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Are you a professional practitioner or just an order-taking lackey? How to list a home for sale like you own the damn place

I’ve written a ton about how we list homes for sale (and not just in that post; surfing the archives repays effort). At Unchained I illustrated some of our ideas, and you can catch this show on the DVDs if you missed it live. Everything we do is about selling the house — not selling us as a brokerage or as agents and not attracting buyers for other listings. We reap a substantial secondary marketing benefit from listing as hard as we do — both the efforts we undertake and our victory dance when we succeed — but our entire focus is on selling the house.

There is more stuff I could talk about, and we are always playing with new ideas. It’s fun — for me at least — to work with buyers, but listing is a perfectible praxis: By the assiduous application of thought and effort, we can get better and better at it the more we do it. But there is a limit to that proposition: You cannot sell a house that won’t sell, and that’s what I want to talk about.

But first: Listing in Phoenix right now, and in many other markets, can be a heart-breaking endeavor. There is too much inventory and there are too few buyers, and even the most perfect home can come up second-best again and again. “If you list, you’ll last,” but it could be that you’ll last a little better right now if you focus your attentions on motivated, qualified buyers, rather than speculating on sellers. You don’t have to blow off sellers, but I think you might be wise to reschedule listing appointments in favor of showing appointments, if one has to give way for the other.

Here’s the real meat of the matter, though: How much will you get paid for a listing that does not sell?

We charge a $1,500 non-refundable retainer when we list, but that doesn’t begin to cover our costs before we even hit the MLS. I’ll come back to this idea, but the point for now is that we actually lose money if our listings don’t sell. Even if you aren’t doing the kinds of things we do, the same must be true for you. You’re out your time for getting the listing into the MLS, and you’re out of pocket for expenses like virtual tours. If your listing doesn’t sell, you’re not only working for free, you’re actually taking a loss for your clients’ sake. They will continue to own the house if it hasn’t sold, but your investment is gone.

(Just in passing, listing our way is a much bigger financial risk, but you stand a much better chance of actually selling the house — and hitting grand slam home runs will get you more listing appointments. It’s worth thinking about.)

But the most important element of listing a home for sale like you own the damn place is to take account of your own investment in that home. If you know for sure that it will not sell — that it is over-priced or under-maintained or if the seller is so obnoxious that you know you’ll end up hating each other — don’t take the damn listing!

If you list a home that won’t sell, you are not working for free. You are working at a loss! You can work for free by staying home and investing time in your social media marketing. You won’t make any money, at least not immediately, but you won’t lose anything beyond your daily bodily-maintenance expenses.

You may think you can cajole an obstinate seller into seeing things your way eventually. But what if you can’t? You’re not only out your time and money, you have advertised to all the neighbors, for up to six months, that you stink as a listing agent. That’s a loss that just keeps on losing.

We list on Price, Preparation — repairs and staging — and Presentation to the marketplace, and if we can’t have all three exactly the way we want them, we won’t take the listing. We will negotiate on smaller issues, but we won’t give any ground on our must-haves, and we’ll decline the listing if we feel we haven’t made it sufficiently clear why they are musts.

This is a place where our blogsite helps a great deal: We want to work with people who understand exactly what they’re getting by engaging us — and who don’t want anything else. We know from experience that our marriage to our sellers will never be happier than it is at the listing appointment, so we won’t list the home if we’re not in love with them and them with us. Yes, this is business, but it’s a very emotional business. As with a real marriage, if one party is looking for the exit on the way in, the relationship is not going to work.

And this is why the retainer is so valuable to us. It’s not a profit center: It covers some, not all, of our out-of-pocket costs and none of our labor. But it “pre-nups” the sellers: It puts them on notice that canceling the listing or blowing off less-than-ideal offers has a financial cost. We want for our sellers to have some skin in the game, so we make them write us a check before we will lift a finger in their behalf. Our listing presentation takes the form of a very friendly conversation, never the same thing twice. But if you want to find out if you can sell, sell the idea of an upfront retainer when all homeowners expect listing agents to work “for free” until close of escrow.

