What do you do?
3. There is a verbal agreement on a sale. As both parties are out of town there is a 24 hour delay to get it all in writing. The buyer’s wife wakes up with very cold feet and they want out of the deal. What do you do?
Going back to bed and pulling the covers over your head is not an option.
Friday, February 19, 2010
Competition vs. MLS -- Part 2-ish
The real estate section of today's Globe has an article headlined "Under the Gun" It starts off with an example of a couple in court because they got badly screwed around by unscrupulous-sounding agents. Then to the lady in the main photo who has burned through 4 agents who "failed" to sell it. We get a little dose of an agent defending their services, then into a Queen's professor who pretty much slags the current MLS setup. Ouch. Allow me to pull a couple of things out of the article that you may have missed in the whole "agents are useless crooks who are about to get their comeuppance" flavour of the thing.
First of all, the court case. Sounds like the agents failed to disclose "multiple representation" or "dual agency" and failed to disclose a family relationship between an agent and a buyer/seller. If true, nail them.
Or maybe they disclosed but did a poor job (accidentally or on purpose) of explaining and/or the sellers didn't read or pay attention to what they were signing. If true, nail both sides.
In any case, what the hell does a single anecdote of unethical behaviour have to do with the state of the industry? That was rhetorical; the answer is "It doesn't". Every profession has its baddies ... the occasional accountant steals, the occasional lawyer steals or screws up, the occasional financial analyst runs a massive Ponzi scheme. Shouldn't happen but it does.
Next up, the lady who burned through four agents who couldn't sell her house. Sounds like every time she went with one who said he "had clients who were interested" or "had contacts". Four times? We all have contacts and clients. That's not how you pick an agent. At least not four times.
So she decided to sell it herself, thereby supporting the "real estate is messed up and needs to change so that people have more options" theory. Well, she did have an option and she tried it (selling it herself). That didn't work either. Her bottom line: "She is now planning to list with [another] agent" but apparently using different selection criteria.
If you burn through four agents, plus yourself, and are working on number five, this is NOT an indication of systemic flaws in the industry. Even if you are cosmicly incompetent in selecting professional advisors, your house will eventually sell on MLS ... unless ... Unless your market truly stinks (not true here ... this was Calgary, not Detroit) or the house is seriously overpriced (I'm putting my money on this one).
And at the risk of being repetitive, she's about to hire an agent!
Finally, the prof. He says a rival database to MLS could give better information, the industry is protectionist, the consumer should have do-it-yourself choices, etc. But what would he do if selling his house? "I would probably pay full commission for the full service ... I know I would be able to find somebody really really good".
I am not saying our system is perfect. I am not saying that all agents are expert and professional. But here's a summary of this article from one perspective:
A certain number of agents behave badly. A lady in Calgary is learning that selling a home involves more than putting a sign on the lawn, and requires some care in selecting an appropriate representative. And an expert observer who seems to think big changes are needed would use a good traditional approach to selling his own home. Hmm.
P.S. Why is this called "Part 2"? Check it out.
First of all, the court case. Sounds like the agents failed to disclose "multiple representation" or "dual agency" and failed to disclose a family relationship between an agent and a buyer/seller. If true, nail them.
Or maybe they disclosed but did a poor job (accidentally or on purpose) of explaining and/or the sellers didn't read or pay attention to what they were signing. If true, nail both sides.
In any case, what the hell does a single anecdote of unethical behaviour have to do with the state of the industry? That was rhetorical; the answer is "It doesn't". Every profession has its baddies ... the occasional accountant steals, the occasional lawyer steals or screws up, the occasional financial analyst runs a massive Ponzi scheme. Shouldn't happen but it does.
Next up, the lady who burned through four agents who couldn't sell her house. Sounds like every time she went with one who said he "had clients who were interested" or "had contacts". Four times? We all have contacts and clients. That's not how you pick an agent. At least not four times.
So she decided to sell it herself, thereby supporting the "real estate is messed up and needs to change so that people have more options" theory. Well, she did have an option and she tried it (selling it herself). That didn't work either. Her bottom line: "She is now planning to list with [another] agent" but apparently using different selection criteria.
If you burn through four agents, plus yourself, and are working on number five, this is NOT an indication of systemic flaws in the industry. Even if you are cosmicly incompetent in selecting professional advisors, your house will eventually sell on MLS ... unless ... Unless your market truly stinks (not true here ... this was Calgary, not Detroit) or the house is seriously overpriced (I'm putting my money on this one).
And at the risk of being repetitive, she's about to hire an agent!
