Some sellers have concerns that traditional agents boycott limited service listings by not showing them. There are a few ways that a Realtor® can tell that you are flat fee listed:
- When a listing is entered into the MLS, the broker must choose a classification to designate the level of service given to the seller. Most “flat fee” listings fall into the category of “Exclusive Agency-Limited Service” or just “Limited Service.” The reason this classification is different from “Exclusive Right of Sale” is that the flat fee MLS listing company does not typically represent the seller with regard to contract negotiations and the seller may sell to an unrepresented buyer and pay no commission fees at closing.
- It is usually the case that the seller takes phone calls directly for showings in a limited service agreement. The language in the MLS for Realtors® to “contact seller directly at…” can be a giveaway that the seller is flat fee listed.
GetMoreOffers.com, Florida’s largest and most trusted flat fee MLS listing company (now also available in New York) has sold over $1 billion in real estate since we started offering flat fee MLS to Florida consumers in 2005. So, the success of our sales proves that Realtors® do not boycott flat fee listings.
Do not believe buyers’ agents if they tell you that 2% or 2.5% commission will never work either. I have been a Florida real estate broker for 34 years and have worked in the flat fee MLS trenches for 13 years. I have seen commission offerings of as low as 1.5% actually work to sell houses in highly cosmopolitan cities. I have spoken to hostile Realtors®, grumpy Realtors® and happy Realtors® and I can say this without a doubt in my mind: agents want to earn a living just like everyone else and selling homes is what pays their bills. Whether the listing is limited service-flat fee MLS or a traditional-full service listing makes no difference. The money is green and spends the same. It is that simple!
The other very important thing to remember is that it is the buyers (and their perception of your price) that actually dictate whether you get showings or offers, not the listing type or commission. It’s the information age and buyers have access to the same listing data as the agents. So it’s impossible for a buyer’s agent to avoid showing a home to their buyer when the buyer is almost always driving the showings. In most cases, they become aware of the listing before their agent does!
Knowing that buyers’ agents have no control over the sale should give you more confidence about your flat fee listing. What many don’t realize is that there are really only two or three players in a real estate transaction that call the shots—and the buyer’s agent is not one of them. The buyer is the most powerful player because they have the money. A buyer is smart…and they are “perfect,” meaning they can do no wrong because without them, no sale happens. The seller is next in the power hierarchy, followed lastly by the listing agent (if they represent the seller; flat fee or self-rep sellers represent themselves).
This is my advice about selling a home using flat fee MLS: do not concern yourself with the chatter you may hear from Realtors® saying they won’t show your home if you don’t list with a traditional 6% agent or offer a 3% commission. Both are false statements and both are an ethics violations to boot.
Should you happen to come across a buyer’s agent who tells you that they will not show a property that they know to be flat fee listed, ignore them and move on. Sometimes agents will simply say this in hopes that you will be scared into listing your home with them.
If you wish to be listed in the MLS with an Exclusive Right of Sale listing agreement rather than Exclusive Agency/Limited Service so that your listing will appear identical to other full service listings, another option is to list with a discounted full contract representation program such as our Platinum level with Altru® Realty. Altru offers many other valuable benefits to sellers with the strongest contract negotiators in the real estate industry for just 1.5%. ALTRU® Certified Negotiators have one goal: to net you the most on your sale and with the best terms possible. To find out more, check out my videos detailing topics such as Home Selling Pricing Strategies, Biggest Real Estate Misnomer, Proving the Value of Your Home…and more by going to: http://altrurealty.com/Videos.aspx.
For more information and to sign up for one of our Flat Fee MLS Programs, contact Getmoreoffers.com at 1-877-232-9695.
Let’s get right to the real estate market update and what is driving sales. I also want to talk about over pricing, multiple offer pricing and relevant pricing. Just as you have likely noticed the quietness of the market, I am quite shocked at the business climate the past 45 days. I am struggling with where we are right now nationally as well as Florida. I know Miami is on its heels after years of strength. Naples has been slower for about a year. Jacksonville greater seems to be the same as Orlando and Tampa Bay which is steady.
Interest rates are likely done moving up after the feds ¼ point raise. Mortgage rates are falling as the short term rates are rising. My prediction is a very weak GDP for the 2nd, 3rd and 4th quarter. This could result in real estate sales prices becoming weaker through the end of the year.
The weakness in May-June speaks volumes because May and June are typically the beginning for the June-July selling season as parents jockey for homes before the start of the new school year. As of right now (June 19, 2017), I see a passive and lethargic real estate market. We do occasionally see a lull occur in the middle of summer with school letting out and vacations beginning. This could be a factor.
