Realtor

When will Real Estate 2.0 invade the rest of the industry?

December 19, 2007 by Spencer Barron

Have agents made so much money in the past that they need not be concerned with details? Most of the ancillary services offered to Realtors have a common thread. Good enough is good enough.

Websites don’t need to look good, you just need to have one. “Get a template.”
Standardized direct mail marketing. Hey we all say the same thing right? “Don’t forget to put your picture on it.”
Lead providers that still collect names in popups online then sell it to Realtors for hundreds of dollars. “Hey you only need one right?”
Newspaper advertising that marks the prices up for a Realtor ad. “You have the money.”
The showing service that is inadvertantly rude to my clients and other agents. “They’re really busy.”

That’s just the short and local list. The local Realtor associations push their poor quality products down your throat with little or no choice for alternatives. The Denver MLS that we pay for by the minute is incredibly slow. Realtor.com, … I think that says enough. When will there be actual quality services for real estate professionals that just want to focus on their business?

Filed Under: Denver Real Estate, Marketing, MLS, Realtor

Pricing a home in a buyer's market.

October 11, 2007 by Spencer Barron

Things sure have changed. A couple years ago, a broker could miss pricing a home by 5%-10% and the market would rise to the price within a 6 month listing contract. Of course, if they priced it at value they would receive more than one offer. It was one of those you-really-couldn’t-screw-it-up markets. Here’s the basic ideas that I’ve found to help guide my pricing and sell homes faster than the market average.

1. Think like a buyer. What do the majority of buyers want? That’s the question you need to ask yourself. Be realistic. If the house you’re competing against has a remodeled kitchen and you don’t, you better have an ace up your sleeve somewhere else in the house. A buyer will buy the best house they find for the money within their price range. Most buyers look for homes within 25% price range. If your home isn’t the best home for the money, don’t expect it to sell. You can either improve the house or lower the price.

2. Comparable home sales have never meant much. All that comparable homes sales exist for is to make people (buyers, lenders, etc..) comfortable with the idea that they’re not paying too much or accepting too low of an offer (sellers). Right now, the only thing comparable sales might suggest for pricing is the approximate price range a home may sell in and justifying the final sales price. Actually getting offers for your home is something completely different.

3. Your current active competition is your best guide. Take a look at the competition. The competition is on the market but hasn’t sold. That says a lot. Theoretically, if your home was exactly the same as the other homes on the market, you can expect similar results. Pricing above or at the competition won’t sell the home any faster than the time they’ve been on the market. If your home is comparable to the active home that’s been on the market for 200 days at the price you’re thinking of listing at, don’t waste your time at that price. It won’t sell.

So what is your competition? Some homes in your price range aren’t competition and some are. That’s where experience comes in. A broker/agent needs to be out looking at the competition if they want to sell the listing. For me, I put myself in the mindset of a buyer and rank the competition in my mind based on which one the majority of buyers would find most appealing. I then price my home to fit in with what was observed. Make the price spread enough that differences between the property are properly justified in the buyer’s mind. Sometimes this lets you actually push the price up and sometimes you’re a little lower than some comps. Just remember though, the buyers have probably never saw the comparable sales on the inside so they really don’t matter.

4. Brokers/Agents – Don’t take an overpriced listing. If you can’t price well against the competition for whatever reason, you may want to think twice about taking the listing. Sellers have the right to hold out for whatever price they want. There’s always the chance somebody who hasn’t seen the competition would buy the home and pay more than what the majority of buyers would pay. I try to determine the probability of selling at a price. I won’t take a listing with a 50/50 chance of selling. It’s up to you as a broker to decide if it’s going to be a waste of time or not. The seller knows he can find somebody out there to list their home at their price. For me, I’m running a business, not a public service.

My rule is I take a listing if it’s within my farm area and not more than 10% higher than what I feel the value is. This usually depends a lot on how flexible on price I feel the seller will be if the time comes to adjust the price. It’s not too strict of a pricing rule just because of the benefits that come from having listings in your farm. If it’s outside my farm, I only take the listing within 5% of my target price. In the Denver area, MLS statistics suggest you won’t even get an offer unless you’re within 5% of value and the average listing that sells original list price is within 10% of the final sales price. Incidentally, there is still a spread of about 20% between the average active list price and the average sold price for the current month.

