I was talking with another Realtor recently who had been the listing agent on a home sold to Buyers I had represented. I was shocked to learn today that his Sellers thought he did a lousy job on that deal. The reason for their unhappiness - the home sold too fast.
When I did the market analysis for my Buyers on this listing, my price came out exactly the same as the list price, so I felt comfortable advising the Buyers to offer full price. "They have it priced right" I told my Buyers.
Offering less than market value ran the risk that another offer would come in that looked better while we negotiated below the asking price. It was right before a summer weekend; the home had only been on the market for two days and was located in an area where sales were very strong. It wasn't worth trying to mess around with a low offer, so we wrote an offer that we hoped the Seller could say ‘yes' to without changes. The offer was submitted and accepted.
After the inspection, we negotiated some repairs into the deal (usually easier to do when your paying full price) and I was impressed at how well the listing agent handled these repairs for the Sellers, and kept me informed of what was being done and when. In short, he knew good repair people who accomplished the repairs at a much lower price than the Sellers would have had to give up had we gone with cash repair allowances, which saved the Sellers money. He communicated very well the entire time, all the way through the closing, and impressed me as a competent and very capable Realtor.
Now I found out that the Sellers were angry because they thought the home sold too fast, which meant (in their minds) that it was listed at too low of an asking price, which they thought was the Realtor's fault. They thought, since a full price offer came in after just two days on the market, that it should have been listed about $7,000 higher, he told me.
I couldn't help laughing at hearing this because, as I told the other agent, my market analysis would have come out just exactly the same no matter what the list price had been. We prepare offers based on market conditions, not the list price. In fact, when we come across homes that are priced well above market value, it makes it less likely that our Buyer will want to submit an offer because they often (correctly or not) perceive that the Seller is not motivated and is going to be unreasonable.
Also, had the home been listed $7,000 over market value, it's very possible, after doing our market analysis, we would have offered $10,000 below the asking price ($3,000 below market value), to leave some room to negotiate up to market value. So, the idea that the home was sold too cheap is simply not true. It sold for exactly market value. The listing agent priced it right and that's why it sold in 2 days for full price.
But the Sellers were so upset with the sales price that they extracted a 0.5% commission rebate plus some closing costs (over $1,500 total) out of the Realtor's commission. And they still were not happy. The agent seemed pretty good natured about it, didn't seem bitter or angry, but it really is a shame that his clients did not like the outcome he created for them in selling the home.
We both marveled at how the quality of the service we provide as Realtors is so often entirely subject to the perceptions and interpretations of those we serve.
I believe this Realtor did a fine job for his Sellers. The home was properly prepared and staged. It showed very well and had excellent photos taken, which really helped my out-of-town buyers visualize how nice the home was. He took great care of the Sellers during inspection negotiations and the completion of the repairs, and stayed on top of the deal all the way through closing. He did everything a good agent should do, as far as I could tell.
But his Sellers will not be recommending him to friends or family. He won't be receiving referrals from them, much less a Thank You card. Instead, they have probably been spreading ill will, telling others how their Realtor "blew it" and cost them the extra money they are convinced their home would have sold for had they priced it higher. The Sellers felt like victims. The Sellers felt ripped off.
A job well done, by most reasonable standards, resulted in unhappy real estate customers.
How do we avoid this as Realtors? We don't. It happens sometimes. It happens to us all. From a Buyer side, the same thing can happen when an offer below list price is accepted right away without a counter-offer. The natural inclination is for the Buyer to wonder "maybe we should have offered even less. Maybe we're paying too much. Why didn't the agent tell us to make a lower offer?"
This second-guessing can never be answered or resolved though, because one never knows how different circumstances or different numbers would have caused a different outcome. We can only guess and wonder.
Yet, as in the example of this other agent, as human beings, we often treat our speculation as fact. We base our opinions and reactions on perceived or imagined scenarios with 100% certainty that the better outcome we imagine as being lost is exactly how it would have been. Then we choose to feel angry and disappointed instead of grateful and happy.
For these other Sellers, they are 100% convinced that their home would have sold for $7,000 more, but I know for a fact that my particular Buyers would not have been willing to pay more than they did. I do NOT know for a fact though whether some other buyers would have come along later and been willing to pay over-market value for the home. I can only say that it's very unlikely.
The bottom line though, the way I look at it, if the customer isn't happy, I failed. I may be able to say I did everything right, or that I "did a good job", and that a good outcome was achieved by all reasonable measures, but if my customer feels let down, I will still wonder what I could have done differently.
Steve and Sylvia Crossland have been providing Austin real estate customers with Sales, Leasing and Investment Property services together since 1990.
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Yes, I think you hit it in your title...."perceived" value. The sellers did not "perceive" that their agent did a very good job for them, that is terribly unfair to the selling agent. Although those particular sellers may have found fault with many/all senarios that could have occured. If it took to long to sell, the negotiation process was difficult, or ? who knows.
