The biggest mistakes that home sellers make are choosing a listing agent based on one or more of two things:
- Highest listing price offered for your home
- Lowest commission
Oddly enough, sellers that choose a realtor based on the highest listing price and the lowest commission don’t necessarily end up with the highest profit. In fact, those two criteria have very little to do with hiring a competent listing agent and in many instances can work against you when it comes to selling your house. However, if you want the most amount of money for your home, what you should be focusing on is finding the agent that will yield you the most amount of profit.
Let’s look at why:
Why you shouldn’t choose a listing agent based on the highest suggest list price
Some agents will distort the truth and “buy the listing”
If you ask three agents how much they can sell your home for and two say $700,000 and the third says $900,000 then you may want to think hard about how the third agent came up with that number. Are there any comparables to support that price? If the agent has no stats or supporting home sales located in your neighbourhood or near you, then that could be a red flag. It’s likely that price is an over-exaggeration to “buy the listing” and attract your business. Without precedent data to support your list price buyers will scare away and you will inevitably have to drop the price once or multiple times.
At the end of the day, your realtor does not determine the market value/sales price of your home, and neither do you. An agent is there to suggest a list price that will attract a buyer and aligns with comparable sales, pending sales, and active sales in your area for your type of home. Where it goes from there is generally left up to the buyer.
Listing Price is a Strategy
Listing price is just a strategy, and as a seller you should be focused on what the market value is and what agent has the most strategic listing price and aggressive marketing plan. A good listing agent will give you a price range. Many factors will determine that range, from your competition, similar solds, the temperature of the market, and improvements in your home.
Pro tip: To learn more about market value vs. listing price, check out our blog here
Pricing is truly an art, and you won’t want your home to go stale. If you price too high you might not get any showings at all, and buyers will eventually shun your home or feel there is something wrong with it. You’ll be forced to reduce your price, often multiple times, and have to deal with buyers constantly low-balling you. Stale listings that are priced to high are consistently sold for less than if they had priced properly the first time around.
Why you shouldn’t choose a listing agent based on commissions
Why would an agent willingly work for less than competitors?
It’s important to ask yourself the above questions when choosing a listing agent.
Like all things in life, you get what you pay for, and an agent that discounts their commission will do this because:
- They feel it’s the only way that they can compete because they can’t stand apart from the competition on service, experience, knowledge, and skills. Aka they’re unqualified and/or inexperienced
- They’re desperate
- They don’t have the ability to negotiate for themselves [… but then how do you expect them to be able to negotiate for you?]
When you think of how to choose a listing agent and whether those are characteristics that you would value in the person selling your home, would that be someone you would want to hire? Most people will say no. Odds are the lowest-fee agent will show you longer days on market and more price reductions than the full commission realtor.
Great agents will not negotiate their commission, because they know that they yield a higher profit to their clients than agents that discount
As a seller, you should be paying attention to who you believe will bring you the most PROFIT when selling your house, not who will offer you the cheapest commission.
When you try to negotiate commissions, at the end of the day you are negotiating money on the front end [commissions] typically only to lose money on the back end [the sale of your house]. Ask yourself how you come out ahead if the price of your home is reduced $25,000 all because you chose to “save” $10,000 by hiring a lower-fee agent who doesn’t have the marketing plan to reach a greater number of buyers, or the skills to sell the value of your home.
To yield the most amount of profit, you’ll want to choose a listing agent with the most aggressive marketing plan, and the skills, experience, and commitment to sell your home. By doing this, you’ll gain greater exposure to the largest number of buyers, which will increase your chance of obtaining a good (or great) offer.
What questions should I ask when choosing a listing agent?
So after all of the ways NOT to choose a listing agent, you may be thinking: “How do I choose a listing agent that will bring me the most profit?” The answer is simple, you need to be focusing on which agent has the following:
- The strongest, most aggressive marketing plan
- Great negotiation skills and experience
An agent’s marketing plan will tell you how many people they’re able to expose your home to. The more exposure your home has, the more offers you are likely to generate. More offers = more profit for you. A realtor’s experience and negotiation skills will come in to play when an offer is received, and the agent that has more sales and offer experience will be able to negotiate a higher price for you than an agent with less skill/experience.
Therefore, instead of focusing on questions like: “What do you charge” and “How much can you list my house for compared to other agents”let’s focus on more important questions to consider when it comes to how to choose a listing agent to sell your property for the most profit:
- How will you market my home online?
- How will you market my home offline?
- How many people are you selling and buying homes for right now? How committed will you be to my listing?
- Will you be dealing with my property personally or is it a team member of yours or an assistant? Will you be handling showings in person or on lockbox?
- Have you sold homes similar to my house?
- Can you show me some homes you’ve sold recently? Did they sell for over asking? Did they sell for at or above market value? What did you do to market those homes?
- Do you have any reviews from online sources like yelp that I can use as a reference? If not, do you have any past clients I can call?
- Are you a full time realtor? What hours are you available from and how will we communicate with each other?
- How many homes do you sell a year? How long have you been in the real estate industry for?
Now that you have a rough idea of how to choose a listing agent and what to focus on, your next step will be determining the market value of your home. If you’re interested in a free market evaluation, then give us a call at 604-765-0376. Prefer text? 604-319-0200 or email [email protected] to start a conversation. We’re here to help, and we can provide you with a comprehensive pricing strategy and go through our aggressive marketing plan to show you how we can help you reach your real estate goals.