This is our attitude going into a listing appointment: We are going to do our work our way. The sellers are engaging us to sell the home, but we are engaging them as well. We’re going to have a long list of things we will want them to do, and, if they won’t do them, we won’t take the listing. We’re going to set the pricing strategy, we’re going to formalize it in the contract, and then we’re going to hew to it as written. We’re going to market the home our way, picking the arrows from our marketing quiver that are most appropriate for selling that particular home. And if we can’t have all of our must-haves the way we must have them, we walk away without a backward glance.

Are we mean about this? To the contrary. I might seem brusque to people, but it’s impossible not to love Cathleen. But we know from hard experience that yielding on any of our must-haves is a recipe for failure. If the sellers simply cannot let us do our work our way, we let someone else lose his or her money and reputation failing to sell that home.

We’re working all of this out at just the right time — I hope. We turned down many millions of dollars of listings in the last eight months. It’s possible we might have sold some of them — but the agents who got the listings instead have not sold those homes. We’re not hitting home runs on every home we did list in that span of time, but we didn’t list a single home we didn’t believe we could sell. And if we’re right about what we’re doing, we should emerge from this downturn in a position where we can write our own ticket in the neighborhoods where we are strong.

The bottom line: If you really are an expert at selling homes, sell that idea. When I’m showing, I see a lot of houses where the listing agent is obviously not in charge of the marketing process, but I cannot think of any reason why this should be so. Bad sellers deserve bad listers, I suppose, but why are there any bad listers? And why would anyone want to be a part of a marketing effort that is either doomed to failure — or can only succeed by massively discounting the property?

You have a choice when you go out on a listing appointment. You can take listings that you know cannot sell on the terms set in the listing contract, which means that you stand at great risk of taking not only a financial loss but incurring an enduring loss to your reputation. Or you can list only for sellers who know — and know why — they are lucky to have you on their side.

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  • 22 comments

    22 Comments so far

    1. Hunter Jackson May 30th, 2008 7:35 am

      Greg,
      I was going to email you this morning asking some listing advice. I do greatly appreciate you posting this.

    2. Mark Eckenrode May 30th, 2008 8:00 am

      i’m curious, have you tested different price points other than the $1500?

    3. Greg Swann May 30th, 2008 8:09 am

      > i’m curious, have you tested different price points other than the $1500?

      No, but twice we’ve sat at listing appointments for million-dollar homes and realized that $1,500 wasn’t enough. The issue is not the amount itself but whether that amount of money matters to the seller. In the $300,000 to $500,000 range, $1,500 is real money. At double those prices, not so much.

    4. Anonymous May 30th, 2008 9:14 am

      Greg: Bravo! I think your business model is great. It is, indeed, important that your clients “have some skin in the game” and are invested in selling their home. I am always thrilled to get calls from homeowners who are so motivated to get their home sold that they are willing to invest in home staging without having been dragged into it kicking and screaming by their listing agent. Happily, that is happening more and more here in Los Angeles.

      It is great to work with listing agents who are expert at what they do, and they manage their client relationships in a way that allows them to use their expertise fully and fruitfully.

    5. Jeff Brown May 30th, 2008 10:19 am

      Next month we’re listing our first San Diego exchange property using our new biz model.

      We’re gulping the Swann Kool-Aid as it relates to marketing. Some of my house buddies are already poking fun, while giving their real thoughts away with their expressions.

      Wonder what’ll happen when our first hugely costly ‘for sale’ signs go up?

    6. Hunter Jackson May 30th, 2008 10:37 am

      Just checked with my MLS and members are not allowed to get a retainer. Geeeeeeeeze when will all this cmls bs end

    7. Greg Swann May 30th, 2008 10:55 am

      > Just checked with my MLS and members are not allowed to get a retainer.

      Call it a non-refundable new account set-up fee.

      Rules against retainers are devised to frustrate flat-fee business models. As of this week, the NAR is on good-behavior. Push the envelope and see what happens. I’ll back your play to every extent I can from here.

