Okay, so why did we start this? Well, in short, one of our staff members recently engaged in selling his home (for the first time) and we have been filled with daily and weekly updates on the process since July of 2006. He had such a horrific and tiresome dilemma that we figured we had to dedicate some sort of information for consumers so they wouldn't have the same scenario happen to them. We also have gone through this process (on both ends) and figured that we all could shed some light and informative tips on what consumer's need to know.
So what happened? Well, our staff member decided to list his first home for sale (a townhome in the West Suburbs of Chicago) back in July of 2006. Actually, it all started on a Saturday just before he and his wife went on vacation. They were just getting packed and ready to go when he heard his wife say, "Look, I just found this house online...lets see if we can go see it..". Being a time-conscious person, he uttered "No", but eventually saw the online listing and figured he would let his wife call the listing agent for a showing. To their surprise, the agent asked if they could come and see the property in one hour. They decided that they could fit the showing into their schedule before departing on vacation. Well, they went and saw the property and loved it. In two short hours, they had decided to put a bid in on the home. At this point, they figured that going on vacation was not such a good idea now as they had to put their property up for sale to begin the process.
The listing agent of the property they put a bid on was "one man shop". He was the realtor, the broker, and the owner of the agency. At first glance, he seemed to be just another real estate agent trying to sell a property to excited buyers. After he and his wife put in the bid, they were now unsure of what they had to do next, but figured they had to put their home up for sale. The listing agent began to tell them that this needed to be done ASAP and they should consult with a real estate agent to do so. Since all this happened so fast, they asked the agent who he recommended and of course, he recommended himself. They were still unsure about this person as they had just met him, but after learning that he only charged 1 percent commission, they figured they would give him a try. At this point, everything was going great: They put their bid in on the property, they decided to list their home ASAP, and found an agent who was going to sell it for them.
Due to the fact that the bid was entered under a dual-agent contract (because they contacted him directly and had no previous real estate agent they were working with), the listing agent felt it was best to have the sellers and buyers directly work out the intangibles regarding price and closing dates. Eventually, the bid was accepted by the sellers and the home inspection passed with flying colours.
On the same day they put the bid in, they signed a listing contract with the listing agent of the seller's property. He put the sign out front of their home, took pictures, put the property on MLS, and arranged for a virtual tour. Everything was going great and they started to get a lot of showings...a lot of showings with no interest. They asked the agent why they had gotten no bids (after 15 showings) and his response was, "Well, its a bad market..". So they pressed on and thats when things got really weird. They asked the agent to obtain feedback from the agents who brought in clients. Everything checked out good. No poor responses and nothing was noted as what needed to be changed from an arbitrary opinion. During this timeframe, another bid came in. They were both a bit suspicious and asked for some sort of proof. To their surprise, the agent faxed them the ENTIRE bid of the other buyers (including a copy of their earnest money check). Unfortunately, their agent began to increase the number of calls to them, often at late hours of the night. After the 20th showing, it appeared he began to panic and began worrying if they would be able to sell their home before the closing date on the other property. His phone calls began to become harrassing in nature and once swore to them about not doing a showing (with a 4 hour time window when they had other committments). After having just about enough of this agent, they contacted the sellers of the other property about terminating him due to his lack of professionalism. The sellers said to get rid of him and they did and hired a new agent (just as Fall hit).
After hiring the new agent, they found glaring holes in the marketability of their home. The new agent had experience in staging a home and told them to remove the "clutter". They were shocked about the ideas, but figured they had to do something in order to get the house sold and make it more presentable to potential buyers. The house was always immaculate, super clean, and in great shape (only 5 years old), but did have a lot items in the house that made it appear busy.
To make a long story short, they never did sell their home..with either agent and decided to cancel the listing just before Christmas to get a break. Fortunatley, they were able to recoup their earnest money on the other property and will relist their home in the Spring of 2007.
What did they do wrong in this process? Do you see anything in this story that could have been circumvented or changed in order to come to a better outcome?
