dishonest agent tactics

detroit_burbMay 4, 2014

I live in a small city with a hot market currently where it is difficult to get renovated family homes.

I am getting ready to sell a down to the studs renovated home two years old on a large lot for the city. The house next door sold a year ago for about 225/sq foot, and prices have increased since then. It is an investor flipped cape with a detached garage on a single lot. Mine is a ranch with an attached garage.

One agent gave me a listing price at 192/sq foot and said if he brought people thru before listing he would charge 4%, and wanted to take people through right away, in fact drove by with a family he had and told them the house was coming up. I thought his price was low, but clearly he had motivation for a low price if he had a waiting buyer. He told me that my house was worth lower price because it was a ranch.

Another agent gave me a list price of 225/sq foot, told me she had ranch only buyers and ranches were rare. She also offered 4% commission if it sold before listing.

Many homes sell before listing, especially the larger ones because there is a pent up need for "move up" homes.

Is the first agent just really dishonest? I cannot believe the disparity. I know that renovated homes are selling at 225/sq ft, and the new homes are selling at 295/sq foot.

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ncrealestateguy

BOTH of them are doing you a disservice IMO.
If it getting multiple offers was my listing and I was offering a way to get the seller the highest price possible, I would expose it to the largest # of people possible. That is done by entering it into the MLS and then asking for the "Highest and Best".
Of course, you have to figure the difference between a full commission listing with multiple offers as opposed to a 4% at the lower price.
I bet you are located on the West Coast.

    Bookmark   May 5, 2014 at 6:44AM
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gyr_falcon

How are they being dishonest? Aren't they openly trying to take advantage of your sale for the benefit of themselves and their clients? There are actually people for which the lack of showing the house hassle is worth accepting less money. I have even read some of their stories on GW. So, say "No", remember those agents' names, and take advantage of your strong market.

But I have to disagree with ncrealestateguy about one thing. My bet would go on your being located in Michigan. But, I could be wrong... ;-)

    Bookmark   May 5, 2014 at 2:11PM
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louislinus

I would guess Ann Arbor....

    Bookmark   May 5, 2014 at 2:52PM
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chispa

We sold a house in 2004 that was never on MLS and bought a house in 2010 that also was never listed. You need to know your market very well, so that you don't get taken advantage of. You also need to be confident in business and your real estate knowledge. In both cases (one in the northeast and the other in CA) the one agent involved charged a 2.5% commission.

The 4% commission is usually done when an agent has done all the marketing work and then also happens to bring in the buyer. 4% seems high for what is essentially a FSBO.

We always use a lawyer to review paperwork and represent our own interests. Do not assume anyone else is doing what is best for you ... that is your responsibility.

    Bookmark   May 5, 2014 at 2:56PM
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Janice5

I was thinking Birmingham, Mi.

    Bookmark   May 5, 2014 at 5:49PM
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detroit_burb

both agents clearly stated that they had buyers to bring thru before putting it on MLS.

I have been called for the past four months by someone who lives around the corner - friend of an acquaintance - who heard we may be looking to move. But I'd never count on that person actually buying.

both agents know each other and are very local, therefore know the market intimately. The lowball guy sells most homes here, some at very low prices before they are ever marketed, in fact, when I was looking, I knew I had to hook up with him if I wanted one of his homes, as they would turn up on the MLS for one day then disappear, and when I would ask him, he would tell me that the home sold before it was entered on MLS. Why enter it for one day, is beyond me. He gave me a list of comps that included all levels of homes, many partially renovated with mostly original innards.

The agent with the higher price is much younger, and gave me a list of comps - recent sales - to justify a selling price to the appraiser. The comps she gave me were all renovated homes.

I did ask lowball man if I would not be in a better position to just put it on MLS to get a better bid and his response was that buyers balk at bidding wars.

Some of the homes do go for astronomical prices to the point where they could build it new for less than they are buying it for, and I'm not sure why that happens.

I think I will try marketing myself and offer the 2.5%.

Is zillow the best way?

This post was edited by detroit_burb on Mon, May 5, 14 at 20:21

    Bookmark   May 5, 2014 at 8:17PM
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louislinus

Put it on CL too.