    8. Mark Eckenrode May 30th, 2008 10:55 am

      @greg: that was sort of what i was thinking… a higher retainer has them put more skin in the game, but positioned right could really build value for the service you provide.

      @hunter: might be grabbing at straws here, but would it be possible to take an “advance on the future sale” rather than a “retainer?” i’ve seen and used this positioning outside the industry to great effect. not sure how the mls would perceive this though… curious

    9. Hunter Jackson May 30th, 2008 1:24 pm

      The problem is, as the doj lawsuit states, is that we are required to use 1 contract and 1 contract only…and many other things.

      Our mls is not affiliated with nar, thank god for that little ray of sunshine.

    10. Greg Swann May 30th, 2008 1:31 pm

      “This Listing Agreement will be Amended by the Additional Terms and Conditions attached hereto which are incorporated herein by reference.”

      That’s completely legal in Arizona, but I know the laws are much more strict Back East.

    11. Hunter Jackson May 30th, 2008 2:18 pm

      I am going to do a hard read of the by laws this weekend.

      Any ways, here is a link to the Listing agreement we have to use.

      http://hunterjackson.files.wordpress.com/2008/05/exclusive-right-to-sell.pdf

    12. Kevin Warmath - Alpharetta Real Estate May 30th, 2008 4:25 pm

      Well, can i answer the direct question by saying: “I’d like to be a professional and not a sniveling order taker.” There is no pride and self value in being a lackey. Didn’t we become realtors so we didn’t have to be lackeys? What happened to “stickin’ it to the man?”

      >But if you want to find out if you can sell, sell the idea of an upfront retainer when all homeowners expect listing agents to work “for free” until close of escrow.

      Greg has tested our real skill because he knows he’s right and so do we. That is why i can’t get it out of my head…just don’t know if my man parts are big enough to do it yet.

      I’ve thought a lot this week about the things I learned at Bloodhound Blog and the $1500 retainer has been at the front of my mind, so this post was timely.

      I think, though, once i do do it that it will revolutionize my listing presentation and free my mind.

      Of course, it presupposes that you actually have a marketing plan worth implementing, as so many agents just put up a sign and put it in MLS. If you have a plan worth its salt then you shouldn’t have a problem charging for it.

      The other really good idea i got at BHB was something simple: the sign. BHR does a super job with the sign. Interesting to see J. Brown is implementing that idea.

    13. Cheryl Johnson May 30th, 2008 6:35 pm

      Kevin, If $1,500 seems presumptuous, here’s a thought: Make a list of what you actually will do, and price each item:

      Custom sign $XXXX
      Register domain name $XXXX
      Staging $XXXX
      Print ad in local paper $XXXX

      List whatever particular marketing services you will use. Total the costs. Show the prospective seller the list, explain what each item is and when it will happen. Explain you need to collect ~that~ amount of money upfront to proceed.

    14. Tom Vanderwell May 30th, 2008 7:16 pm

      Greg,

      I think that if I had known you back in 1988 when I was selling real estate, I might not have made the switch to mortgage lending in 1991! :-)

      I’d like to repost this in it’s entirety on my “guest post” page at http://straighttalkguestpost.blogspot.com. There are a lot of other Realtors and sellers who need to see this.

      Let me know if I can do that.

      Thanks!

      Tom Vanderwell
      thomas.vanderwell@53.com
      616-292-7559

    15. Tom Vanderwell May 30th, 2008 7:20 pm

      Greg,

      I think that if I had known you back in 1988 when I was selling real estate, I might not have made the switch to mortgage lending in 1991. You’ve got an awesome attitude and the absolutely correct focus.

      I’d like to have you consider allowing me to repost this on my guest post page at http://straighttalkguestpost.blogspot.com. There are a lot of other Realtors and sellers who need to hear things like this.

      Let me know.

      Thanks!

