Listing Presentation "Tiebreakers"

Throwing the Runner-Up a (Very Hollow) Bone

It's not uncommon for homeowners, in the course of interviewing agents to list their home, to be deadlocked between two (or more) agents.

What then?

To sew up the listing, I guarantee that at least one of the agents will promise that, if the homeowner hires them, they'll give the other agent's clients "first crack"at the home once it's on the market.

That way, if Agent #2 "brings the buyer," they can still split the commission with Agent #1, giving the former a substantial consolation prize.

Solomonic, right?

Not exactly.

Hollow Bone

There's no mistaking the two-fold appeal of this "gesture": 1) it makes the first agent look especially fair, even magnanimous, towards their rival; and 2) it lets the conflicted homeowner "off the hook" for passing up another agent they may have sincerely liked -- without feeling guilty about it!

In fact, however, such a pitch is invariably an empty gesture -- and the Agent making it knows it!

Here's why:

The best way to attract a Buyer for any given home is -- big surprise! -- to list it.

After all, the listing agent's name is on the sign in front of the home, on MLS, on the postcards marketing the home, etc. Plus, they're the ones hosting the Sunday open houses.

Of course, the listing agent is also the one hosting the Broker Open, when all the other local agents tour the new listings.

Statistically, the odds are vastly greater that another agent will be representing the home's ultimate Buyer.

Infinitesimal Odds

That's because even a very busy, very established agent is likely working with at most 8-10 Buyers at a time.

In turn, each of those Buyers is likely to screen an average of 60-80 homes online, and ultimately tour 12-15 of those before deciding which home to buy.

So, out of approximately 26,000 homes for sale metro-wide, the universe of homes any agent's clients are likely to be interested in seeing at any given moment is . . . perhaps 120 (8 x 15). And that assumes there's no overlap between any of the clients.

If you like statistics, that's less than .5%.

For those reasons, I focus my listing presentation on what I'm going to do for the client -- not my competitors if I'm hired.

It's also the case that a Realtor promising to let the runner-up have "first crack" can just as easily have that argument used against them: after hiring me recently, the first thing the client did was request that I call the other Realtor to make sure any of their Buyers were first in line.

P.S.: Alternative Math. If the foregoing statistics are too complicated, consider this: in my experience, the odds of any given showing leading to a purchase are about 1 in 10 (10%). Now assume (optimistically) that the odds of any given house being suitable for a Buyer I'm currently working with might also be 1 in 10.

Combine the two, and the odds of my having a Buyer for any given home are less than 1-in-100 (1%).

How Clear Are Realtors' Crystal Balls?

"Predictions are Tough -- Especially About the Future"

As I've blogged previously, home Sellers should pick Realtors based on how well they price, market, negotiate, communicate, etc.; Buyers, all those things, plus the Realtor's market knowledge and frankly, willingness to hustle for them.

Predicting future home prices isn't one of the criteria.

For one thing, that's not possible to do -- for anyone.

For another, to the extent that Realtors opine about the direction of prices, they're invariably too optimistic.

The Saga of Stockton, CA

What caught my eye in a long piece on The Huffington Post about Stockton, CA -- dubbed "Foreclosureville, USA" -- was this quote from a Stockton Realtor, Rudy Willey, with 27 years experience selling homes locally:

Having seen his share of boom and bust cycles, Willey knew the times were too good to last. A wave of selling in Elk Grove, a town half an hour away that had been the fastest growing in the country in 2007, became a sign. "When I saw the 'For Sale' signs, I thought: 'Something's happening,'" Willey said. "I thought we were due for a correction – maybe a 15 percent drop.

--Evelyn Nieves, "Stockton is Foreclosureville, USA"; The Huffington Post (1/10/2010)

So, how far have Stockton prices actually fallen?

Try, 60%.

Clearly, Willey had lots of company missing the magnitude of the decline.

And virtually no one anticipated the breadth and scale of the housing downturn, the biggest since The Great Depression (excepting, of course, Goldman Sachs and a few hedge funds, that made tens of billions betting on it).

But that's the point.

As Yogi Berra famously said, "it's tough to make predictions -- especially about the future."

Your Realtor can and should know prevailing prices better than anyone.

But predicting the future is beyond our job description.

P.S.: As my clients know, my stock answer when asked about the direction of home prices is, "if you tell me what interest rates, unemployment, and GDP are going to be . . . I'll give you a reasonably reliable housing forecast."

Picking a Listing Agent

New Way to Get Clients

Home Sellers pick their listing agents a variety of ways: who their friends and neighbors used; who they trust and feel comfortable with (rapport); who they think will ultimately get them the most money, the fastest.

Under that last category would certainly fall, "the Realtor who knows the most prospective Buyers for my home, and what they're looking for."

Which would explain how I've now signed two clients in the last six months: I was the Realtor who showed the owner's home the most when it was previously for sale (in one case, the owner ultimately opted to rent out their home; in another, they simply took their home off the market).

In each case, I'd shown the home of each "client-to-be" multiple times, and after every showing had passed along feedback to the then-listing agent explaining why the home wasn't a good fit for my client.

Obviously, the owner was paying attention . . .