More Real Estate Lies: Buying A Listing
Author: Tracy Ruddell
Thinking of selling your home this year? Naturally, you'll be looking for the right Toronto REALTOR® to maximize your profit. So, you should hire the agent who quotes the highest, potential selling price, right? That's someone who really believes in the value of your home.
We talked earlier this week about some of the top, Real Estate listing lies we see all too often. Today, we want to warn you about a shady tactic that some agents use to buy your business under false pretenses.
It’s no secret that sellers are motivated by price. Who doesn’t want to get top dollar for the sale of their home? But what many sellers don’t realize is that some, unscrupulous agents will say whatever it is you want to hear to get you to sign on the dotted line. Once you’re locked into a contract, they’ll be whistling a much different tune.
If you interview several Real Estate agents before hiring one–as you should do–you’ll be getting what’s called a listings presentation or sales pitch where the REALTOR® takes you through their strengths, how they would market your home for sale in Toronto (or wherever the area may be) and, the magic number every seller wants to hear, the price range they believe it will sell in. Agents use recent comparables to come to that home valuation and all agents have access to the same data. Chances are, most REALTORS® will give you an estimated value that’s in pretty close range to one another but some agents will purposely mislead you, telling you that your home is worth more than it is based on the current sales data, just to get you to sign with them.
They'll do this by looking at the same data as everyone else, figuring out the logical value range that other agents are going to give you and then add a percentage on top of that to beat out the competition. This is what’s known in the industry as “buying a listing”.
How does this hurt you? An unethical REALTOR® knows that one of the following scenarios is likely going to happen:
Once you’ve been through the stress and inconvenience of listing your home, they’ll convince you that an offer lower than what they estimated is in fact the best offer (and it probably is the best offer they’re going to be able to get you because they’re not doing right by you as a client).
They list at the inflated price they told you, the house doesn’t sell and you have to pull it and re-list a few weeks or a few months later, creating a stigma for your property.
These agents know this is going to be the outcome and they don’t care because you signed a listing agreement (typically for at least 3 months, sometimes 6 months). Now you’re locked-in.
All of this said, could your home sell for what would be considered well-above market value?
Absolutely it could. It’s happening every week. This is a crazy market. And to make that happen for you, a good agent is going to advise you on staging your home appropriately and they'll market your home in such a way as to get the most prospective buyers through (the best agents have very successful websites and digital media); they'll almost certainly hold for offers as well, although that strategy isn't right for every single home.
The truth is, it’s not the agent that’s determining the price you’re going to get. The market determines that. The job of your agent is to open your home up to the largest market possible and to ensure your home is presented impeccably. They need to market your home better than the competition to drive the most interest and, whenever possible, generate a bidding war or a really strong bully offer. That’s the only thing that’s going to drive your final sales price above market value. Remember, all of your prospective buyers are looking at the same recent comparables that your listings agent reviewed with you to determine their offer price. What causes them to go well above market value isn't logic; it's emotion fuelled by buyer competition and too many previous, lost bidding wars.
If you’re selling your home and interviewing GTA REALTORS®, don’t make the mistake of hiring the individual who’s just telling you what you want to hear when it comes to sales price. To be frank, it’s an agent’s job to know more than you do about Real Estate and to tell you the truth. Find the person who excels at marketing your home and has superlative negotiation skills, not someone who’s just blowing smoke to drive business.
Lead image © SamJonah from Shutterstock.