    Bookmark   May 5, 2014 at 8:46PM
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lyfia

Best if you are doing it yourself is a flat-fee MLS listing. It would bring you the most exposure, but in a hot market I would try craigslist and Zillow and a sign on your lawn with flyers first.

    Bookmark   May 6, 2014 at 8:13AM
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mpinto

None of this would be allowed in my company. A property is either listed or it isn't. We do, however, allow for a named exclusion in the listing contract.

    Bookmark   May 6, 2014 at 11:20AM
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jewelisfabulous

mpinto -- how does your agency handle "pocket listings"?

    Bookmark   May 7, 2014 at 5:34PM
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kathyg_in_mi

I'll bet on Royal Oak, MI.
Kathy G in MI

    Bookmark   May 7, 2014 at 10:55PM
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gyr_falcon

Hey, I wasn't trying to start a city contest. lol I was just good naturedly teasing ncrealestateguy about betting a west coast location for someone that had Detroit_burb for a member name. :-D

    Bookmark   May 8, 2014 at 12:46AM
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ncrealestateguy

Gyr... I know... I did not even pay attention to the OP's name until everyone started guessing Michigan cities.

    Bookmark   May 8, 2014 at 6:34AM
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lucillle

Why not get a list of recently sold homes in the area and what they sold for? That gives you a valuable piece of information- how hot the market is, and what homes are selling for. It may be that listed properties sold for enough to take care of the commission and then some (or not).

    Bookmark   May 8, 2014 at 7:43AM
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gyr_falcon

We all have done that, ncrealestateguy. But it is nice to confirm I'm not the only one that misses the obvious clues once in a while.

    Bookmark   May 8, 2014 at 12:24PM
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dreamgarden

"We always use a lawyer to review paperwork and represent our own interests. Do not assume anyone else is doing what is best for you ... that is your responsibility."

Great suggestion. I think it would be worth it to try and sell it yourself before you let any agents help.

    Bookmark   May 8, 2014 at 12:57PM
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mpinto

Jewel. I know we occasionally have office exclusives. We also occasionally have an expired listing where the seller wants the agent to keep an eye on. If a buyer is found, great. However, we don't offer a discount for these, since it it company policy not to accept less than 5%.

    Bookmark   May 8, 2014 at 8:08PM
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cold_weather_is_evil

>> Aren't they openly trying to take advantage of your sale for the benefit of themselves and their clients?

There's the thing. The seller is the client if the seller is the one paying the agent a percentage. The seller determines the price. The seller determines if the offer is accepted. The seller is in charge, not the agent. Period.

The state agency that regulates real estate agents and brokers can help clarify that. EDIT: ESPECIALLY if you tell them that the agent is acting in their own best interest and not in yours...

This post was edited by cold_weather_is_evil on Thu, May 8, 14 at 20:53

    Bookmark   May 8, 2014 at 8:41PM
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mpinto

Jewel. I know we occasionally have office exclusives. We also occasionally have an expired listing where the seller wants the agent to keep an eye on. If a buyer is found, great. However, we don't offer a discount for these, since it it company policy not to accept less than 5%.

    Bookmark   May 8, 2014 at 9:07PM
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gyr_falcon

Cold_weather, since the agent claims to have already driven by with clients, I took it to mean that the agent was under contract with buyers. (Whether what they said is true or not, I have no way of knowing.) If I sign a contract with a buyer's agent, I am the client, not the seller. The buyer's agent has a legal obligation to represent my interests. My understanding is that past court rulings have upheld that even when the seller pays the buyers agent's commission, that does not mean the buyer's agent represents the seller.

    Bookmark   May 9, 2014 at 1:30AM
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detroit_burb

Thanks for all of the input.

I have never heard the word "pocket listing" before, but this particular old-timer is the master of this game. He is one of the top sellers in this city. The younger agent (who recommended listing much higher) told me very good naturedly that the old-timer seems to find his way into every deal.

She sold a newly renovated 1920's home for about 800K from an investor to a buyer, and he approached her and said that he was really working with that investor, even though there was no written contract. So she said "I gave him 1% and let him handle the comps and dealing with the financing."

Odd.

Something smells like a rat.

    Bookmark   May 9, 2014 at 8:29PM
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