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When Your REA Overprices the House

Posted by blueheron (My Page) on
Mon, Jun 7, 10 at 19:13

DH and I are selling a summer cottage on the river about 25 minutes from our house in the next county. It is a lovely property, about 1.4 acres and I have made perennial gardens around the property.

It is, however, a cottage and not a suburban home. It does have all the amenities except a dishwasher, but it only has 2 small bedrooms and one bath and no closets in the bedrooms. It does have a pantry in the kitchen and a coat closet in the entry.

The REA describes it in the ad as a suburban split-level and potential buyers are envisioning a family home, which it is not. It is more of a summer home, but there is a gas fireplace that heats the living areas. (In order to sell it, however, we have to install baseboard heating in all the rooms which we are willing to do.) So it could be lived in year round.

We think she has over priced it at $259,000. Plus, she pulled a fast one, saying 7% commission is the norm, which it isn't! We only paid 6% when we sold our house in 2008. And we think she should list it in our local Sunday newspaper, as well as the one in the county where the house is. She said there was some dispute with the newspaper and they charged too much! ???? So what! And she has it listed with her office for 6 months. Isn't that a long time? DH and I just were not thinking when we signed the contract.

We are tempted to get out of the contract and pay $1,000 to do so. It is still cheaper than the 7% commission she charges.


Follow-Up Postings:

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RE: When Your REA Overprices the House

Why on earth don't you talk to her? Point out your concerns, ask her to rewrite the ads, lower the price (it's your call, not hers), etc? And of all the dingbat answers (about the paper charging too much)! And who had a gun to your head when you agreed to a 7% commission?


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RE: When Your REA Overprices the House

SHE is working for YOU.... take your concerns to her.


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RE: When Your REA Overprices the House

I would not blow a thousand dollars at this point. I would make an appointment to go into her office and try to straighten things out. YOU choose the offering price, you can have the MLS description changed - write it out as you want it, don't count on her to fix it on her own.

Ask her for her marketing strategy beyond listing it in the MLS. Signs on the road, brochure box in front of the house, print advertising such as real estate magazines, listing it on craiglist, making sure that the MLS listing is picked up by websites such as realtor.com. As for not posting in the newspapers, ask if that is the policy of the entire office.

Ask her why the commission is 7 percent instead of the 6 percent just 2 years ago. (Maybe the percentage is higher for vacation homes?) Ask what the split is on this 7 percent - how much does the buyer's agency get? (By the way, the answer to that is in your contract, which I hope by now you have read carefully.) You probably won't get the commission lowered, but you should get your questions answered.


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RE: When Your REA Overprices the House

As mentioned already, you price your house not the REA.
Read your contract and in a business manner discuss these issues with your agent.
This is your house, take control but do it in an assertive manner not aggressive or as a victim of the agent's "fast ones", you agreed to these terms in the contract.


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RE: When Your REA Overprices the House

When she was going over the contract and the 7% commission was mentioned, I said, "Wait a minute, we have to talk about this." She said the commission hasn't been 6% since the 70's.
And she added up everything and said, "Look what you're getting!" Of course we're only getting that if it goes for full price, which it won't. I don't know why DH and I were so compliant. We must have had a brain fart or something! DH called her office the next day using an assumed name and asked about the commission usually charged. They said it's negotiable. Fancy that! They never tell us that before we sign the contract. (I knew that it was supposed to be negotiable but only knew one or two people who actually had it reduced and the circumstances were unusual.)

I emailed her last night and requested she put it in the local paper. Haven't heard back yet. She wants to have an open house this weekend but I told her to hold up on that because we are having the siding washed and other things done to clean up the property. We will also tell her to reduce the price.


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RE: When Your REA Overprices the House

We recently sold 2 houses and I have had more interactions with REA's that I hope to ever have. Here are my thoughts:

1. I wouldn't have signed the contract for 7% commission. For every REA, there are 500 waiting in line to take their place. I personally would have found somebody who charged 6% commission.

However, given that you already agreed to the 7%, your REA is in control. When does your contract end? Why don't you sign up with somebody else when it expires? If not, I would recommend calling other agents, and asking their commission. Compile a list of those who charge 6% or less, and provide it to your agent. Tell them they are not competitive and ask them to lower their commission.

2. Why aren't you actively involved in setting the price on your home? Your REA works for you, and not vice versa. If you want the price lowered, call them right now and tell them the price you want. If they refuse, which I highly doubt they will, call their manager and complain.