As I have spoken about many times in my past quarterly reports, Americans are creatures of habit and without any doubt, crave safety and certainly about their future. They expect and literally demand certainty from the US government and leadership. If they lack certainty, they clam up and put off a decision until they feel safer and on better footing. That being said, the current political environment has cast doubt among many. I believe we are stuck with an uncertain political climate until the public gets comfortable and starts “making moves” again both figuratively and literally.
My suggestion: if you are selling a home currently with us or plan to shortly, price that home with no wiggle room. Homes are selling, but only the ones that are either in a hot neighborhood or are priced to attract buyers. There are three ways to price a property: Multiple Offer Pricing, Relevant Pricing and Over Pricing (or Wiggle-room pricing). Let’s explore each and the pros and cons with an in depth exploration…
Most agents fall back on the Over Pricing strategy. They add wiggle room and list with the intention of negotiating down to a “meet-in-the-middle” number. When sellers do this, they typically end up lowering the price to get an offer (and thus missing opportunities during the time they were overpriced), never get an offer, or end up selling into a vacuum which means selling to one buyer well-below list price.
Multiple Offer Pricing
Multiple Offer Pricing is the most aggressive method whereby a seller prices the home slightly under or right at market valuation. Buyers love these properties because seldom do sellers or listing agents use this strategy. The reason listing agents don’t is because they typically over price homes which goes along with their tendency to overpromise service and performance. They do this either to get the listing and/or because they believe they need to over price to leave themselves a cushion for the “meet-in-the-middle” method of negotiating (a technique I do not agree with). They also may not understand or feel comfortable with managing the multiple offers that may come from Multiple Offer Pricing.
Another reason why sellers don’t use Multiple Offer Pricing is because many sellers believe they must accept a full-price offer. This is a misconception. In our case, our sellers ask us what we think and we know the seller wants honesty and guidance. We explain different pricing strategies and we know how to manage them. Multiple Offer Pricing is powerful because buyers assume they can buy at the list price or slightly below the list price. They innately feel a sense of urgency because they recognize the value and realize others will too…and the offers flow. Our strategy when using Multiple Offer Pricing is to be very patient and try not take an offer for the first 8 days of a listing to ensure we have seen most of the offers. If we see additional showings in the near future we wait on those showings to be completed before taking an offer. We often drive the final price well above the list price. By using this strategy, we get to pick the ideal buyer with the ideal terms.
Relevant Pricing is our go-to pricing method and is based on setting the value we think is accurate for the home (based on CMA data, seller’s opinion of value and other relevant market analysis). Setting a relevant market price is an artful process that takes into account scientific data but at the end of the day, only the actual market can tell us what the value really is. Keep in mind, this is not a static concept and value can be influenced by fluctuating factors such as timing, current demand and other competition.
Using this method, we set a list price no higher than what we believe a good, well-suited buyer will pay. Our intention is to receive a full-price offer. The reason why this pricing strategy is effective is because buyers make offers based on what I call “hopeful buying” (optimistic state that an offer could reasonably be accepted). Most buyers place offers with the intention of meeting the seller in the middle. If an offer is not a full-price offer at our “relevant list price” than it is a meet-in-the-middle. That being said, the lower the list price, the higher the hopefulness of buyers. Hopeful for what? Hopeful that they can get a deal at their “happy buy number” (amount they will be satisfied buying at). That hopeful “buy number” is a meet-in-the-middle offer.
The technique of relevant/accurate pricing hinges on a seller (or the agent negotiator) being of the mindset that whether a buyer brings their offer up to the relevant list price or not does not matter. If a buyer walks, that’s fine. But, buyers never walk, they circle…meaning they are always thinking about raising their offer. All the pressure is on the buyer. My expression is, “we care about all buyers, never one buyer.” When the buyer knows the price is good, they are more likely to hang around and stay in the game.
Let’s consider a pricing example for all 3 types of pricing:
You have a seller who wishes to add wiggle room and lists a home for $480,000 with a “walk number” (amount they will accept) at $440,000 and a “happy walk number” (amount they will happily accept) of $450,000…In this scenario, the buyer’s hopeful buy number is $440,000. So that buyer would have to offer $400,000 to meet the $480,000 seller in the middle (a huge gap!) That offer is unrealistic and the buyer has no hope of getting the seller down that far. Therefore, no offer is coming! This is how Over Pricing can backfire.
Relevant Pricing may be $450,000 which in this case is the seller’s “happy walk number.” So, if the buyer wants a $440,000 deal they would offer $430,000 and meet in the middle at $440,000. That is both realistic and satisfies the “hopefulness” of the buyer.
Multiple Offer Pricing would be a $440,000 list price. All buyers from $410,000-$440,000 want to place an offer and a multiple offer situation may occur. When that happens, the best buyer wins out and so does the seller because the seller ends up with more options and possibly the leverage to bring a buyer up to the happy walk number.
My new book about real estate should be out by September. The title is The Sand Box. It’s all about what’s wrong with the way the majority of listing agents do business and how to effectively negotiate.
