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14 Jul 2009
Today we entertain another question from our Sequim and Port Angeles readers in our continuing series of Q&A with retired real estate attorney, author, and now real estate broker Chuck Marunde. Chuck is the Broker of Sequim & Port Angeles Real Estate, LLC.
Question: Does it matter who I list my home with? Any Realtor can earn 1/2 the commission by selling it, so all Realtors are motivated to sell my home. Right?
Answer: The answers are “yes” and “no.” Here’s an explanation.
It’s true that a Realtor who sells another Realtor’s listing can earn a commission, but there’s more to the story. If you are selling your home, understanding how this works is critical if you hope to sell your home within a reasonable period of time. The other two options are selling your home slowly or never. I don’t have to prove to anyone that many listings are in the slow mode or haven’t sold after 276 days or 362 days on the market. There are many possible reasons why a listing hasn’t sold, but the focus of this answer is on the pool of Realtors out here selling. Are Realtors equally motivated to sell listings, regardless of who listed it?
The answer is a profound “no” in my experience. Here are a few secrets that the public may have never heard of or read before, and which, believe it or not, many agents have not thought through themselves.
By the way, this whole question, “Aren’t all Realtors equally motivated to sell my home?” keeps coming up because clients and friends keep raising this issue. One friend told me that when he had his home listed, the only one who ever showed it was the listing agent. He said he felt like no other agents cared or tried to sell it. Another client and friend told me recently that her own agent seemed to lack enthusiasm and creativity in marketing her home, but she went on to assume that all other agents will be motivated to sell her listing. Not exactly.
Dirty Little Secrets You Should Know
Listings are primarily lead generation tools for agents. Didn’t know that, did you? You thought that by taking a listing an agent intended to sell that listing and earn a commission. He does, but not quite the way you think.
I would guess that between 90% and 98% of the time agents do not sell their own listings. Of those that sell, they are sold by other agents in the multiple listing service (MLS). What does that mean? It means the listing agent throws it in the MLS and hopes it sells, because almost every time that is what happens. Meanwhile, since the listing agent is promoting your listing in the MLS, he can get inquiries from that listing. In the vast majority of cases, that person is not going to buy your listing. They may be a tire kicker, or they may hire your agent or another agent, or they may buy another listing through your agent. All of these outcomes are intended by your agent and one of the major reasons he wants listings as a lead generator for other business. Note that I have not suggested there is anything un-American or wrong with this. My point is that your listing agent has a lot of other more important agenda items besides selling your home. He is far less likely to sell your home himself than he is to get leads off your listing and sell other homes. Again, nothing wrong with that, but I’ll bet you haven’t thought of listing in this way before.
Advertising your listing in print is a lead generation tool for your listing agent, not the means by which he will likely sell your home. I started in real estate sales 30 years ago, and I know from experience that when I advertise a home for sale in a newspaper or magazine, it is a great lead generation tool. People will call and ask casual questions about the house, and that gives me an opportunity to not only answer their questions, but to tell them about other listings if it becomes apparent they are not interested in this one. They key in sales is to begin to build a relationship, to prove I’m trustworthy and competent. That’s why an advertisement can be a success even if the listing doesn’t sell. Again, notice that the benefit here is for the Realtor, not you as the home seller. He sells another home while your listing gets stale on the market.
Advertising your listing with signage is a lead generation tool for your listing agent, not the means by which he will likely sell your home. This is true too. One of the things in life that amazes me is that reality is not always what everyone sees as the obvious. This is true in real estate sales. Listing agents get lots of calls from the signs, but rarely do any of these callers purchase the house. If we can connect with them on the phone and begin to build a relationship, maybe we can sell them another home, just not yours.
Advertising your listing anywhere is a great tool for name recognition and branding. This is very helpful for Realtors, but it doesn’t help you sell your home. Sorry.
Let’s take the next big step in the sequence of logical (and truthful) thought here.
Since listings are such great lead generation tools for listing agents, one can begin to comprehend why non-listing agents are not all that excited about selling someone else’s listing. Each agent needs to focus on generating his own leads, and that includes connecting with buyers so he can sell someone else’s listing. But selling someone else’s listing does not happen because an agent markets that other listing, which he cannot do without the written permission of the listing agent (which they won’t give). It happens because someone, anyone, searches the MLS, and calls that agent out of the blue or because of one of his own listings, not yours.
In other words, your listing gives other agents no lead-generating benefits at all! They generate their own leads through their own listings or their other advertising or networking, not through your listing.
Other Realtors cannot advertise or promote your listing to find buyers for your property. That would be a violation of the MLS rules. The only way an agent can advertise another agent’s listing or another broker’s listing is with written permission by that listing broker, and that just isn’t popular. Listing brokers do not want to give up the lead generating power of a listing, and certainly not to an agent from a competing brokerage. See how that works? No wonder other agents are not motivated to sell your listing!
If other agents cannot advertise the specific features or benefits of your home, they are not connecting with buyers looking for those precise benefits. Only the listing agent will get those leads. Again, other agents are not motivated to sell your home unless a buyer happens to find it on the MLS and ask him about it. Then . . . bingo, it’s time to earn a commission, because a living breathing client is on the phone.
Buyers don’t do random. In other words, buyers don’t call an agent out of the blue and say, “I’m looking for a 4 bedroom, 2 bath home on 10 acres where I can have some horses, preferably with a lot of horse trails adjacent to this property that we can use.” Twenty or thirty years ago they did that, but not today with the Internet. A buyer like that is going to search for an MLS listing online with those parameters and call the listing agent, or maybe he’ll call a buyer’s agent who can show it to him. Even then, notice that the buyer’s agent wasn’t doing anything to sell your listing. He got a call and he gladly showed it, but there was no existing motivation to market or sell your listing. (Don’t get sidetracked by thinking that the listing agent is going to get this call and sell his own listing. It happens, but it is rare. Remember between 90% and 98% of all listings that sell are sold by agents other than the listing agent.)
Now let’s close with the first question. Does it matter who I list my home with? Yes. It does. It’s obvious that print media no longer sells like it used to, and let’s face it, almost all buyers have migrated to the Internet. The National Association of Realtors’ national survey indicated that about 85% of all home buyers start their search on the Internet. So your agent should have a massive Internet presence. Don’t be fooled by those who say they do but don’t.
But your agent should also have solid experience in real estate, hopefully a good education in real estate, and it is absolutely essential that your agent be a marketing expert.
Selling your home today is not what it was 20 years ago. In this new economy and shifting advertising market, the agent you hire to sell your home matters. Read All Agents Are Not The Same.
Questions may be submitted to firstname.lastname@example.org.
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