Scenario #1: I list the property for $130,000 (like she wanted), and it sells quickly for $128,000. Let's say another agent brings a buyer in, too. Her realized financial gain would be:
- $128,000 x 3% / 2 = $1,920
Scenario #2: I list the property for $140,000, and it sits a few months. During that time, I drop the price to $135,000. It finally sells for $130,000 through a buyer's agent. Her realized financial gain would be:
- $130,000 x 3% /2 = $1,950
So, she makes a whopping $30 more for the 2nd scenario.
BUT WAIT!!!
What isn't seen in these figures are her costs to market the property. I haven't a clue what the costs are, but I'd bet it's more than $30 over a course of a few months.
Therefore, it is more advantageous for her to go with the first scenario. Not only does she get her profits sooner, but in all likelihood, she gets more of it. Based on this and her earlier erronwous comment about my realized profits at $128,000, I feel there is a little battle going on off to the side, and I have to watch my back. My wife is already furious, both because the agent called her to "unload" and the fact that she sounded rude/unprofessional in doing so (according to my wife).
It is Friday the 13th, though, so I guess I shouldn't be TOO surprised.
4 comments:
Actually, it's worse than that for her. She typically splits her 3% with her agency, so she only gets 1.5%. See the "Freakonomics" post on my blog for more details.
Don't forget about market forces here either. I think you will end up doing much better with a starting price that will assure multiple offers. You're going to get more offers if you price at market or just a little below rather than pricing a little above market. You have a higher chance of getting more bids and therfore bidders who may want to compete, therefore, driving up the price you sell at if you keep price a little below market. Let the market do the work for you rather than against.
I just want to say that I dont like your realtor.
Actually I dont like most realtors. I have a feeling your wife is going to want you to find a new one soon though. (Or hopefully you can start holding or doing lease options after this one and not have to deal with them anymore.)
I think your agent unfortunately is like most agents nowadays, Clueless. Your agent doesn’t seem to understand the “Big Picture”. What I mean is by her actions you’ll most likely never use her again or recommend her. If she would have taken the time to assist you she would have probably had a repeat customer. Like I said most are clueless. There are still some good agents out there you just have to look. The best advice someone gave me is select an agent like you're conducting job interviews. The really good agents won't care if you ask tough questions while the bad ones will start to squirm or even get angry.
By the way if I were in your situation I’d do a lease option instead of sell it.
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