I had an interesting conversation with one of the agents in my office yesterday. He is a strong producing agent who is feeling rather frustrated with all the multiple offers going on. Since January he has been in ten such scenarios and lost all ten. If it weren’t for his listings I’m not sure I would be able to talk him off the ledge. Multiple offers seem to be the focus of a lot of discussions around the office (see today’s article in The Star on winning a bidding war, http://bit.ly/HBlh7b ) and while we often talk about Buyer fatigue, the new malady might just be Agent fatigue.
I might just have the answer for winning more offer presentations. It is so simple yet so genius. Sell your clients a FSBO property. Let’s face it, Agents stay away from FSBO’s. They’re not supposed to, but we all know they do. At our company we devote part of our training to dealing with private sellers because, while still a very small segment of the market, agents will come across them from time to time and need to know how to negotiate with a private seller. We should also recognize that, for the most part, FSBO’s aren’t flying off the shelf. Personally, I’ve passed the same three large round blue and green directional FSBO signs for the last 2 months. (Interesting how FSBO’s don’t need to adhere to city bylaws regarding open house signs isn’t it?). It reminded me of an interesting situation one of my agents had a few months ago. She had been working with a buyer for a few weeks and after several failed offers they found the perfect home for sale being offered privately. My agent talked to the sellers and managed to organize the showing with her clients. The house was for sale for $749,000 but her research showed that it was easily worth $850,000 and that under normal conditions (read; massive bidding wars) the house could reach into the $900k range. The sellers said they were trying to get a bidding war going. The instructions clearly stated that all offers were to go to the Seller’s lawyer. My agent’s clients were interested in the house so she called the lawyer to ask if there were any offers registered. His response was “yes, we have an offer on the table for $745,000”. Fabulous. Well it turned out perfectly for one buyer. Sadly it was not ours. That’s a story for another day. The point of this is to illustrate that it is not always in a Seller’s best interest to go it alone.
Let me state unequivocally that I am not against people selling homes themselves. There are lots of situations where involving a Realtor just doesn’t make sense. In a 2010 NAR survey of buyers and sellers, about half of the FSBO sales typically occur when the seller knows the buyer. Here are some other interesting points from the survey;
• Over 60% of all FSBO’s sell for 10% or more below the market than if they had they had sold after obtaining the services of a Realtor®
• Over 65% of FSBO’s end up in some sort of litigation or legal dispute ending up in court or arbitration and costing them more than the expected savings of selling on their own
• Most FSBO’s take longer to sell than if they had listed with a Broker
What’s the take away here? While the NAR report talks specifically about a very difficult U.S. real estate market, there are some interesting things to talk about with potential FSBO sellers and buyers; namely pricing and future litigation. Remember, if you are offering on a FSBO or mere posting listing it is extrememly important that you offer no advise to the seller. To do so puts you in an assumed multiple representation role. If the Seller asks “what should I sign it back at?” your response should simply be ” I am representing my client and as such I cannot offer you any advise”.
Naturally I would love to hear any stories you might have regarding your experiences with dealing with FSBO’s or mere postings.
Happy Monday. What a great way to start the week with free coffee and pastries. The whole Bosley Company was invited to check out a new condo project in Yorkville so we decided to have our morning meeting in the sales centre for 133 Hazelton (check out www.133hazelton.com) before the presentation by the builder himself, Mizrahi Khalili. Whenever we get together as a company whether socially or for business, you can be assured that it is an entertaining event. Put a lot of peacocks in a room and watch what happens.
After going over new listings and sales data we jumped right into our main topic; agent responsibility. Tom Bosley and the other managers decided to make everyone aware of a recent law case that has set some new precedents. The story can be reviewed here; http://www.canlii.com/en/on/onca/doc/2011/2011onca352/2011onca352.html The case itself, while lengthy, should be read thoroughly by every REALTOR out there because it affects your business. The basics of this case are clear. The Buyer buys a home that has an SPIS. After moving in, the buyer discovers that the minor structural problem disclosed in the SPIS is actually a major problem that costs more to fix than the purchase price of the home. The buyer sues the seller and wins even though title insurance covers the cost of the whole repair. The Seller appeals and the appeal judge upholds the decision but also includes the agent (who was in multiple representation). The seller and the agent have to split the damages. In the decision, the judge felt that the agent should have been more diligent in his handling of the structural problem, that given his 30 plus years in the business, should have known that the problem was worse than disclosed by the seller.