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First let me say that although I prefer to work for a large brokerage, there is nothing wrong with a Broker doing business on his/her own. There is also nothing wrong with attempting to get your staff members listing, it is just business.
Your staff member should have known something was wrong when he only charged them 1%. If you cannot negotiate on your own behalf, how are you going to negotiate on mine? And the old adage comes into play; you get what you pay for.
Dual Agency is also termed double ending in the real estate business. There is nothing wrong with it provided it is handled properly and is legal in your state. Few agents have the ability to handle a dual agency situation with the finesse it requires. His putting the buyer and seller at the table together was not the worst idea on the planet and seems to have worked out OK since they came to an equitable agreement and went into escrow.
He took pictures, put it on the MLS and set up a virtual tour, he is already leagues ahead of most discount brokers. There were a lot of showings, also good. He was doing something right.
When asked why there were no offers after 15 showings he told the sellers that the market was bad. Well you did say it was July 2006 but you didn't mention what city this is in so I am going a little out on a limb here. In July 2006 the market was not good, and 15 or 20 showings may feel like a lot, but it is not, they should have had that in the first week of the listing. There was a tremendous amount of inventory on the market in July, most of it terribly overpriced. You didn't mention the price or the comparables. Was your staff members house priced properly? Did they reduce the price over time as the market dropped over the summer months?
You say, another bid came in on the property they were in contract to purchase. Well, with a contingency to sell a property that was just being placed on the market, the agent would have done his sellers a dis-service if he did not continue to seek back-up offers. This could have been handled many ways, you were vague, I don't have the details. The sellers could have said, buyer remove the contingency or quit with an agreed upon time frame usually a 24 or 48 hours notice to perform that is designated in the original purchase contract. You did not give specifics here and these things vary from state to state.
Faxing the new offer to purchase to the buyers already in contract, your staff member, was unthinkable and none of their business.
The phone calls and harassing behavior that you mentioned is very vague, so beyond saying that it is not very professional I am going to leave that alone and stick to the facts you have provided.
This business of the buyers contacting the sellers about terminating him sounds fishy. You described a scenario where the relationship between your associate and their listing agent was collapsing. You did not say anything about the relationship between the seller of the other properties relationship with this agent. All your staff member had to be concerned about was their relationship with the agent. They had every right to fire him if they were unhappy with his services and to extricate themselves from the contract to purchase his other listing. That is it. Once in contract with him as the agent, they would need a release before hiring another agent to represent them on the purchase and the sale or the original agent would be able to claim the commission through procuring cause, and rightfully so.
Moving right along, your staff member hires another agent who made some very realistic suggestions about presenting their home in the best light. Why they were so shocked is beyond me, clutter gets in the way of a sale and the agent had experience in staging a home, they should have been grateful, not shocked. A buyer needs to see clean surfaces and empty spaces so that they can visualize their own belongings in their potential new home. The market was still flooded with properties, prices were dropping rapidly, interest rates were rising, and it is highly likely that their property was overpriced even if they do not feel that it was.
What they did wrong in this process was in not hiring a seasoned professional, an area specialist, and paying a commission worthy of a true professional, and more than likely overpricing their property. Understand that agents earning full commissions do so for a very good reasons. They provide services which cost a great deal of money, and do not recover that money unless the property sells. They are financing the marketing and advertising of the sale of the property. This often runs into the thousands when done properly and increases when a property sits on the market for an excessive amount of time.
Please go to this link: A Must Read Before Hiring Your REALTOR this article was written in July 2006, (right at the time this all occured), and published in our local paper in the Real Estate Section. It does not matter what city you are in, it is applicable to hiring an agent, and should be mandatory reading before doing so. Please share this article with your staff member and tell them to be more discerning when they hire their next REALTOR and to price their property properly.
There are buyers out there, they have their choice of many properties and they are hunting for value. Provide value and the property will sell.
There really is only one reason any property does not sell and that is price.