It is much more difficult now
Our real estate market here in the twin cities has changed quite a bit in the last couple of years. It is much more difficult to sell a house than it used to be. Last year I made some mistakes that I decided not to repeat this year. I will publicly admit that not all of my listings sold.
I was beating myself up, but…
For a time I was beating myself up a bit over it but it wasn’t me not doing a good job. In every case the home owner was upside on a mortgage and the asking price for the home was too high. I would show my clients numbers and local sales data and recommend a price reduction but they would tell me that they couldn’t reduce it. I canceled two of those listings myself.I watched as one of those listings I canceled listed with another agent, six months later she listed it with yet another agent.
It is still on the market listed with agent number four. The price has been reduced slightly, mostly by agent number three but the property is still on the market and has been for the last 15 months. The property is worth less money today than it was the day I originally listed it. If she would have accepted my recommendation she would not have had to make fifteen months worth of mortgage payments, pay a years worth of taxes and insurance on an investment property that she is upside down on.
When did you buy it?
This year when a home owner calls and asks me to list their home I ask them when they bought it. The question is less personal than asking a total stranger that just contacted me how much the owe on their home. If they purchased the home after 2003 my questions get a bit more personal. Sometimes I give them a kind of lecture and ask them if they really have to move and if they have ever considered renting the place out. I have been able to help a few people find good tenants. I don’t make any money that way.
Some people call me and I do a market analysis for them and then they tell me how much money they have to have for their home and I tell them that I won’t list it for them. I explain that I can not sell it for the price they want to ask but assure them that there are plenty of Realtors in the Twin Cities and that they should have no trouble finding someone who will list it for them.
The same goes for buyers
It is pretty much the same with the buyers. After I have determined if they have talked to a lender I ask them how long they plan on living in the home. If they give me an answer of five years or less they are advised that buying and selling real estate that often may not be the best use of their resources. I explain typical buying and selling costs.
Last week I had a couple ask me to discount my fee because they owe about as much on their property as I can sell it for. I told them that I wanted to work with them, and I meant it, but that I could not reduce my fee. They explained that they do not have a lot of money and they need as much as they can get from the sale of their home. My heart goes out to them but I also have bills to pay, and selling their condo is going to be a lot of work. I explained the value of my services and the ways that I will save them money. I also told them that they can find an agent who will charge less. They signed a contract with me last Saturday, and their home will be on the market this week.
I’ve said “no” just as often
In the last couple of months I believe I have said no to new clients at least as often as I have said yes. I still have some tough listings but I am confident that I can sell them. It isn’t easy saying no. When I started in the business I worked for one of those huge real estate companies. They would encouraged me to get listings at any cost and we were all thought that some commission is better than none. We were discouraged from discounting our fees but in the end the company would rather see us take less than get nothing at all.
A woman who called me last week spent some time trying to “sell” me on the idea of listing her townhouse. The answer was still no. I did feel some compassion for her and her situation but I have learned that if I don’t remain some what emotional detached from my clients and their problems I end up wearing myself out and doing a lot of work for free. She has her unit listed with another agent. I asked if that agent had ever suggested reducing he price. The caller said yes. I told her that she should listen to her agent.
Learning when to say no
Learning when to say no is important. Last year I spent too much time and money trying to sell homes that were over priced. Now I am not afraid to say no, I think I have had enough practice now so that I am good at saying no. It just kind of rolls off the tongue and I enjoy saying it. It makes me feel like I am running my business instead of letting it run me. Every hour spent trying to sell and over priced listing is an hour that could be used for activities that will lead to revenue generation.
Missy Caulk
April 8, 2008 at 6:09 am
Teresa, I have to keep my emotions out of it too. I have potential clients telling me after I show them the market value, “Well we’ll just sell short?”
Is the the big catch all?
Last time, both had excellent jobs and were transferred out of state, good investments. This freaks me out that so many are reading the papers and think that is a way to go and don’t care about credit.
I told them to go back and renegotiate with their employers, for more benefits or to make them whole.
Kevin Sharkey - IBR Broker
April 8, 2008 at 7:30 am
Teresa,
Great post as usual. There are many opportunities out there to choose from, especially for an agent like yourself. I agree with your whole idea of being more selective in who you choose to work with. Ultimately, you will generate more revenue because of being more selective.
There are other agents who do not have as many options as you, and are more likely to “chase leads”. Others get emotionally involved and will reduce their fees to help out. As a broker, I am conflicted by some of this activity. On one hand, there will probably not be a closing for my bleeding heart agent. On the other hand, an agent will get more experience, an opportunity to work with marketing a home in a down market and maybe someday have enough experience so they can become more selective in who they work with.
I think this may just be part of the whole growth cycle of an agent. The better the agent becomes, the sooner they can take control of their business. Clearly, you are at that point. Thanks again for the great words.
P.S. I still have the other red mitten. It wants to join its mate.