Here is the crux of the decision; We, as agents, need to be aware of a host of problems a home or condo may have. I am not suggesting that we should know about structural deficiencies but we should know when that little red flag goes off in our heads. Simply asking a seller about the home is not enough. Our due diligence must be factual and in-depth. Don’t leave anything to chance. If you don’t know the answer, or feel that the seller is intentionally withholding critical information then you have to dig deeper. In order to cover yourself properly you must contact the necessary specialists whether they be home inspectors, structural engineers, city planners or fortune tellers. (just joking about the fortune tellers).
During the meeting, I asked the question about what our duties are if we are representing out clients who wish to buy a private sale property (FSBO) or a simple posting. The short answer is that these types of listings essentially put twice as much onus on us as REALTORS. It is not the answer you really want to hear. Companies that post a listing on MLS are supposed to abide by the rules of MLS and RECO, that is, represent their properties truthfully and accurately. While they often include in their materials a disclaimer that they are not responsible for the accuracy of the listing, the reality is that they cannot opt out of these rules.
The lesson is clear, we are duty bound to show any listing on MLS even if it is a mere posting however our priority is to protect our clients and that may mean spending more time and money researching every possible angle.
Have a great week!
A few times a year, our company runs a new agent orientation/training program called Bosley U. I have made reference to it in my blog before. It is a 5 week training program taught by the managers at our company and when the group finishes, we are confident that they have as much information and skill as someone who has been in real estate industry for two years. Each session is taught by 2 managers and last week I was teamed up with Maureen O’Neill, the manager of our 276 Merton office and past president of the Toronto Real Estate Board. Maureen and I currently sit on the Education Committee for the Ontario Real Estate Association (she is the Chair, and I am the grunt).
This morning I wanted to write about something she said which I thought rather apropos given the pressures we face by The Competition Bureau. As you may or may not know, the Bureau is bent on allowing members of the public access to all the data available to Toronto real estate agents. TREB, has been collecting sales data for 30 years, and has painstakingly made sure that it is secure and kept private. The Commissioner feels that it is within everyone’s right to have access to that information. While I have my own opinions on the matter, the truth is that if, as a member of the public, you want to find out what a house is worth, you simply need to go to City Hall and look at the public records. But knowing what the house sold for down the street does not necessarily provide you with the tools or required information to sell your house privately.
Maureen brought up a stellar point during the last class. As she so eloquently said; everyone has access to sold data and available homes for sale but the two distinguishing points that separate very good agents from average agents and even most FSBOs are marketing and negotiating. Good agents are constantly reading the pulse of the market. They are out “in the field” everyday, looking at properties, talking to agents, negotiating offers and networking. A part-time agent, or a member of the public, simply is not active enough to interpret the information available, and without the information, he or she cannot adequately negotiate the sale of a home properly. Sure, you can get some information by reading the paper, but I actually don’t believe you are getting the full real estate picture unless you are going to open houses, attending seminars and office meetings, checking on what has sold all over a neighbourhood or simply talking with your counterparts.
The other piece of the equation is marketing and, once again, a professional agent is using his resources to sell his listing and today that means not just MLS and a feature sheet. Good agents today are utilizing Facebook, blogs, twitter, websites, 3rd party sites, networking with other agents or promoting their listings through their offices. Not only are they getting a property exposed but through their time in the business they have developed relationships with mortgage brokers, home stagers and tradespeople. Good real estate agents are connected.
Here are some very telling statistics; There are over 30,000 agents in the GTA. 20% of them did not sell a house in 2009. 50% did fewer than 4 deals. Only 5% (or 1500 agents) did more than 24 deals in a year. What kind of agent do you want to be?
The views in this blog do not neccessarily reflect the views of Bosley Real estate Ltd, Brokerage