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The market in Westchester County is very price sensitive; with a median price above $500,000, that is understandable. The stakes are high, and goofs cost dearly. In some markets, a cash poor buyer may be attracted by a seller incentive of sorts, such as a small credit for closing costs or repairs. However, there is no way to search for such an offering in our marketplace; you can search by price point, square footage, location, school district and even physical amenities like pools or garages, but givebacks are not a criteria.
The same goes for homes listed where the buyer agent is offered a bonus or enhanced commission. Even if we wanted to get paid more than average for selling a house, there really is no plausible way to convince a client to make a place theirs if it doesn’t feel like home. If they love a place, they’ll want it no matter what their agent is paid. If they hate a place, you could offer me the crown jewels; there is no ethical or pragmatic way to make someone buy a home they don’t want. Buyers are, therefore, often leery of what could be perceived as a gimmick.
My experience with sellers who offer a buyer a credit or their agent a bonus is that they have an attachment to price above net proceeds. Money does talk. And it speaks loudest in the list price. If a sellers wants to throw some money at making their property more attractive, it should be in the form of a price reduction. If a buyer needs help with closing costs, they’ll already know that on the advice of their agent and loan officer and structure that in the offer for the place they want.
The danger with offering a giveback to either buyers or agents is twofold. First, it does not make the place more visible as I explained. But worse, even when a buyer makes their offer and negotiates a seller down from asking price, they will still want their credit back! For example, consider a home listed for $509,000 and the feedback is that the main bath is outdated, and maybe the carpeting is drab. My advice to the seller would be to lower the price to $499,000 for a higher perceived value and more eyeballs on the property. But instead of reducing the price, the seller instead instructs me to offer a $10,000 remodel credit to the buyers. A buyer comes along and negotiates an accepted offer of $488,500. And sometime prior to contracts they’ll also demand that $10,000 credit. Now we have a problem.
There are those who say that the credit can be taken out of the negotiations to avoid suck a pickle. Not that easy. Once offered, you can’t put the smoke back in the cigar. If the credit is for a full priced offer, the buyer will simply view it as a price reduction from the outset, or money the seller was already willing to part with, and use that as a baseline. If a full priced offer is not a condition of the credit, then its removal is viewed as a bait and switch. In other words, it causes more problems than it solves.
If you are a seller, and you want to throw more money in the pot to move a property, do it where it speaks the loudest and with the fewest complications: lower the price.
Name Recognition Means Nothing to Home Buyers
If you are searching for homes online, do you care who the listing broker is?
I’ll go out on a limb and say that unless you have had a specific negative experience with an agent or broker, if a house fits your needs you could care less if it were listed by Attila the Hun, Rasputin, Herbie the Love Bug, or Kronos, Ravager of Planets.
This goes for both consumers and buyer agents. Most sellers get this, but a select few make the mortal error of listing with a name rather than the merit of an individual agent. That can cost. If you want to sell real estate in 2012, you have to understand how buyers and buyer agents think. They input their criteria into the search fields and hit “enter.” The results will come out in a list of homes, and they sift through the places to separate the best from the also-rans. Among the highest regarded choices, curb appeal, condition and price rank highest among reasons for a home making the short list.
No one chooses (or eliminates) a home because of who the listing agent or broker is. It is antithetical to the process. Do you care where the peanuts in the peanut butter were picked? No, you just want peanut butter. Do you care who installed your toilet? Probably not, as long as it flushes. Yet there are a few sellers out there that are hung up on the name recognition of the broker as if buyers care. They don’t. Buyers are tuned in to WIFM- What’s in it for me? I never in 16 years ever heard a buyer say “we bought the house because it was listed with ABC Properties” or “we want to see this house because it is listed with Joe Agent.”
Sellers should hire an agent based on that agent’s qualifications whether they work for a prestigious firm with a name that sounds like a high end law practice or if they work for a mom and pop. It isn’t the company. It is the agent. Their track record, their marketing plan, their references.
Track record.
Marketing Plan.
References.
Those are the things that should matter to the seller. Name recognition is the booby prize. It may sound nice, but it doesn’t sell houses.