3. Similarly, why aren't you actively involved in talking with them about the description of your house? If the house has been on the market awhile and hasn't sold with the present description, tell them your ideas and ask them to change it accodingly. Here again, if they refuse, talk to their manager. Incidentally, if they are uncooperative, you might be able to cancel your contract with them without a penalty.

4. Ask them for whatever else you want. If you want a newspaper ad, ask for it. In our area, they are quite expensive and are not very effective, but if it was me, I wouldn't be afraid to ask them to do an an once. If they give you the lame story they gave before, tell them that's not your problem and that you want the ad in.

FYI, when our house was on the market, I talked with our agent about once a week regarding suggestions/corrections, etc. They didn't mind it one bit, and the house did get a lot of showings.


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RE: When Your REA Overprices the House

Many times a higher percentage is paid for a lower-priced property.

Example:

If I were to charge 6% to sell a home, I'd charge 10% to sell a vacant lot.

To me, $259,000 doesn't sound like a "lower priced" property, but I don't know your area.

don't know how well newspaper advertising works where you are or how costly it is, but in the DFW area it's worthless & one week-end ad costs over $100;
it's a waste of money.

While I do work for my clients, I can't allow them to control how I spend my money or how much money to spend.

If you're convinced that newspaper advertising will sell the house, you might run an ad yourself (it's cheaper for an individual homeowner than for a "commercial" entity such as a Realtor) & if the ad produces a buyer, reduce the commission at closing by the cost of the ad.


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RE: When Your REA Overprices the House

She IS advertising in the Sunday paper of the county where the house is located. What we wanted was for the house to also be also advertised in the county where we live. Many people in our town would love to have a place on the river. It is only 25 minutes away from our house, so it makes sense to advertise here. (No way are going to advertise the house ourselves. She's getting 7%, she can just spend the money.)

And newspaper advertising is a very good way to sell a house. People read the Sunday papers for open houses every week. I don't know how you advertise your houses, but that's the best way around here.

It is listed on the MLS.

And she listed the house for 6 months. Grrr. There again, we were not on the ball. I would love to wait it out and let some other realtor sell it, but if we get a reasonable offer before then, there's no reason not to take it. Plus, houses like this sell best in the spring and summer when it is the most attractive, which of course she knew.


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RE: When Your REA Overprices the House

gradgirl, if we call other agents and ask their commission, they'll just say it's negotiable, just like they did when DH called the REA's office. They're not going to commit themselves without knowing any of the particulars.


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RE: When Your REA Overprices the House

She hasn't made 7%;
she hasn't made a dime.

The house is on MLS, it's on Realtor.com, it's in the local paper, & I'd guess it's on an agency or agent website.

Buyers today, especially buyers who can afford a second home in the quarter million price range, look on Realtor.com, they look at agents' websites, & they have their buyers' agents put them on an automatic email system that notifies them when a property comes up in their preferred neighborhood & price range.

They do not sit around & wait for their local Sunday paper to inform them about a house in some other community.

If you want to sell the house, stop trying to blame your agent for overpricing it, stop being enraged at her for the fact that it hasn't sold, stop obsessing over her fee (I don't think 7% is out of line for a resort property), & do what it takes to get it sold.

If the price is too high, drop the price.


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RE: When Your REA Overprices the House

Why are you adding baseboard heating at this point in the game?
You state the place is a summer residence.Is this something the agent told you to do or do you really think it's going to help sell the place. I'm questioning why it's being done cause chances are who ever buys it will probably use it the same way you do so why bother with the added expense?


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RE: When Your REA Overprices the House

Many banks will not loan on a home that does not have heat in all the living spaces.


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RE: When Your REA Overprices the House

My parents had a lovely summer cottage on a river in a county nearby. It wasn't a 'fishing shack', but a two bedroom cottage with functioning plumbing and a great well and proper and legal septic system. They added a wonderful four season room to the back and it did have closets and was fully applianced. But baseboard heat doesn't turn a summer cottage into a year-round residence, especially if it is located in an area of similar summer homes. Was this her idea?


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RE: When Your REA Overprices the House

I'd call another real estate office to ask what the usual commission rate is for that area. If it is 6%, not 7% as the agent stated, I'd tell the agent that you want out of the contract because they lied about the commission rate and are fraudulently advertising the house. If the agent resists, I'd threaten to make a formal complaint to the real estate board.