Finally, the prof. He says a rival database to MLS could give better information, the industry is protectionist, the consumer should have do-it-yourself choices, etc. But what would he do if selling his house? "I would probably pay full commission for the full service ... I know I would be able to find somebody really really good".
I am not saying our system is perfect. I am not saying that all agents are expert and professional. But here's a summary of this article from one perspective:
A certain number of agents behave badly. A lady in Calgary is learning that selling a home involves more than putting a sign on the lawn, and requires some care in selecting an appropriate representative. And an expert observer who seems to think big changes are needed would use a good traditional approach to selling his own home. Hmm.
P.S. Why is this called "Part 2"? Check it out.
Thursday, May 28, 2009
fyi: housevalues.ca
There are tv ads running for a website called housevalues.ca. The suggestion is you get an estimate of the value of your home for free, online, no muss, no fuss. How great is that? Maybe you don't even have to talk to an icky real estate agent ...
Well, not exactly. There is nothing wrong with the site, but I thought you might like to know what it is and how it works. The site is run by an outfit called Market Leader in Washington state. Their customers are real estate agents and brokers. Their product is "lead generation".
You plug in location and contact information. They will give you a couple of listings in your geographic area and somehow (without ever looking at your home or laying human hands and eyes on the process) give a price estimate. They also give your information to the agent who has subscribed to their service for your area.
Again, nothing evil. But the estimate is rather unrefined, and you can get a full market evaluation by calling an agent of your choice anytime you wish.
Just thought you would like to know.
Coming soon, in a similar vein, I'll let you know what you get if you pay $24.95 for BMO's home-buying package.
Well, not exactly. There is nothing wrong with the site, but I thought you might like to know what it is and how it works. The site is run by an outfit called Market Leader in Washington state. Their customers are real estate agents and brokers. Their product is "lead generation".
You plug in location and contact information. They will give you a couple of listings in your geographic area and somehow (without ever looking at your home or laying human hands and eyes on the process) give a price estimate. They also give your information to the agent who has subscribed to their service for your area.
Again, nothing evil. But the estimate is rather unrefined, and you can get a full market evaluation by calling an agent of your choice anytime you wish.
Just thought you would like to know.
Coming soon, in a similar vein, I'll let you know what you get if you pay $24.95 for BMO's home-buying package.
Thursday, March 19, 2009
98% of list ! NO, NO, NO, NO !!!!
[See update at end]
This is a pet peeve of mine. In two days, two flyers in my own mailbox from fellow agents emphasizing a property sold for, respectively, 95% and 98% of list price. Before anybody gets excited, the senders have done nothing wrong and what they say is true.
But I would STRONGLY suggest that you not give ANY weight to the fact that the property sold for a high percentage of list. Why? Let's check out these two mailings.
The first one is really pretty straightforward and accurate, claiming a 95% sale-to-listing ratio and a quick 10 day sale. This is very good in today's market, where the days-on-market and sale-to-list ratios are starting to look like the numbers we saw in "the old days". My only point is that this property was a fairly unique, higher end home, and the 5% below list represents almost $80,000!
The second one more clearly shows why we don't use these statistics and why we don't think people should use them to evaluate a representative. The home in question is promoted as having sold for 98% of list. It did. 98% of the LAST list. The full story is that the home was listed for 68 days at its original price. It was then re-listed at a slightly lower price. Sometime later the price was reduced another $20,000 and ultimately sold for almost $12,000 below that number.
This was quite likely a fair price. The time and pricing changes were likely quite understandable given that the whole thing was happening while the market was trying to decide what to do in response to economy spasms.
But, the way we look at it, the property sold in 3 1/2 months for 93.7% of the original list. That very likely indicates good work under the circumstances. But I doubt you will ever see it on a postcard.
This post qualifies as part of a series. My intro to how NOT to select a rep. was posted previously. You can find it here.
[Update: A client recently pointed out how this statistic could be useful. The client agreed with me that using the sale:list ratio of the majority of agents would in no way distinguish or rank them. However, she suggested that an unusually low ... OR HIGH ... ratio would be a good reason to eliminate an agent.
You aren't likely to hear anybody bragging about a low ratio. But the point was that it would indicate an agent who encouraged or accepted prices that were too high AND did little to market them. The result: limited reruns, reductions, etc and a home taking a long time to sell.
