“Beware of real estate agents who will ‘buy’ your listing.”
This was the title of an article recently published in the Chicago Tribune, written by Kenneth R. Harney.
The article begins: “It’s one of those hush-hush practices that homeowners rarely hear about but real estate agents know only too well: It’s called “buying the listing.” The author goes on to correctly note that the National Association of REALTORS® ethical standards prohibit this practice. NAR’s standards direct that: “REALTORS®, in attempting to secure a listing, shall not deliberately mislead the owner as to market value.” Unfortunately the practice continues.
When you think about selling your house, you may invite a few agents over to give you a pricing analysis.
But how will you know which one brings you an accurate value? Do you think all potential list agents give accurate pricing – then why does each agent present a different value? How will you know who’s telling the truth?
Will you just hire your agent through a “bid process” – whoever bids highest on the sales price gets to list your house? This is a very common method of selecting an agent – but an ill-advised one. There are many reasons why the “high bidder” method brings frustration and disappointment to sellers. It’s something I discuss in my book, Chapter One “Real Estate Greed”.
Many agents purposely bid their list price high in order to get hired for the job, planning all along to have you reduce the asking price later.
Real estate agents typically earn commission paid upon sale. So they know they won’t earn anything for the extra work of extensive market and pricing analysis in advance of your first meeting. They know they won’t get paid anything ever from your property – unless they first get you to entrust your listing to them. So their first objective is getting picked to represent the listing. And this priority often blinds them from doing the work that you really need them to do – carefully, accurately, and honestly advise you on selling your property.
Regarding your property’s value, agents interviewing for the listing are often wildly off-base.
They know they won’t be paid hourly to perform in-depth thorough research for you at the initial interview, so most do the work as fast as possible – hasty research and cursory analysis – and then recommend the highest price because – you guessed it – they know that they are far more likely to be selected as listing agent if they are the “high bidder.” They know that, for uninformed sellers, whichever agent delivers the highest price projection gets the listing. That’s called Buying the Listing.
Such agents have no thorough protocol to help you add value to your home. They don’t execute a proven approach to earn you the highest price. Instead, their intent is just to get the listing paperwork signed, and then wait for you to get frustrated with the lack of offers so that you’ll agree to lower the price to get it sold. This is an inferior approach to selling real estate, and it has disastrous consequences for you as the seller.
If your property is priced too high when it goes to market, fewer buyers will come for showings; and for those who do view the home, they don’t send offers if they find the price to be uncompetitive. This leads to a long time listed on market, slow progress for your sale, and usually one or more price reductions – which reduces the perceived value of your property, and ultimately leads to a lower net profit for you.
According to Harney’s article, agents in Arizona have noticed the overpricing trend affecting 50% of all listings; in other areas, 10%-30% of house listings (and their owners) are afflicted in this way.
“Buying the Listing” is an all-too-common practice in the field of Real Estate that endangers the seller. And I’m glad that the Tribune made a space to publish the expose about it. I recommend reading the full article here: http://www.chicagotribune.com/classified/realestate/ct-re-0612-kenneth-harney-column-20160607-column.html
But it’s only one of many instances of Real Estate Greed that harm sellers – you’ll want to be able to recognize and avoid them all.
Now sellers can learn about the unethical practices in the marketplace that threaten to frustrate them and reduce their profits. You can learn about more risks and how to avoid them by ordering a copy of my book. The only cost for the book is a $5 donation to a charity of your choice. To get your copy of the book just visit LaurensFreeBookForCharity.com.
P.S. Can overpricing really be a problem even in a hot market where properties are selling fast? Absolutely. The danger of falling for the Buy the Listing scam may in fact be greater in a hot market – with all the newspapers and colleagues talking about how “hot” the market is, it can be easier to believe that any price is possible. But no matter how hot the market, a strategic approach, based on a through Property Diagnosis, is always necessary to maximize your profit. Grab a copy of the book for details on how to take a strategic, proven approach to maximizing your profit in any market conditions.
P.P.S. Please don’t be a victim of the phenomenon of Buying the Listing or other unethical practices. Learn to protect yourself.
Lauren Collier is an entrepreneur and writer who can’t stand the idea of people being taken advantage of. She’s working from the inside to try and make the system better, to make sure that property sellers get service that works for them.