In a recent general conversation with a real estate agent who just listed a new property, I asked him how much was his budget to market the home and if he got the seller to pay for the marketing expense of the home.
Well…, he gave me a mysterious look and in stammering words, he muttered something about putting it in MLS, putting a sign out front along with flyers, presenting it to their weekly sales meeting. And then he stopped and looked at me with a stare and said, “What do mean ‘getting the seller’ to pay for marketing? How can I get the seller to pay for marketing when I’m charging a commission.”
I then asked him how much of the potential commission he would earn , was he going to spend now in order to get the home sold? He proceeded to tell me that was up to his broker as he couldn’t afford to spend his (the agent’s) share of the commission on marketing, that was the responsibility of the Broker-in-Charge, i.e., his boss.
We then had an in-depth discussion as to how auctioneers market properties and who pays the marketing fee. I then proceeded to ask him if he ever had asked a seller to pay for marketing. He said no, that most of his clients were “underwater” financially and couldn’t afford to pay anything.
I agreed with him that many sellers were in financial straits, but offered some suggestions: (1) Use his own money by way of a credit card, home equity loan, borrow from friends, relatives, etc. and then get reimbursed at closing . Yes, he did ask the proverbial question, “What if it doesn’t sell?” [Puts pressure on you to get it sold doesn’t it?] (2) If the client doesn’t have the money, they could sign a promissory note for the amount you plan to spend in case the house doesn’t sell. (3) If there is no existing home equity loan in place or if it is maxed out, go to the bank/lender and explain to the lender what you are attempting to do.
Explain to the bank/lender they could suffer a financial loss themselves if they don’t cooperate. This approach takes some pre-planning to convince the bank/lender that their help is needed.
Did the agent take my advice? No, he thought it was too much work. Next….
If a property is listed for $195,000, in all probability the first offer will be much less, perhaps $185,000 to $190,000, depending on the area you are in, and the offer will be full of contingencies. The agent should be able to reach a much broader base of buyers with an extensive marketing plan. A detailed marketing plan needs to be shown to the seller showing them that by reaching more buyers, the offers should be higher, thus they will net more dollars at closing. Of course there are no guarantees. The only guarantees are that the government will get more of your money.