In life, we all need to trust those who are expert in areas we are not.  Real estate agents require the confidence of their clients. Likewise, Realtors must believe in their buyers and sellers. When there is no trust, a real estate transaction can become a poisonous affair for all parties. 

One of an agent’s most important functions is to interpret what is happening in the market. Pricing a home is complicated; not everyone can do it well. 

Being too kind

An experienced, local agent, who I know and have confidence in, told me of her nightmare. For the past several months, she has been working with a seller to get the home ready for marketing. This was a personal referral from a previous client.

It is a property with extensive deferred maintenance. The agent arranged for a pest control report; hauling of debris; carpet cleaning; plumbing repairs; painting; weeding; cleaning and staging with furniture. She even loaned the seller $3000 from her own funds for this process. Many hours of her time were spent not just supervising, but also working on the house. 

Before the seller signed the listing, the agent had carefully reviewed comparable sales and explained how all the problems would impact value. She suggested an asking price commensurate with the condition she anticipated after it was clean and free of debris.

Now that the home has been spiffed up, the seller has told the agent that two relatives, neither of whom live in the area, think it has been under-listed by more than $100,000. 

The agent provided comparable sales, including a home next door, to these two inquisitors. This did not change their opinion; they want the seller to list high and expect her to receive even higher offers. The agent, who is knowledgeable and professional, is certain this is not feasible.

Although her relatives have misgivings, the seller has decided to go ahead and put the house on the market. If the agent gives back the listing, she does not think she will be reimbursed the $3000; if she markets it for her suggested price, she doubts  they will accept anything less than the high price they have in mind. If she lists at the inflated price, she does not feel it has any chance to sell. This agent, who went so far and above the call of duty, is in a no-win situation. 

Whose reality do we accept?

Several weeks ago, I returned a listing to unrealistic sellers for similar reasons. The sellers reside overseas; they have not lived in their Montclair home for almost 10 years. Despite this, during a short visit to the Bay area, we met and they told me what they felt  the property was worth.

Their price opinion was based on closed sales of neighborhood homes they had never seen. I responded that I considered their property a fixer; the comparables they cited were houses in top condition. I suggested we get comprehensive inspections and then discuss it again.

Several months, and numerous reports and bids later, we had the necessary information. Problems, including serious foundation repair, furnace and roof replacement, and substantial pest control, total over $43,000. This is not to mention other maintenance and repair issues, as well as the need for extensive remodeling.

Another consideration is that buyers usually have their own, independent inspections. When widespread work is required, it is common for buyers to come up with higher bids and to ask the seller to pay some or all of the additional cost. If, however, a well-priced listing engenders multiple offers, the buyer’s renegotiating leverage is minimized or eliminated.

With all this in mind, I gave the sellers a variety of marketing strategies for an “As Is” sale. My recommendation was to list at an attractive price to diminish the As Is stigma. Faced with the sellers’ reluctance to take this option, I offered to list $50,000 higher, although I made it clear this would not be the best tactic.

Disregarding my advice and the three sets of comparable sales I had supplied, the sellers instructed me to list $90,000 more than my original proposal. Worst of all, they reiterated their expectation of getting an offer $60,000 to $70,000 over their already elevated asking price. 

I explained that the definition of a seller is someone who has a need to sell and is willing to accept the price verdict of the market. I told them it would be better to work with another agent, and I released them from the listing. Even though I spent about 20 hours for which I will never be paid, I feel relieved.

Final thoughts

You may ask, how can I trust an agent I really do not know? The truth is, we take this risk all the time. How well did you know your doctor, dentist, lawyer, tax accountant or car mechanic at the beginning? At some point, we have all been in the position of letting go and putting ourselves in someone else’s hands. 

Nevertheless, when choosing a real estate agent you certainly want experience, competence and caring. Before you commit to working with a particular Realtor, ask a lot of questions and make sure there is mutual trust and respect. A team feeling is always preferable to a tug-of-war.

Residential real estate is more a business of relationships than selling houses. Without solid rapport, a satisfying outcome is a long shot.
 

Related Articles: How to Interview Agents, Part 1; Part 2, Part 3, Part 4; and Understanding Agency