I have wondered if transactions that are smooth and quick make our jobs look too easy..."hey I could have done that" the seller thinks! When the reality is that it was smooth and quick because of the skill, knowledge, and experience the agent brings to the process. Of course transactions can be difficult and challenging too!
That is a real shame that the agent won't be appreciated by those sellers for a job well done.
Steve,
An all too common scenerio which you stated very well. Good post!
I think we have all been in your shoes with this one.
Some things will never change.
This happens all the tim; and sometimes the sellers you work the hardest for are the most thankless.
Perception is reality, unfortunately. And I hope that we can all use this story as a learning tool to make sure we explain what's happening throughout the process. A dialogue I learned a long time ago that makes folks think about this scenario is: 'Is it okay if I bring you a full price offer immediately?' to which, of course, they say yes-and you can talk about why they might just get an offer like yours fast. Which would hopefully dispel some of this drama when it happens.
In the book Freakonomics by Steven Levitt, one of the studies of the book was on Real Estate Agents selling their own home and how long it stays on the market. He "proved" agents will hold out for a better offer if it is their own home because agents who listed their own homes left their properties on the market longer. This without taking into considerartion Real estate agents are rarely "relo" folks or transferees who must buy and sell quickly, and that agents often are speculating with investment property.
It was just odd that a great book promoted that real estate agents don't perform their job well if they sell your home quickly.
It is very difficult when this type of thing happens. I had an experience when a client was buying new construction. The builder did not own the land yet, wanted the deposit paid directly to him, and had specs that were way too broad. I advised the clients to get an attorney -- which they did -- and the attorney prepared a performance mortgage to protect the buyers. The builder was not happy, but he did fill out more specifics on the specifications of what was going into the house -- it was quite an expensive house. I turned out to be the "bad guy" because it cause a delay of about 10 days! The ironic part is that the buyers decided to expand the house which caused an additional delay of 2 months. Sometimes you just can't win.
In my area, the seller makes the final decision weather to accept or reject the offer. The seller needs to get a reality check, and the listing agent did not need to reduce his commission. Sometimes you have to be tough and throw the monkey back at the seller.
Dick Beals
Steve, I agree with you 100%. It the perception of the value we provide, and whenever my client feels I let them down, I, too, feel it is my fault, not theirs.
Our rules state that we owe our client certain fiduciary duties and that we must be 'fair and honest' to customer. I always say that honesty can be easily defined and documented, but fairness is in the eyes of the beholder. How many spouses know that they treated their significant other fairly in their divorce decree? And what did the other side think?
Steve- Peoples perceptions about what we do or don't do will never change. I like to always put "ball" in the buyers or sellers court and let them have the final decision on what price they want. If the seller wants to price a home to high, I usually tell them that it could sit longer and might not appraise out. The same with a buyer, if they wont to lowball every offer, I let them. I do explain what market value is and they risk the chance of losing the home or the sellers completely rejecting it.
If the home stays on the market too long, it's the agent's fault................If the home sells too quickly, the agent is at fault.............hmmmm
Thank you for the article.
Judi
Correct me if I'm wrong here, but even if they were somehow able to get a deal for $7000 more, wouldn't the appraisal knock them back down to the final offer they got anyway?
A well written article, Steve, and a situation that many get caught in, on both sides. Too bad the sellers felt cheated - they got what they wanted, a quick sale at top dollar with minimal hassle, no Open Houses week after week, etc.. They made the choice, didn't they? The agent didn't reduce his commission because it sold quickly just as he wouldn't raise it if it took a long time. Honorable of him to agree to their rebate. But you're right, if they aren't happy, then there is a problem, and it will be tough, if not impossible to change that perception.Interesting that the objective we all try to achieve in a sale , despite being met, turns out to cause disappointment.
The crystal ball is still in the shop for repairs!? Many times people make the assumption that because we are Realtors we have the magic number. Regardless of what we tell them though, they will challenge us. The selling process is no exception to the rule that you can't please all of the people all of the time. Even when you keep the dialogue open, sometimes people are under the assumption that they should be able to get more. Sounds like that Seller's agent went above and beyond and even though we all try to keep satisfied customers, one of the facts of life is that some people just won't be no matter what you do. It's a most stressful process and we, as Realtors, have to keep it in mind and try to keep the customer from losing sight of the objective. Great post!
Gee, I feel sorry for that listing agent. You just know that these sellers are going to bad-mouth him - unfairly. Well, the next time they want to sell, they can go FSBO, over-price it, and then see what happens. AND, they can then see how the appraisal comes out, as Jerry mentions.
Sour GRAPES anyone?
