Residential Real EstateDo Buyer"s Agents Do Any Selling Anymore?
A dear friend has her homestead for sale. The tales she tells me about what agents and buyers are saying about the house are causing her to wonder whether some buyers" agents are closer to limousine drivers than real estate agents. They don"t want to move properties, she says. All they want to do is chauffeur buyers around.
My friend"s house is a small three-bedroom in a starter home neighborhood of 50-year-old homes. The home is in a very hot neighborhood of starter homes near a newly installed rail line, that has seen almost 100 percent appreciation over the last seven years. With low interest rates, the homes in the neighborhood are selling within 30 days.
She found mold while her insurance still covered such things and tore out all the plumbing and put in a completely new kitchen with granite tile and two new bathrooms with ceramic tile, one with a jetted tub. Additional upgrades, including new hardwood floors, front entry columns, front door, paint and other cosmetic changes, have run over $25,000 in addition to the insurance payout. She has the home priced per square foot with others that are selling in the neighborhood, and has even discounted the home slightly. Why?
Because it"s ugly.
The house has a one-car garage in front with a ratty side yard and the front entry porch overlooks a covered parking bay for a second car. It"s a view only a mechanic could love. But, inside, the home is a dream come true.
Like most starter homes, the house suffers from the usual problems - it"s not a move-up home, and compromises in space have made for some awkwardness in design. But she"s done what she can with all the usual improvements, including a first-class paint job.
The home has had plenty of showings, at least one a day since it went on the market, but no offers. It has had some comments from buyers via their agents. They all love the way the home has been improved on the interior, but they complain that "I need more space," "I don"t like the paint color on the outside," or "I don"t like the front entry." One agent said that she was just beginning to show her first-time buyers the universe, and that she felt certain they would be back.
They haven"t come back, and they haven"t bought anything else either. The buyers can only pay starter home prices, but for their money, they want a move-in ready home complete with new home upgrades, and twice the space that any home in the neighborhood offers. What they really want is to skip the starter home, and get their move-up home for the same price as a starter home.
It"s a buyer"s market.
My friend is about to tear out her hair with frustration. She says she has priced the ugly drive-up into the home, even though, with her improvements and paint job, it is more attractive that 90 percent of the homes on the same street. She knows what improvements resonate with buyers, because she is a Realtor herself. But she can"t help the way the house was built, she says, and feels as if she has done what she can to make the house move.
Today, she dropped the price $5,000.
She says now she is beginning to understand why many sellers feel that agents don"t earn their commissions. She"s paying 3 percent to the selling broker, but she isn"t seeing any selling going on.
"In good markets, we take full credit for a home selling in 24 hours, but in bad markets, we blame the market," says my friend. "From the feedback I"m getting, not one of these agents has given their buyers a reality check, and what"s even more incredible, is how much time of their own they are willing to waste on buyers who want the impossible or don"t understand the realities of the market. If you want to live in this location, what"s available is 50-year-old homes, and this is what the homes look like."
Buyers, once they have been qualified to a price range, need to be told what their price ranges will typically buy in certain neighborhoods. If homes in a given neighborhood are selling for $125 per square foot and the buyer has only been approved for a $200,000 loan, then it stands to reason that appropriate homes will come in around 1600 square feet. If they want improvements, those cost money, so either the price of the home goes up, or the square footage must come down. If they want more square footage, then they need to look at other neighborhoods which are further away, or where the homes are less desirable for some reason. Then, before the agents put a buyer in the car, the buyers need to understand how much space 1600 square feet really is.
Buyers" agents typically ask qualifiers, such as "What are you looking for?" and "What are you willing to spend?" but do they ask qualifying questions such as "Do you understand what your price range will buy?" Buyers need to understand the neighborhoods. They aren"t going to get everything they want in a starter home neighborhood, because every positive and negative variable is priced into the home including location, schools, amenities, crime rates, the age and condition of the home and more.
Buyer"s agents also need to do their homework, she says, before putting buyers in their car. Do they know that no other house for sale in her neighborhood has all new plumbing, new baths and a new kitchen for the same price as other homes with few improvements?
"I don"t want to hear that the house is too small. Buyers should know up front what 1600 square feet looks like. How big do they think 1,600 square feet is going to be anyway?," she says. "And paint colors are not a reason to not buy a house. Don"t tell me the buyer doesn"t like the paint. Tell the buyer to make an offer, and maybe something can be done about the paint. You need more space? You can have more space, but not already built in this location. If you want this neighborhood, you"re going to have to add on to get more space."
"Agents are afraid to make suggestions," she says, "or they might be held liable, but the way things are going, they aren"t doing the buyer or the seller any good. If buyers continue with unrealistic expectations of what their money can buy, then they don"t buy, and the sellers don"t sell."
The reality is that most houses have something wrong with them, which is one of the reasons sellers use agents to market their homes. If all homes were perfect, they"d sell themselves. But they aren"t, and sometimes it"s good for the industry to remember why people hire agents - to help them move homes that are less than perfect by offering creative solutions to buyers.
"I"m paying three percent to the selling agent," says my friend, "but I"m doing all the work, while they chauffeur their buyers around. We aren"t agents anymore. We"re limo drivers."