      Tom Vanderwell
      thomas.vanderwell@53.com
      (616) 292-7559

    16. James Hsu May 30th, 2008 10:13 pm

      The last 3 months I started taking a $795 non-refundable pre-listing fee and I do exactly what Cheryl Johnson suggested except I don’t itemize the cost of each item, but I do provide a list of everything that happens and use it to explain what the non-refundable fee is for. It has definitely helped keep things afloat.

    17. Jeff Brown May 30th, 2008 10:30 pm

      James — Our new biz model calls for a monthly payment for our listing fee.

      When asked to account for it, tell them it goes two places — marketing their property and onto my Starbucks card. Haven’t heard objection #1 yet. :)

    18. James Hsu May 30th, 2008 11:05 pm

      Jeff – In your monthly fee model, do you have an amount they pay at closing or is it just the monthly fee?

    19. Jeff Brown May 30th, 2008 11:25 pm

      Monthly fee — as long as it’s not sold.

    20. Kevin Warmath - Alpharetta Real Estate May 31st, 2008 6:21 am

      @Cheryl I don’t think it is an issue of simply itemizing your expenses for the seller. Rather it is about doing something different than every other realtor and being able to charge for it.

      Yes, differentiation is what allows Greg to charge a retainer. He has developed a marketing program that is so different from what other agents are doing that he can say: “Look, this is a ton of work; this is the way you should be marketing and the only way we work. It costs money up front to do this.”

      If you just say:
      “My sign costs x, the virtual tour costs y and the print ad costs z and i need you to pony up” if i were the client i’d say I can find 10 agents in an hour who will do the same thing and not charge a retainer. Agents will trip over themselves getting here.

      It is only because Greg is different that he can do this. The corollary is is that you need a differentiated marketing plan so that you CAN ask for the retainer, which is when you know you really have a relationship (and aren’t just a real estate lackey!)

      @James Congrats on starting to charge a retaininer. I wish I had that much confidence that my plan was better/different that other agents. I guess that is the crux of the matter: confidence, substance, perception vs reality. I’m getting there ;->

    21. Greg Swann May 31st, 2008 6:54 am

      I’m with Kevin on this, Cheryl. We don’t cost-justify the amount of the retainer. The purpose of that fee is to induce us to direct our attention to your home instead of another, and we believe it works because it demonstrates your commitment to the marketing process.

      That is often enough explanation, but we might also hear, “I’ve never heard of a real estate agent charging a retainer.” Yes, and you’ve never heard of real estate agents doing any of the things we’ve discussed today. We’re going to undertake an extreme and costly effort to launch this home into the marketplace. If the home doesn’t sell, or if you cancel the listing, we will take a loss even allowing for the retainer. We’re taking a risk no matter what we do, but we’ve found that by getting sellers to join us in that risk, we maximize our opportunity to achieve a mutual success. You can fire us if you want to, but that $1,500 will be long gone, and it won’t be coming back. We’re asking you to do business in what we know is a radically different way. If you’re not 100% committed to our way of marketing your home, you need a different listing agent, and we need a different seller.

      We decidedly encourage sellers to shop around, but if we hear grumbling about the retainer, we decline the listing. Anything that sounds like an unhappy marriage is a red flag, leading us to pursue other opportunities. We know our way is better, but we won’t get married unless you know it, too.

      We write a firing clause into every employment contract. The only way the retainer is refundable is if we fire the sellers. They’ve never heard that idea before, either, but it’s another way of establishing that our time and our minds are our sole assets, and we don’t intend to waste either one.

      Realtors talk all the time about professionalizing the business. This is the way your attorney, your accountant and your physician do business. We’re not mean or stuffy about any of this, but if we can’t do our work our way on your house, we need to focus our efforts on sellers who do see the benefit of working our way. You’re paying a retainer and a sales commission to engage the time and attention we would otherwise devote to other endeavors. If you don’t see the value in the marketing plan we are proposing, you need find someone else.

    22. [...] I’ve discussed in the past, we charge a non-refundable retainer to sellers for similar reasons, to cover our front-loaded costs if the rug is pulled out from under us. But [...]