Gone are the days when it was easy for homeowners to post a sign in their window or yard announcing “House for Sale” and it would cause a small stampede. Everyone from neighbors to passersby rang the bell or called the phone number provided to find out the asking price, even real estate agents.
Back then, owners selling their homes without hiring a real estate broker believed they made a brilliant decision. With mortgage money in plenty, a low interest rate environment and demand outpacing supply for property in emerging Brooklyn neighborhoods, broker representation threatened to become a bygone necessity.
New Broker/Agent business models emerged to respond to changing consumer needs. The retail real estate industry began to take on the appearance of the financial industry, with competing benefits between Full Service Realty Brokerage and Discount Realty Brokerage.
While competing realty business models offered more choice than consumers wanted, the average hard working, middle class homeowner stumbled upon what was thought to be a simple winning marketing strategy:
- Post a Sign on the Property, either in the window or in the yard.
- Provide telephone contact information that has an answering machine.
- And to make sure they capture all customer leads, post a Craigslist.com ad with their email address for inquiries.
While the above appeared simple to implement, executing it successfully was always the catch. If there is one thing that separates do-it-yourself-sellers, or commonly referred to as FSBO’s, and licensed Real Estate Brokers it’s…
CONSISTENCY
Not mind blowing enough for you? I can understand the feeling. When I first entered the Real Estate business in 2002 I remember asking an industry veteran who had 17 years experience in the Brooklyn residential market what advice they could offer to a young upstart.
The above answer was offered then and I was less than impressed when I heard it as you are now. However, after starting Corley Realty Group in 2004 and successfully leading our sales team over the years, I found it to be the one advantage we had over our competition, including do-it-yourself-sellers.
For any business, no matter what industry it competes in, it matters that their operating model, business systems and product and/or service delivers the same CONSISTENT experience its customers/clients expect. By doing so it establishes their value proposition. And this offers a clue why so many homeowners ultimately attempt to sell on their own.
When polled, many homeowners are not sure what a real estate broker does to sell their home. As old as the real estate business is, the industry hasn’t done a very good job of communicating what many licensed real estate professionals do. Largely because real estate practice standards differ from each state, city and town (or in our case, borough).
Like politics, all real estate is local, which explains why Brokers in Manhattan that predominately specialize in apartment sales would find many of the steps taken by Brokers in Brooklyn specializing in townhouse sales to be foreign to their business practices. Establishing a value proposition can only be tailored to the specific needs of the community of homeowners served by a real estate broker.
Now that we’re in a distressed sellers market, there are more for sale signs on properties than in 2004. No longer are crowds of potential home buyers overwhelming do-it-yourself-sellers with appointment requests and offers to purchase. In fact, the complete opposite is true. And the motivation by homeowners for arranging a sale is far different than before. Still, many homeowners still employ the marketing plan discussed previously expecting the outcomes their predecessors had.
Here’s the bad news: Their predecessors didn’t do that well, as the majority of do-it-yourself-sellers them from 2003 to 2006 weren’t able to arrange a sale for their home if it weren’t for the professional efforts of a real estate broker, as indicated in the graph from the National Association of Realtors below.
Why were so many do-it-yourself-sellers ineffective in arranging a market sale for their home? Because selling a home entails certain knowledge and skills that are acquired from practice over time in order to be effective. To demonstrate the point further, I recall working for a client to arrange a sale for their single family townhouse in Crown Heights where we were asking $695k. My partner and I worked 3 weeks in advance to create the interest needed to deliver big foot traffic at the first scheduled open house.
Down the street from our listing was an executor of an estate, who was also a relative of the deceased and also attempting to arrange a sale for the home. When I offered our firm’s services to assist them in arranging a sale, he declined believing he could do the same job as we would without paying a brokerage commission. I wished him well.
We held our listing’s first open house and received 4 offers, one of which was for full asking price. We advised our client of all offers after substantiating each buyers capacity to purchase and was happy to inform the buyers who made the offer for full price that they had an accepted offer. Employing our skills and experience in the specialized categories below, we were able to execute an enormously beneficial sale for our client:
- Valuation
- Staging
- Advertising
- Promotion
- Negotiation
- Financing
- Transaction Coordination, and
- Settlement
The executor was also ultimately successful in arranging a sale for the full asking price they held out to the public. It took him 3 months to get everything in order to go to contract.
When I saw him outside the home he was selling we had a chance to chat, in which our efforts came up in conversation. I congratulated him on a succesful sale. He also complimented us in kind. He inquired what we sold the property for and we advised we obtained the full $695,000 for our client and had already closed.
If you could have seen the look on his face when he heard our news. I inquired what was he able to sell for and he advised the full price they were asking, $475,000. Both homes were exactly the same in size, dimension, floor plan and accommodations. He effectively deprived the heirs the legacy the deceased would have wanted.
The estate lost $220,000 in value from the sale of the home.
* This post originally appeared at http://mybrooklynreport.wordpress.com/2009/07/06/if-there-was-any-doubt-why-real-estate-agents-matter/
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{ 1 comment }
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