Pricing within the 5% rule helps me sell most homes in about 1/3 the time of the current market average. If my sellers want to ‘test’ the market at a slightly higher price, I used to take the listings, but I’m getting away from that. It’s hurts to spend thousands on listings that don’t sell. I find that most sellers always think of the price drop as money lost. In reality, their home was never worth the higher price. But in the end, you always seem to hit a wall on price that’s above what the home is worth even though they might have been agreeable to pricing it correctly if you helped them to be realistic upfront. In the end it’s rarely worth taking an overpriced listing.

Filed Under: Denver, Denver Real Estate, Marketing, pricing, Realtor

Dealing with tenants when selling… my advice, "Don't do it"

May 2, 2007 by Spencer Barron

If possible, don’t sell your home with the tenant in the home. Here’s why.

Nobody wants to purchase your problem unless you want to sell at a discount.
When tenants don’t cooperate, you lose more than you’re gaining in rent.

As a Realtor, I think the most difficult situation is dealing with tenants of a property your client is trying to sell. The final sale price will depend greatly on just how cooperative the tenants are.

As for methods in dealing with tenants when selling, start by knowing renter’s rights for your state. Review the lease. In Colorado, the law states that tenants have the right to “quiet enjoyment” of the property. Review the lease to see what type of access you will be able to have.

You may even want to offer the renter some sort of incentive to be cooperative. As it stands, the tenants can likely expect the rents to go up. There is nothing in it for them. Sweeten the deal or don’t expect cooperation.

Filed Under: Denver Real Estate, Realtor, rental

January Home Sales Up – Is the Denver Market in a mini-upswing?

February 9, 2007 by Spencer Barron

While I think many Realtors in Denver probably already knew this, it seems buyers are coming out of the woodwork.

Denver Metrolist is reporting good news for buyers and sellers alike. While days on market have gone up significantly from last year, 14% over last year to 117 days, so did ‘solds’. Sold listings for January were up almost 25% since this time last year. (statistics from Denver Metrolist for the month of January 2007) Good news for buyers? Well, prices were down a touch as well compared to last year at this time.

I like to think that activity in January is a harbinger of what the first half of the year will be like. It’s been a busy couple of weeks for me. I’d imagine that many agents around Denver are breathing a sigh of relief if the same thing is happening to them. It’s almost as if the market was artificially supressed by poor media coverage. I haven’t heard anything horribly bad in weeks.

I’m not saying that all is warm and fuzzy. January’s DSNews (Default Servicing magazine) reports that Colorado’s foreclosure rate is 2.7 times the national average. Look out Douglas and Weld, you have a new contender for top foreclosure county. Adams County now tops the list with 1 foreclosure for every 132 households. But the truth is, this is actually an improvement from where it’s been.

My Real Estate Market predictions:

It doesn’t take a rocket scientist to realize that the job market and commercial office markets are healthier than they’ve been in years. Real estate will always be based on what’s going on locally. In particular, the job market has more to do with how the real estate market will do next year than interest rates will ever have. More jobs will mean fewer defaults on loans. And higher incomes mean higher home values. If buyers can afford to buy a limited supply of quality homes in desirable areas, prices will go up, and vice versa. So if there are jobs in Denver, I’d imagine home prices will remain stable or even show modest growth. Look for areas like Sunnyside, Berkeley, Bonnie Brae, DU, Cherry Creek, Cherry Hills Village, Greenwood Village, Englewood and Washington Park to see continued growth (1-3% this year), while areas like Highlands Ranch, Green Valley Ranch (Denver), Park Hill (Denver), Northglenn, Thornton and Southwest Denver will show some declines as high inventory and foreclosures put pressure on sellers to drop prices (2-5%).

Technorati Tags: Denver, Real, Estate, Statistics, Foreclosures,

Filed Under: Denver, Denver Real Estate, Marketing, MLS, Realtor, statistics

Why you won’t get feedback on all showings

February 5, 2007 by Spencer Barron

1. Most agents won’t respond to the email request for feedback because they are just too lazy.

2. Most agents won’t respond to any messages that are left on their phones for feedback because they just don’t care.

3. Most agents show more than one property in a day. So if they don’t respond in the first day or two, they probably don’t even remember any feedback.