OK, that was pretty much just academic. Not many agents are like that. If they were, they would have figured out how to disguise the statistic and/or you would never hear about it. But too hight?? Yup, my client suggested that a high ratio implies properties being under-listed to encourage a quick sale not necessarily at the best price. I'm not sure that would happen in the recent/current sellers' market where under-pricing is a viable -- and often annoying -- strategy. But in a more balanced market, as many are now predicting ... good point. April 17, 2011]
This is a pet peeve of mine. In two days, two flyers in my own mailbox from fellow agents emphasizing a property sold for, respectively, 95% and 98% of list price. Before anybody gets excited, the senders have done nothing wrong and what they say is true.
But I would STRONGLY suggest that you not give ANY weight to the fact that the property sold for a high percentage of list. Why? Let's check out these two mailings.
The first one is really pretty straightforward and accurate, claiming a 95% sale-to-listing ratio and a quick 10 day sale. This is very good in today's market, where the days-on-market and sale-to-list ratios are starting to look like the numbers we saw in "the old days". My only point is that this property was a fairly unique, higher end home, and the 5% below list represents almost $80,000!
The second one more clearly shows why we don't use these statistics and why we don't think people should use them to evaluate a representative. The home in question is promoted as having sold for 98% of list. It did. 98% of the LAST list. The full story is that the home was listed for 68 days at its original price. It was then re-listed at a slightly lower price. Sometime later the price was reduced another $20,000 and ultimately sold for almost $12,000 below that number.
This was quite likely a fair price. The time and pricing changes were likely quite understandable given that the whole thing was happening while the market was trying to decide what to do in response to economy spasms.
But, the way we look at it, the property sold in 3 1/2 months for 93.7% of the original list. That very likely indicates good work under the circumstances. But I doubt you will ever see it on a postcard.
This post qualifies as part of a series. My intro to how NOT to select a rep. was posted previously. You can find it here.
[Update: A client recently pointed out how this statistic could be useful. The client agreed with me that using the sale:list ratio of the majority of agents would in no way distinguish or rank them. However, she suggested that an unusually low ... OR HIGH ... ratio would be a good reason to eliminate an agent.
You aren't likely to hear anybody bragging about a low ratio. But the point was that it would indicate an agent who encouraged or accepted prices that were too high AND did little to market them. The result: limited reruns, reductions, etc and a home taking a long time to sell.
OK, that was pretty much just academic. Not many agents are like that. If they were, they would have figured out how to disguise the statistic and/or you would never hear about it. But too hight?? Yup, my client suggested that a high ratio implies properties being under-listed to encourage a quick sale not necessarily at the best price. I'm not sure that would happen in the recent/current sellers' market where under-pricing is a viable -- and often annoying -- strategy. But in a more balanced market, as many are now predicting ... good point. April 17, 2011]
Sunday, March 15, 2009
I Hate My Job.
No, I love my job. But I hate my job TITLE.
I am allowed to call myself a Salesperson or Sales Representative. Lee has taken courses to qualify her to open and operate a real estate office, so she is a “Broker”.
Any of us who do not state somewhere in ANY promotional material that we are one of the above; or are so bold as to instead call ourselves a Consultant, Manager, Facilitator, Guru or some sort of real estate deity … is breaking the rules set out by provincial legislation. You may notice the commonly used "agent" isn't mentioned... not allowed. We've been known to break that rule in the interests of common sense and common usage, but by law it's not right.
Yes, I “sell” my services in order to attract clients. The end of the most active period in a “job” is a “sale”. We certainly produce a wide array of marketing materials to assist in the sale of a home. We work with buyers and sellers to help THEM get a sale. We negotiate on behalf of clients. And so on.
But we cringe at the idea that we sell homes. The implication is that our job is to get a buyer to buy or a seller to accept an offer. It isn’t. Our job is to help a buyer find and acquire the right home for them. Not the first home, or the most expensive home, or the one that pays the highest commission rate. The Buyers buy it.
Our job is to help a seller market their home effectively in order to get the best possible offer for them. Not the first offer, or the one that closes fastest, or the one from our own buyers because then we get more commission. The Sellers sell it.
That's the job: work with clients through the real estate buying/selling process so that they are happy and satisfied at the end. I like it. The title ... not so much.
I am allowed to call myself a Salesperson or Sales Representative. Lee has taken courses to qualify her to open and operate a real estate office, so she is a “Broker”.
Any of us who do not state somewhere in ANY promotional material that we are one of the above; or are so bold as to instead call ourselves a Consultant, Manager, Facilitator, Guru or some sort of real estate deity … is breaking the rules set out by provincial legislation. You may notice the commonly used "agent" isn't mentioned... not allowed. We've been known to break that rule in the interests of common sense and common usage, but by law it's not right.
