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October 18, 2012

7

Do You Want Me to Tell You What You Want To Hear or Do You Want The Truth?

by mark mclean

There used to be an old saying that the toughest sellers were real estate agents. I’m not really sure why, maybe it is because they are so close to the daily minutia of the market that they can easily pick apart the competition.  But lately I’m not so sure. This week I came across two interesting situations. In the first, A client called the agent crazy for suggesting a list price that was $80,000 lower than what he expected. The agent, a seasoned veteran with lots of experience in the neighbourhood under is belt was nearly shown the door. In the second situation a  Seller was distraught that her house only sold for full asking price, with one offer. How did things get out of whack so quickly? When did the public stop trusting an agent’s research? For starters, Toronto has enjoyed one of the longest periods of sustained property appreciation ever. That has led to the belief that prices will never come down. Clearly there is a disconnect in place. On one side, the media is hitting everyone over the head with reports saying the market is cooling rapidly but on the other side, some sellers are refusing to believe that news has anything to do with them or their property. So I question whether we, as agents, are doing our job?

The truth is that when we are called in to evaluate a home, our job is to 1. Provide a range that the property should sell for given current market conditions and based on historical data of past sales. 2. Determine a strategy to employ that would best suit the situation in order to provide the maximum exposure to buyers. As easy as it seems, it’s not. Subtle nuances in the market play a huge role in the evaluation process. Property assessment roles may tell you what the house down the street  sold for, but it doesn’t mention the Wolf stove and custom kitchen or that the house’s foundation is collapsing. More importantly, assessment roles don’t tell you that one house sold in a Buyer’s market and another sold in a Seller’s market. All that critically important information comes from the grunt work an agent does as part of their daily routine. It cannot be replaced.

A while back I wrote about market value, you can read it here http://bit.ly/Quk3S0 So the question we should be asking our clients is Do you want me to tell you what you want to hear or do you want the truth? Setting expectations ahead of time should be our primary goal. In the case of the “only one offer” the agent did a great job of telling the client not to expect multiple offers in the first place. If it happens it is a gift. She also came prepared with a full competitive analysis of the neighbourhood and showed the client, after the sale, that they should take comfort in the fact that they set a new “high water mark” on the street. For the client who wanted to list at a higher price, the agent was able to clearly demonstrate how he arrived at his price in a way that left his client’s emotional attachment at the door.

It reminds me of the story one of our agents told about an agent who booked an appointment for 7pm on a house that was vacant and had no power. Our agent told her she couldn’t go in after 5pm because it was too dangerous, to which she said she only worked after 6pm because she had, what she called, “a regular job”.  Am I the only person out there that believes you can’t do this job part-time?

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7 Comments Post a comment
  1. Oct 18 2012

    You’re not the only one, Mark. We refer to them as “bored housewives” and they are very annoying. I know in the city members of cultural groups will have a different full-time job and have their “real estate clients” use another realtor to show them all the properties they want to see and then use the part-timer to actually write the offer, giving him 50% of the commission for doing little more than writing the offer. Sad, but true.

    Reply
  2. Oct 19 2012

    Hi Mark:
    The situation where the Seller was upset because she got list, I have to say that perhaps her agent needed to council their clients more. Being repetitive about market conditions is best. I have been polling agents and there seems to be a sense of denial among the majority about the market. Mainly due to the fact that new listings are still having offer dates.This belief that the home will sell on a specific day will resonate down to the Seller consumer. The buyer consumer needs to be looked at too. It is important to look at data daily. Sales, list to sale ratios, days on market, price adjustments ( I mean lower) etc… the clients need to know what is truly happening out there. I am so tired of hearing an agent say” my client feels it is worth X dollars”- if that is the agents only mandate when representaing a home for sale- then it is no wonder that properies sit and both the agents and Sellers whine.

    Reply
    • Oct 19 2012

      I think you hit the nail on the head. sellers aren’t budging as hard as the market is dictating. I also echo your comments about the importance of looking at the data everyday. Another reason why an agent who is in the office, attending meetings, going to open houses will trump a part timer every time! Thanks for this and have a great weekend! m

      Reply
  3. AynOttawa
    Nov 10 2012

    Great post! As a Quote-un-Quote ‘full time’ realtor, I personally could not work another job. I work hard at knowing the comps and keeping in-tune with the market and WORKING for my Ottawa clients. Your right, some sellers want to believe their house is not affected by the cooling of the market, this is usually not the case.

    Great post,
    AynOttawa

    Reply
  4. Apr 24 2013

    lot of silly realtors out there promising the world to these sellers. When the whole multiple bid situation started, agents would evaluate notice a house is selling for avg. example $500000, so they list it $499000 or $509900 and hold back offers and prices would soar, now a days a lot of agents will list at $449000 or 409900 if the avg comps are $500000 which really is stupid and defeats the purpose of multiple bids since we’re in a slower periods and why I see homes being listed for below asking and then no offers and cancelled and goes back up for way over the market value.

    I understand buyers/sellers getting caught up in the media hype but its sad when realtors use it to take advantage of their clients.

    I think our biggest problem now is that sellers don’t want to budge (no urgency since many Toronto homeowners have so much equity) and buyers think its a slow market. But even then, the movement still there in most of the GTA. Everyone is hoping for a crash in the condo market, but the rentals are so strong, I think all we can expect is for the prices to come down a little or plateau for a while. I think the media fails to understand that a crash is not so likely when many condo speculators have at least 25% down or even 40% down, makes walking away very difficult.

    Great write up Mark!!!

    Reply
    • Apr 26 2013

      Thanks for the insights Ron. I think the media is backing off all the crash talk for now and it looks like the condo market will see some slight improvement over the next few weeks.

      Reply
  5. May 6 2013

    Real estate is my profession and my only business interest and I always seem to be wishing there were more hours in the day. How anyone can market real estate part time is beyond me.

    Twenty four hours a day is great if there wasn’t such a thing as sleep!

    Reply

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