As always, if you have any questions or concerns, feel free to contact us at 877-232-9695.
The way I get a feel for the tone of the real estate market update is through 100’s of our active and pending listings, industry articles as well as dozens of conversations I have each day with buyers, sellers, agents, mortgage brokers and title professionals.
We negotiate many deals each day and this gives us great insight into what I consider to be the most accurate and real-time pulse of real estate. Any mention of politics in my market reports is strictly intended to share my take on how politics affect the real estate market and are in no way meant as a way to push any particular political agenda. That said…
Political and Financial Factors Affecting the Real Estate Market Update:
- The new administration’s Make America Great Again agenda is stalled and I don’t forsee that changing in the second quarter.
- The DOW breaking of 20,000 was a rally anticipating big business and banks would benefit from tax reform and deregulations.
- Many predicted that the new administration would have their way but due to failed ACA repeal, one should not expect a fast track to tax reform.
- The DOW is always very stingy on giving back gains.
- Overall consumer confidence remains relatively high.
In conclusion, I think the bloom is off the rose.
Are real estate prices slipping? Yes. Interest rates moved up ½% since my last report in December 2016 post-Trump victory. My forecast at that time was steady-to-up for real estate prices and stocks.
What I didn’t anticipate in my last report was a fractured republican effort regarding the Trump agenda nor the Russia-Trump saga.
We are now at a break-point and a few things do concern me, each of which are significant in their own way. Let’s go to real estate prices, the economy and interest rates. It appears buyers remain focused on value. My gauge of real estate is based on our call volume, listing volume (new listings) and offer flow.
I see a mixed bag, still showing signs of possible strength as new listings are coming in at a pace which is 7/10. It feels like 2015 to me and not the sluggish pace of 2016 nor the fast pace of 2014. I do not see interest rates as problematic. What I see as problematic is consumer confidence dropping as Trump falls short of market expectations.
When I say market, I mean stocks more than real estate. Real estate follows signals from other indicators such as consumer confidence and the public’s overall feeling of well-being…in particular, their 401Ks.
At this point, I see stocks and consumer confidence the big question. Amazingly, with all of the political uncertainly and drama, the DOW is still north of 20,000. Should the DOW support crack back through the 20,000 level, I would expect a retest of DOW 1840 followed by consolidation.
The overall Florida real estate tone hasn’t changed much other than Miami-Dade and Naples seem to be softer. These two markets had been leaders. Manhattan real estate has been said to be softer as well. I feel prices in Florida will remain tempered at best. In contrast, certain cities in the US are reflecting record high sales prices such as Denver, San Francisco, Portland and San Jose.
My recommendation as ususal: price your real estate aggressively with no wiggle-room. Price your homes at “happy-walk” numbers.
Our companies are evolving and growing…
GetMoreOffers.com and ADDvantage Real Estate: Basic flat fee MLS listing in MLS (and a higher service offering of Platinum Pro through Altru Realty.) 877-232-9695
Altru Realty: Our hybrid company focused on better negotiation practices and seller representation. Plans include Altru Virtual and Altru Concierge). 888-392-4806
PIQ Realty (traditional real estate) with our new PIQ Doc management system; Realtors that want to work with me hang their licenses under this brand. 727 551 4474
New Frontier Title (affiliated business): closing transactions all over Florida; managed and operated by Sheree Akins. 877-544-6447
Showing Bee (our national publicly facing listing aggregation company based on seamless showing technology which is listing agent-centric)
Bee Forms (our national form generator designed to manage and simplify the complicated task for MLS data entry forms)
Move in Virtual Tours (our new photography company created to support Altru, PIQ and ADDvantage customers with advanced Matterport 3-D immersive technology and HD enhanced magazine quality photos. We are open for business in Tampa Bay extended and our new NY operation.
New hires and operations:
- Opened Altru Branch in Buffalo, NY (lead by broker, Renee Golda-Widman)
- Hired a new negotiator/Altru Concierge/Altru Realty (Toni Lupo)
- Hired another closing coordinator for Altru Realty to back up our star paralegal closing coordinator, Marci Kunzig (Lynn Simonton)
- Hired new SEO/SEM company for Online Digitial Marketing: Accent Digital Marketing
In other news, I am about halfway through writing my new real estate book. The book will reveal insider perspectives geared to help the consumer prepare for buying and selling real estate . Some of you have spoken with me and understand my take on pricing and negotiations. In my next blog, I will share an unedited excerpt from the book. The topic: Wiggle room is good…everyone wants to negotiate, right? NO—they don’t!
Stay tuned for more and as always, thank you for choosing GetMoreOffers.com.
Keith R. Gordon
Authorized Broker for GetMoreOffers®
ADDvantage® Real Estate Services