Yes, I “sell” my services in order to attract clients. The end of the most active period in a “job” is a “sale”. We certainly produce a wide array of marketing materials to assist in the sale of a home. We work with buyers and sellers to help THEM get a sale. We negotiate on behalf of clients. And so on.
But we cringe at the idea that we sell homes. The implication is that our job is to get a buyer to buy or a seller to accept an offer. It isn’t. Our job is to help a buyer find and acquire the right home for them. Not the first home, or the most expensive home, or the one that pays the highest commission rate. The Buyers buy it.
Our job is to help a seller market their home effectively in order to get the best possible offer for them. Not the first offer, or the one that closes fastest, or the one from our own buyers because then we get more commission. The Sellers sell it.
That's the job: work with clients through the real estate buying/selling process so that they are happy and satisfied at the end. I like it. The title ... not so much.
Saturday, August 9, 2008
Door #1 ... no, door #2, ... no .... oh Monty, how do I pick an agent?
Introducing a series on how (not) to pick an agent…
There are a lot of reasons used to select a real estate representative. Unfortunately the search for “good”, “logical”, “rational” “statistical” selection criteria is rather futile. It’s a hard job.
It’s just as hard for a good agent to express what makes them unique and/or an agent you should consider. Poor us.
In the end, many agents advertise their strength in the areas that buyers and sellers have decided or been told meet the above criteria. And they usually mean … nothing.
In our opinion, what you should be looking for is an agent or “consultant”
• that is most concerned about your satisfaction and success,
• who you can trust to work for you and you alone,
• who will be completely honest with you at all times and
• who will keep you informed and be available throughout the process.
Unfortunately, it is near-impossible to objectively measure any of these.
So you don’t. Instead …
• You assume that all agents are in it for themselves and the gold and you should just hire the toughest, self-centred, biggest producer of them all.
• Or you decide to hire the “nicest”.
• Or the one with the slickest presentation.
• Or you decide that they’re all the same so you might as well go with your brother-in-law’s kid who just got her licence.
• Or you go back to the “objective” measures and go with “sale-to-list-price” ratios; number or size of deals; average days-on-market; etc.
Wrong. Nice try, and we understand how difficult and frustrating it all is. But still wrong.
Coming up: A series on assorted “myths” in selecting an agent. We’ll try to be succinct and clear about how the business works and why a given selection criteria is of little use (or worse, could lead in a wrong direction). We’ll try to help with some of the ways that are good ways to select an agent. But we are the first to admit this list is shorter and harder to use.
So, yes, we’re trying to help but we’ll make the decision harder. Hopefully better. But definitely harder.
Related posts:
... "98% of list ... NO NO NO!!"
..."Days NOT on market"
... "How many houses do you sell..."
... or just click the "selection" item in the tag list on the blog (in case I add a post and forget to update these links ... it happens!)
There are a lot of reasons used to select a real estate representative. Unfortunately the search for “good”, “logical”, “rational” “statistical” selection criteria is rather futile. It’s a hard job.
It’s just as hard for a good agent to express what makes them unique and/or an agent you should consider. Poor us.
In the end, many agents advertise their strength in the areas that buyers and sellers have decided or been told meet the above criteria. And they usually mean … nothing.
In our opinion, what you should be looking for is an agent or “consultant”
• that is most concerned about your satisfaction and success,
• who you can trust to work for you and you alone,
• who will be completely honest with you at all times and
• who will keep you informed and be available throughout the process.
Unfortunately, it is near-impossible to objectively measure any of these.
So you don’t. Instead …
• You assume that all agents are in it for themselves and the gold and you should just hire the toughest, self-centred, biggest producer of them all.
• Or you decide to hire the “nicest”.
• Or the one with the slickest presentation.
• Or you decide that they’re all the same so you might as well go with your brother-in-law’s kid who just got her licence.
• Or you go back to the “objective” measures and go with “sale-to-list-price” ratios; number or size of deals; average days-on-market; etc.
Wrong. Nice try, and we understand how difficult and frustrating it all is. But still wrong.
Coming up: A series on assorted “myths” in selecting an agent. We’ll try to be succinct and clear about how the business works and why a given selection criteria is of little use (or worse, could lead in a wrong direction). We’ll try to help with some of the ways that are good ways to select an agent. But we are the first to admit this list is shorter and harder to use.
So, yes, we’re trying to help but we’ll make the decision harder. Hopefully better. But definitely harder.
Related posts:
... "98% of list ... NO NO NO!!"
..."Days NOT on market"
... "How many houses do you sell..."
... or just click the "selection" item in the tag list on the blog (in case I add a post and forget to update these links ... it happens!)
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