4. If a buyer’s agent has an interested client, it’s not in his client’s best interest to give feedback, as it could compromise a future negotiation.5. Most feedback will only be negative, since if they really like the home it would fall under number 4. So only considerate agents with some free time and an uninterested client will give feedback when there was something definite their client did NOT like.

When you don’t get a call back you can assume:

1. They may be interested but are not certain about writing an offer at this time and don’t want to tip their ‘hand’.

2. The property didn’t make any impression on them, or they just don’t remember it among the other homes that were shown.

3. The agent that showed the home is incredibly lazy and inconsiderate.

Less than 1 in 3 agents will actually give feedback. Any agent that claims they get feedback for every showing is either lying to you or making it up. I make a reasonable attempt to get feedback, but as a rule, I won’t hound agents to get me feedback unless it’s the very first showing. It just makes you look desperate to agents that may actually have a buyer. Besides, if you did your homework, there really isn’t a whole lot you can learn from feedback except things to support a future price drop.

Technorati Tags: Denver, Real_Estate, Realtor, Feedback, Home_Value

Filed Under: Denver, Denver Real Estate, Negotiations, pricing, Realtor

The Top Ten Most Common Complaints about Homes for Sale – Useful Feedback

February 5, 2007 by Spencer Barron

Selling a home has gotten a lot tougher over the last two years. The Denver real estate market has really started to slow down. Buyers are gaining the upper hand in negotiations because there are many more homes to choose from. This means home sellers are going to have to pay attention to the feedback they get from their agents and from the public and make changes that will help them sell the home. I hear all sorts of things when I start calling for feedback. It’s amazing how useless most of it is. I mean, it’s rarely anything the seller and I haven’t realized but I push on waiting, building support for whatever course of action will eventually need to happen. I’ve come to characterize feedback in three types.

The first type of ‘feedback’ are things the homeowner already knows but the homeowner has refused to address. These are usually obvious and just a huge waste of time. These are things that should be addressed prior to sale. Either fix the problems or drop the price until the home you’re trying to sell is similar to the homes in the same price range, the homes your potential buyers are looking at. The huge waste of time comes in because these are things that are so obvious that I pointed them out as I walked through at the listing appointment. How many wasted opportunities to sell will you need before you take my advice and make changes?

1. Didn’t like the finishes. Paint colors, carpet, light fixtures, etc… This is pretty common and highly changeable. The problem is most sellers think that if the buyer doesn’t like it, they can change it. If you’re getting lots of showings and no offers, this could be the culprit. Usually it’s cheaper to make the changes than try to drop your price enough to get an offer. It’s the whole $2 will get you $10.

2. Home needs updating. If you haven’t remodeled recently and don’t have the latest and greatest finishes, you won’t compete anywhere near the same price of similar homes that do. Buyers usually don’t want to do any work. If your competition is nicer, don’t expect they’ll pick your home unless there is a significant price difference. Your only cheap options are staging the property well and making sure that it’s clean and bright for showings. Some paint usually goes a long way to help here too.

3. Home needs serious work – You can’t tell me the seller and the listing agent don’t already know this. Investors are your most likely buyer here and don’t expect to get more than 80% of what your home could be worth if it was fixed. Most savvy investors are looking for homes at about 70% of what they could sell it for fixed up.

4. Horrible smells – Many homeowners have an idea that their home smells but don’t know what to do about it. Others like to pretend they can’t smell anything. I know they know it smells though because they always ask. People whose homes don’t smell never ask visitors when they come in if they could smell the _____ (insert animal of your choice). People whose homes smell, usually do ask that silly question. Of what value is giving the feedback…”Yes, it’s horrible.” when the seller isn’t going to do anything about it. If it smells bad, don’t expect to get a fair price for your home. I’ve seen this knock $20,000 of the value of homes. Animal smells are the worst but food smells can be overpowering too. Suffer from hyposmia? Get professional help.