Bill Lublin
April 8, 2008 at 8:07 am
Teresa: Great post- and what courage to address an issue that so many agents keep in the closet- Its always better to take a listing that will sell then just to take a listing- and if its needed, its better to be the second agent when the listing doesn;t sell. As far as fees go, if you can;t negotiate for the fee to feed your family, how well can you negotiate on behalf of the seller when it comes time to actually negotiate the sale of the property? You have the skills and knowledge that the consumer needs, and you are well worth the cost of that service 🙂
Kristal Kraft
April 8, 2008 at 8:18 am
Wise advice T. The last time we had a bad market I get very good at asking people (with a straight face), “How much money can you afford to bring to closing?”
Eventually they got the message after hearing it from agent after agent. Seller’s realized we weren’t miracle workers and to sell their home it would take money out of their pocket.
Once agents realize this is the way to make it happen for the seller, the market will turn around. Or at least they will be able to sell their home and move on to the next destination.
The good news is, sometimes what they perceive to lose on the selling end them may gain on the buying end. It may not be as bad as it looks.
Of course if the homeowner doesn’t have to sell right now, they shouldn’t. This too shall pass. Really!
Teresa Boardman
April 8, 2008 at 8:30 am
KK – I often question sellers on how badly they “have to sell” and advise against it if they are upside down or close to it.
Bill – I learned that line in real estate school and never use it. I just know that to stay in business I need to make a profit and that my time and experience is worth money and sold to people who will pay for it.
Kevin – loved the mitten! Will call, my right hand is getting cold.
Missy – hate the idea of a short sale for people who just want another house. i am seeing agents in my market encouraging it. I won’t.
Greg Cremia
April 8, 2008 at 9:20 am
Over the past 2 years I have turned down more listings than I accepted. There is a wall right next to my desk that I can bang my head against if I ever feel the need to.
Andy Kaufman
April 8, 2008 at 11:29 am
Learning how to say “no” is a valuable skill and one that I’m still perfecting.
I also spent a good portion of last year caught in non-dollar productive activities that drained me mentally, physically and financially, but I feel that it’s almost a rite of passage that one needs to go through to in order to learn the lesson first hand.
The challenge lies in that it’s a lot easier to say no when you’re drowning in business and are forced to pick and choose rather than when you’re sitting around the office most of the day and working with that ‘on the fence’ buyer or seller that will happily devour your time & energy if you allow it, just for ‘experience’
I’ve learned a few lessons from those clients. Most notably how to identify and either incubate or steer clear.
Vicki Moore
April 8, 2008 at 1:38 pm
Thanks for reaffirming the position I took recently. A close friend told me of a neighbor who wanted to list their house for far above its value. They gave me all of the details, including that the seller didn’t care if it took over a year to get her price. It became quite a conversation. I told them that I was in the business of selling houses, not listing them, how much it would cost me to retain a high-end listing for over a year and that the likelihood is that by then both the seller and I would be sick of each other and I wouldn’t make the sale anyway. They had arguments for every position that I took and I’m sure that the seller would have too. However, it’s my business. I’m the one taking the risk. I have to choose where to put my time, money and efforts.
Teresa Boardman
April 8, 2008 at 2:47 pm
Andy – I have said no when business is bad and it is hard to do but I remind myself that the time that I would have been working on something that is not going to generate revenue could be spent making money. I am not in the business to show houses or to list them, if I want to make money I need to sell them. I am willing to work hard and market the hell out of each and every listing but I am not willing to work with sellers who will not cooperate for any reason.
Vicki – the more you say no, the easier it gets.
ines
April 8, 2008 at 2:52 pm
I’ve never had a problem saying “no” – now Rick…..that’s a different problem (I know that’s mean). Rick and I sat down today to discuss which listings we are not renewing – it’s important to know where you are spinning your wheels and where you are getting results. It’s also important to identify which customers you work well for and who really appreciates your expertise.
Mike Farmer
April 8, 2008 at 3:13 pm
I have about four in the wings now I’ve convinced to wait to sell. They are all making improvements to their homes waiting until the market is more favorable.
Teresa Boardman
April 8, 2008 at 5:28 pm
Ines – I don’t renew them all. 🙂
Mike – I hope yu gave them some chocolate so they will remember you and list with you. 🙂
Matthew Rathbun
April 8, 2008 at 8:10 pm
T,
This is one of the most important mindsets that an agent can have in this market. You’ve done a great job of using your experience to help other agents. That’s one of your most endearing qualities. I really appreciate your openness and willingness to share.
The concept of having a business plan and only taking on those clients who fit into that plan is a great risk mitigation tool. It all starts with being determined to say “no” if you the client isn’t realistic and you aren’t a good fit.
Teresa Boardman
April 9, 2008 at 6:20 am
Mathew – you bring up another point. The “good fit” thing is why I sometimes say no to buyers. A personality quirk of mine but I have to feel comfortable with the people I work with. I spend a lot of time with my buyers and do a lot of hand holding as many are moving from other states or are first time buyers. If I don’t trust them or feel like they don’t trust me, I just can’t do a good job so I end up interviewing buyers after they get done interviewing me.