Real Estate Round-Up: S is for seller, part 2
Last updated 8/12/2021 at 2:54pm
I have been a licensed Realtor since 1997 and Chris Murphy and I have been selling real estate in North San Diego County since 1998. We have loved our profession and most all the clients we have represented over the years. The rewards of this profession are found mostly in the relationships we’ve created, built on trust and mutual respect. Occasionally, a client is worth memorializing in one of my columns.
I have shared the stories of many wonderful clients who hired us to help them make their success story. I will never forget meeting with one couple, six years ago, who were very well established in their lives and careers. They owned an incredible property in Tumble Creek and had been referred to us by another client we had represented who moved to Fallbrook from Poway.
Mr. Seller was extremely sharp, a self-made man. He had the kind of success in life that instead of making him arrogant, made him smart enough to know if you hire someone for a job, you’d better trust them with that job or hire someone else. He has referred countless friends to us over the years.
When we sat with him and his wife and made our presentation to them, they asked the question all sellers should ask their Realtors, “what can you sell my home for?” Before we could answer, he told us what he wanted for his home. He had done his homework and he had a particularly sound idea of what it was worth. The price he wanted was much higher than the comps supported, but the property was worthy of pushing the price.
We shared our unique marketing strategy with them. Our strategy does include a unique approach to the list price, called value range marketing. Mr. Seller then said something that will always stick out in my mind. He said that he didn’t care how we achieved his number, because that was our job, he just wanted us to sell his home for the figure he felt it was worth. He didn’t dicker with us over commission or approach. He gave us the bottom line and, in his mind, as experts in our profession, we were to achieve it, nothing less.
Using our unique marketing technique, we not only achieved his number, we exceeded it by over $55,000. That might not seem like a lot in today’s marketplace, but six years ago the economy was still recovering. In that market, pushing the purchase price was unheard of.
Fast forward to 2021. We are in uncharted territory with the prices of homes climbing with each successive sale. The question of how high is high, is constantly moving up and up. We must look at recent sales history to have a starting place to determine an anticipated sales price, but generally all sales for Murphy and Murphy are consistently much higher than even our client’s wildest expectations.
Enter Seller story number 2. I’ve written broadly about this seller previously, but I have a new chapter to their story. This seller hired one of the Realtors that hangs their license with our brokerage. This Realtor reviewed the comps with the seller. This Realtor explained the unique marketing tool we use at Murphy and Murphy. The seller told the Realtor the price they wanted to achieve, which as a side note, was extremely higher than the comps supported. The Realtor created a value range marketing bracket that would provide a sound basis for comparison, while incorporating the ability to reach the price the seller stated that they wanted, and a Residential Listing Agreement was executed.
Within less than 10 days, the seller had received two offers. One $25,000 above the price they wanted, and a second $50,000 above the price the seller wanted. The seller sent out multiple counter offers to both buyers. One buyer walked away from the transaction. The other buyer increased their offer by $3,000.
I shared in the past how the seller did everything they could to make the escrow unpleasant for the buyer. Check out my article, R is for Response, a few weeks back to get the details. Long and short of the story is the buyer finally cancelled the escrow. The seller then took their focus completely off the success they had almost achieved if they had just played nice in the sand box and put it directly on how much they were paying in commission.
Let me remind you. The seller’s initial escrow was $28,000 above the price the seller said they wanted. The difference between what they were paying in commission versus a discount broker was more than made up by the remarkably high purchase price. But the commission amount was all the seller could focus on.
Fast forward to a week ago. That same seller has now listed their home with a discount broker for the exact number they told the Realtor from our office they wanted, $600,000. (actually, they listed it for $599,800) It has now been on the market for eight days, by the time you read this, 13 days. Does anyone believe based on the current marketplace that this property will sell for over the list price given the time on the market?
Knowing what I know, because remember, you should hire someone who knows what they’re doing, there is not a chance. The market is taking a short breather right now. Buyers are still looking, but they are also traveling and visiting family. They are enjoying their ability to travel and get out. The market will return, but it might not be until September. In September, this property will have been on the market for 45 days. The longer a property is on the market, the harder it is to get a high price for a property.
I’d like to do some math with you. Simple math, not common core math. Imagine the original purchase price of $628,000. Now imagine a commission rate that many people would define as “normal.” Multiply that number by the sales price to come up with the total commission. Now take the new potential selling price. Let’s base it on the current list price of $599,880. Now imagine a discounted commission rate. Multiply that number by the sales price to come up with the total commission. How much more does the seller make in the first scenario than the second scenario?
If you focus on the cost rather than the profit, you will not be helping yourself out. Yes, you will be paying less, but you will also be netting much less. Experts are experts and you should trust them if you’re going to hire them. They know how to negotiate the purchase price. They know how to negotiate even the intangibles like occupancy, appraisal, and repairs. Don’t shortchange yourself looking for a deal, because that deal by any other name is a bad decision.
Kim Murphy can be reached at [email protected] or 760-415-9292 or at 130 N Main Avenue, in Fallbrook. Her broker license is #01229921, and she is on the board of directors for the California Association of Realtors.