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2 Oct 2008
We know home sellers are frustrated because their homes are not selling, because there are so few buyers right now. We know many sellers have reduced their listing price once, twice, and sometimes several times. And yet many homes remain unsold. It’s as though buyers are just not showing up, which they aren’t. None of this is front page news anymore. We read everyday in the newspapers what sellers are going through: the stress, the financial strain, the uncertainty, and for some a foreclosure if the home doesn’t sell fast.
But what is it like for Realtors? If you read my blog often, you know that I like to tell my readers the truth. Of course, what I write is colored by my limited knowledge and experiences, just like everyone else. But my readers constantly express their appreciation for my open writing, honest expressions of the challenges home sellers and home buyers face, and for insights they often do not get from others. By the way, I do get some heat periodically from other real estate agents in the area and from newspaper publishers, so I must be doing something right. After all, I’m not writing here to make other professionals like me. I hope they do. I’m a sensitive person. I do write to help my clients and to help others who are buying and selling real estate. That would be you.
The question today is what is it like from a real estate agent’s perspective to have many listings in this market?
An agent can only manage so many listings at one time, because of all the administrative work associated with each listing, and because of the level of customer service required to keep each client satisfied. How many listings can an agent manage practically? You’ll hear different numbers, but an agent can effectively manage a dozen listings, plus or minus. That number could be increased to two or three dozen, provided the agent has one or two assistants. But there is much more to the story.
Listing a property, getting it in the MLS and broadcasting it in a number of key locations on the Internet, maintaining a website and a blog to connect with buyers from outside the area, putting together an advertising campaign, having a CRM (customer relationship management) system in place to effectively manage the calendar and communications with clients, and handling all the regulatory requirements for paperwork and files–these are time consuming and a lot of work. Clients probably don’t generally comprehend how much work there is behind the scenes, and as agents, we really don’t have a forum to explain in great detail how all of these things work to the clients. We can give our clients a brief summary of what we do, but they really don’t want a two hour explanation, and let’s face it, they don’t need to know. These things are the agent’s responsibility. But having said all of this, this is NOT where the boondoggle is. In other words, as much work as all of this is, this is not the greatest limiting factor as to how many listings an agent can handle. What is?
The greatest challenge an agent has today in this real etate market, the most difficult market in decades, is managing client expectations.
Many listing clients today are freaking out. It is totally understandable. This is not by any means a judgmental statement. We are in the worst economic crisis any of us have seen in this generation. People are worried their entire retirement fund is going to crash with the stock market. The majority of Americans refinanced their homes, their rentals, their businesses, and now the burden of mortgage debt is killing them. This is America. Almost everyone is in this situation. Foreclosure is a topic of discussion for almost everyone today.
What this means for the real estate agent is that he cannot handle the large number of listings he might handle in a normal market. Today I would estimate that six high maintenance clients are going to consume a great deal of an agent’s time during the week. Here’s the problem. Because so few buyers are showing up, if an agent wants to be selling his listings, he better have 50 or more listings to sell just one every third month. That is totally unmanageable today. Of course, listings help the phone ring, so there is more to this than just selling the listed home.
While we all understand and appreciate the fact that home sellers are stressed out, a traditional real estate agent working with many listings is also going to be stressed out. Clients often don’t realize it, but an agent spends a lot of money and time during a listing. I would estimate that between my actual expenses (both fixed and variable), and an hourly rate at minimum wage, each of my listings costs me between $3,000 and $10,000. In a healthy market when listings sold within 90 days, those numbers would be much smaller, but in today’s market when listings are on the market for a minimum of six to nine months, and more likely one year to two years, these numbers may be low.
What’s the answer to all of this? Believe me I’ve been thinking long and hard about this. Everything is changing. We are living in different times. Selling real estate has dramatically changed in these past few years. Newspapers and magazines have lost their dominant power to sell real estate. Everyone knows this, including home sellers and agents. Over 80% of Americans start their search for real estate on the Internet. Foreclosures are flooding the markets. The credit crunch is killing buyers, and there are few buyers out there right now anyway. We are in the beginning of what may be a national depression. Does anyone think that selling real estate should be business as usual?
Home sellers need to hire real estate agents who are knowledgeable and experienced, but then they need to let their agents do their jobs. A home seller who has no confidence in their agent should retain an agent in whom they do have confidence. Hire the professional and let them do their job. But a home seller must listen to their agent, too. A home seller must honestly and humbly solicit their agent’s real opinion about what it would take to sell their home in this market. What is the real FMV (fair market value), not the price we would love to get. What is the price a buyer would actually pay right now? Overpricing is a killer, and it is a waste of time for all of us.
It’s hard work to sell a home right now. If ever there was a need for professional experience in selling, that time is now. I strongly recommend using a Realtor, whether it is me or another Realtor. This is not a time for experimenting as a FSBO, unless you have extraordinary skills and knowledge in all the required areas to efficiently connect with buyers and get the deal done.
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