Steve, great post. Some will never be happy.In my area of Fort Myers, they can be glad to get a fair market value selling fast these days!Many are reducing their asking prices.Incredible that they took some commission off!
Sometimes you just can't win. Some people are just contrary, don't trust Realtor's and just will not believe what they are told because they feel if they will it to be true, it will become true. NOT!
I listed a duplex a while back. Told the sellers it would sell for around $475, at that time. Showed them the comps, did an in depth analysis. Explained everything, they understood. We went ahead and listed it at $490 because they wanted to try it a little higher. We agreed that we would reduce the price in several weeks if an offer didn't come in. (One of the units was vacant = no rental income) Three weeks into the contract we received an offer of $475. Sellers refused to counter, could not budge them, tried everything. They wanted to wait, did not want to negotiate. Bye Bye Buyer. You know I am thinking at this point, "What did I get myself into?" "Where are the sellers that I spoke with when I listed this thang?" About a month later another offer came in at $465k, they would not even come to the office to discuss it, rejected. (One unit still empty) Listing expires and is renewed at the 6 month point. 8 months into the listing, the second unit goes vacant. Tenant got tired of all the traffic into the other unit and all of the potential buyers and agents knocking on her door asking if they could see the other unit, even though they were instructed not to and a do not disturb sign was on her door. (Two units empty - no rental income at all) Mortgage payments still due every month.
Sellers getting nervous now. An offer comes in at $435, sellers finally decide to negotiate, counters go back and forth, goes into escrow at $445k, closes escrow, finally.
The stubborn streak cost these sellers a $30k difference in the price and the cost of the lost income of over $10k plus the costs of the mortgage roughly another $20k or more. Yes that is a grand total of about $60k. How smart is stubborn?
You have to know that the sellers are probably telling everybody what a lousy agent they had. They had a very good agent, who told them the truth every step of the way. Sellers do not always listen. It is about saving face, it is the rare breed of people who can step up to the plate and accept responsibility for their own actions.
Is there any way to combat this? No, not really. All we can do is educate our clients, explain the market, offers, timing, how the process works, but when sellers think they know better than the professional who knows the market, who has shown them the comps and has substantiated the selling price, what are you going to do? I only wish my crystal ball would show me the future at listing time, because these types of sellers cost us agents a small fortune in marketing and advertising when they decide to sit on the market and throw their money out of the window.
Had I known ahead of time, I might not have accepted the listing.
Like I said, "Watcha gonna do?"
> Is there any way to combat this? No, not really.
I think the best approach, when something like this happens, is to do as the other agent did in this case. Keep a sunny attitude, chalk it up as part of the business, and move on. He never had a bitter tone or said anything bad about the {edit} sellers. He just matter of factly told me what they had said and what the result was. He's a better man than me. I would have had a harder time keeping a positive attitude.
Thanks for all the great followup comments and feedback. I'm really enjoying myself at AR after stumbling in the door a few weeks ago.
Wow Laurie, What a story about the duplex! At least it is a story you can share in the future with potential sellers about the pitfalls of over pricing and not being willing to negotiate. Although people tend to think they are the exception to the rule!
Steve, great final point about the postive atittude of the listing agent! That mental adjustment is the key for moving beyond the disappointment.
Steve, That is a big reason I would never make a full price offer. I would have gone in $5000-$10,000 below list price and put a very short time limit of offer. The seller would have come down a few thousand and probably would have felt much better about the whole situation even though they would have ended up with less. If the seller would have held out for full price, you could have come up and the seller would have felt a sense of victory instead of a sense of being ripped off.
It's a wierd thing but it is all in the perception.
Hi Tim,
> I would have gone in $5000-$10,000 below list price...
That won't work in our market. It's really amazing how many multiple offer situations we are in now in Austin. More than half of the offers we submit go into multiple offers, and it's not hard to predict which listings that will happen with. Come in low and you risk your offer getting set aside in favor of a more serious offer.
Laurie, I thought you were going to say the listing expired and they went with another agent who got them to a lower price (as often happens with the 2nd agent) and it sold immediately. So the 2nd agent looks like the hero! At least you were able to get some income from this one. With sellers such as yours, that doesn't always happen. You're exactly right on the cost to the agent. There are those listings where it's just better to walk away.
I had a similar situation a few years ago to what Laurie described...home was listed at $190,000...sellers had bought for $130,000.. had an offer of $180,000.. they wanted $190,000.. the market was going down and sellers kept waiting for prices to come back.. we wound up having to do a short sale.. at $125,000 and they came up with some cash as required by the lender..There are some walls you can't knock down. if they had taken the $180,000 offer they would have always thought they sold for too little.. strangely they still like me even though they lost money because they can blame it on the market... go figure..
Your friend sounds like a good real estate professional. He should look at himself in the mirror and tell himself that every day and not let non-professionals run his business.