I don't see this agent ever working out for you. After what has already been done, you won't be able to trust them about anything in the future.


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RE: When Your REA Overprices the House

As I said, when you call a real estate office to ask their commission, all they will tell you, "it's negotiable."

I'm not angry because it hasn't been sold - it's only been on the market about 3 weeks! lol Yes, I said we are going to drop the price. Read my posts.

This isn't Texas. Different rules apply.

We got the estimate for the baseboard heating, but we are waiting to have it done until the house is sold. The reason why it has to be done is - if they buyers need a mortgage, all rooms have heat.


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RE: When Your REA Overprices the House

As I said, when you call a real estate office to ask their commission, all they will tell you, "it's negotiable."

And that is true.
Your agent has every right to ask for 7% commission.
You have every right to refuse.
But, obviously you need to negotiate all of this before you sign the listing agreement.
Did you interview any other agents? It is always a good idea to interview at least 3 agents before listing.


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RE: When Your REA Overprices the House

Six months is not an unreasonable length of listing. What is the average days on market in your area? If it is more than 6 months, then your realtor wouldn't have a fair chance with a shorter listing period.

In my area, commission does change with the asking price. A home above 1mm will have a commission of 5-6%, anything less will generally go 6-7%. I've taken less in both cases.

As far as setting the price, I would hope that she backed up her opinion with the prices of like houses that have recently sold. I had to laugh, though, because the vast majority of my clients always want to overprice their homes. I lose a lot of listings because I won't agree to a high price.

Jo


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RE: When Your REA Overprices the House

"This isn't Texas. Different rules apply"

LOL, human beings tend to be the same regardless of geography, marketing is marketing, & unreasonable demands are unreasonable demands.

I wish you & your Realtor the very best.


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RE: When Your REA Overprices the House

A few thoughts:

1) As stated by others, the price is ultimately controlled by you. That said, the realtor should be able to back up her pricing with some data. Did she show you comparable sales? How much do you believe she's overpriced it? If it's more than a couple grand, yes, it should definitely be reduced.

Also, what sort of area is it in? Is it a developed community, or off by itself? If it's rural, is it near a town/city? Is it on a well, rural water or city water? Any nearby attractions, shopping, etc? What's the square footage of the house? What's 1.4ac of bare riverfront land sell for in PA?

2) Regarding the, uh, embellishment of the house in the marketing and whether it's suitable as a regular home - I dunno. I can see what she's trying to do - broaden the appeal of the house. In many areas of the country, vacation/summer homes are not exactly in high demand right now.

3) Unless things are really weird in PA, print advertising is largely worthless, particularly newspaper ads. Worse, newspaper ads are bloody expensive.

Brochures in a box are similarly useless - they're largely snapped up by nosy neighbors. My view is that if someone is seriously interested in a house, my number is on the sign; call me.

About the only things worth looking at are just-listed direct mail (of debatable effectiveness), e-mail marketing (ultra cheap but again of limited use) and an as-big-as-possible Internet presence - Realtor.com, Trulia, Zillow, Craigslist, and anywhere else you can get that home will be to your advantage.

3) Six months, especially in this market, especially for a property with a somewhat narrower audience, is not too long of a listing.

4) You signed on for a 7% commission. While I disagree that it's the norm (there is no norm anymore), and I dislike her representation that it is, it isn't her responsibility to tell you what other agents charge, or to do your homework for you on that count. Not trying to piddle in yer Cheerios here, just giving a bit of tough-love perspective.

Jason


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RE: When Your REA Overprices the House

It could be that 7% is the norm in your area for harder to sell vacation properties.


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RE: When Your REA Overprices the House

I am uncomfortable with your statement that she is advertising the summer cottage as a residence. There are differences in homes built initially to be 'year round' and those not. Things like insulation, pipe protection, septic size. They can be retrofitted to be made into year-round houses but anyone who has had a summer cottage will spot that immediately, baseboard heat or not. And it could hit them as hype and it would make me lose confidence in the listing if I were viewing it.


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RE: When Your REA Overprices the House

So how is this going now???

and I hope she has changed the description of the house--nothing made me more angry when I was house-shopping than to have a realtor misrepresent a house through descriptive advertising...and certainly this vacation house is not a "suburban home"


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