This is one of my pet peeves in this industry. People don't know what they don't know. However, they think they know better or the neighbor knows better than the Realtor. Why is this? Why do they trust the neighbor who has never sold a house more than they believe the experienced Realtor? Here is a story of loss. A loss of too much money. These are the stories that keep me up at night...
A seller needs to sell a house her parents owned. The house has cost her lots of money to hold onto and had septic issues that did not make it an easy sale. This person contacted me a year ago because she had tenants in the house that wanted to purchase the house. She wanted to make sure she would be getting fair market value from them and wanted to know a price I thought the open market would support. I came up with a number and a great way to market the home. She was thankful and said she would list it if they didn't agree to the price, however, they agreed to pay her her price. Well, a year later, the same call came in. The tenants not only did not buy the home but they called the board of health and caused more delays and costs for this seller. She called me again and told me the story as well as her finding a "couple of investors". She said the "investors don't want to pay me anything". This is not a surprise. Investors are looking to make $. Therefore, they traditionally pay around 60% of the value so they can turn around and make money on the property. We discussed all of this as well as the new market value and commission. She sounded positive about listing the house on the open market as soon as the board of health issue was resolved.
Well, being in a small town, a member of the board of health mentioned that the house sold a couple of days ago. Hmmm, within days of the resolution with the board of health. So, I looked up the new deed to see if I knew the new owner. That's when my blood boiled over... There were 2 deeds recorded on the same day! The seller, who was not independently wealthy and needed the money from the sale, sold it to an investor after all. She was paid $325,000. The investor must have been a wholesaler. They sold it again THE SAME DAY for $395,000!!!! Ha, this is the price I had given the seller on the open market. SO, this seller lost $70,000 or $50,000 after commissions paid. This is more money than I would want to give away. How about you?
There is a moral to this story. DO NOT "avoid" the commission by underselling your home to a cash investor. I do understand if it is a strong buyers market and you need cash fast. However, at the writing of this story, it is a VERY strong sellers market with many homes in the area receiving 6-12 offers the first weekend. I know for certain I could have sold the home quickly and gotten more than my commission covered. I Believe she lost at minimum $50,000! Don't do this yourself and don't let friends do it either!
My professional mantra is to get each seller of mine as much money possible for their investment. I know I do this because my price per square foot for homes sold are higher than my competitors. I'm hopeful that more sellers will pay attention and let me help them get LOTS of money.
Signed,
Sleepless in Groton