5. Home is overpriced – If you’re a seller, don’t expect helpful feedback from buyers when it comes to price. This is the most inaccurate feedback you will get. Most buyer’s agents will likely tell you it’s overpriced regardless of what the comparable sales are. Usually, the buyer’s agent has no idea about the home’s value; they only know if their clients liked it or not. Even if they liked it, they might say it’s overpriced. Who knows for sure? The only thing that is certain, the buyers didn’t want to pay the list price for the home. If all buyers that see your place would gladly pay your listing price, you’re probably listed too low. From an agent’s perspective, feedback on price is only useful for helping the seller feel comfortable about a price drop, unfortunate but often necessary. I , personally, don’t go by feedback; I start by looking at the competition and seeing how we compare. This dictates more than anything what your home should be listed at.

The second type of feedback we get are things that the home owner already knows about but can do very little to fix.

6. Poor location – Funny thing is everyone talks about location, location, location as being the most important factor in real estate. But to a seller, he can’t do anything about the location when it’s bad. You can expect that location alone will turn off many potential buyers even before they come in. Repeated canceled showings? They probably discovered the problem before they even went in. A seller can only try to divert attention to the property’s strong points while attempting to downplay the problems with the location. Backing up to a busy street? Play soft music inside and considering adding a water fountain outside. If you’ve got worse problems than road noise, you’re probably going to need to address it in the price of the home. These problems may include close proximity to factories, crack homes, shanty towns, tent cities, train stations, gang hangouts, prisons, public housing, or Rocky Flats; don’t act like your home is anything like the home that backs to a ‘green belt’ or fronts on Washington Park.

7. The home has a funky layout – Staging may help but If your home has a hodgepodge of additions over the last 80 years it’s going to effect the price.

8. Bad Neighbors – There’s very little you can do to get the neighbors to ‘get with the program’. I’ve seen homes where the neighbors had a junk yard in their back yard, rotted out cars and all. As you might guess, this is bad for the neighborhood. I once got a call from an agent that noticed there was an electric fence, the type used for horses, along the top of my client’s fence. The neighbor needed to keep the pit bulls from jumping the fence and getting into everyone else’s yard. Do the only thing you can do, file a complaint with the proper government agency and hope nobody finds out it was you.

Now for actual valuable feedback.

9. Doesn’t show well – This can mean anything really, but if you have dogs barking at the buyers as they walk through the home or they are stepping over underwear, I want to know. Homeowner doesn’t step out for the showing, laundry is everywhere and bread crumbs are all over the counters? I want to know how the seller is doing at keeping the place show-worthy. Trust me, these are things the seller doesn’t want to hear. They are at the root cause of why homes don’t sell even after they really are priced appropriately for what they are.
10. Home doesn’t show at all, the homeowner denied showing – As an agent, nothing is more frustrating than when you’re spending money to market a property and the homeowner turns down a showing.
In most cases, I know exactly why something isn’t selling. Feedback is an exercise to help educate the seller and build the seller’s confidence in what I’ve already said to them. I don’t try to get feedback so I’m better educated about the price or condition of the home. I’m an expert and if I need a second opinion, I’m not going to ask someone who has a motive to not tell me the truth. I get feedback to take to the seller and say ‘See, I’m not the only one that didn’t think blood red with a rag faux finish is a poor color choice for the bathrooms ceiling and walls.’

Technorati Tags: Denver, Real_Estate, Marketing, Feedback, Agents, Home_Repairs, Home_Value

Filed Under: Denver, Denver Real Estate, FSBO, Marketing, pricing, Realtor, value

Most Brokerage's business models don't benefit the Agent

February 1, 2007 by Spencer Barron

I’ve always been interested in sustainable business models and have noticed that there are very few in the real estate industry. Except for that of the brokerage. The business model of the brokerage is not the same as that of the agent. Brokerages make money from agents, agents make their money from transacting real estate.

Before I made the decision to pursue real estate full time, I had considered getting into the mortgage business. What I found was just about anyone would ‘hire’ you on as a mortgage broker. Why? Because they would provide almost no support for you but take half of what was made on a loan. They knew that in most cases, a mortgage broker would come on, refinance their friend and family then wash out of the business. So they attempt to capture a larger share of the market with a networking through expansion method.

I can’t help but think many large real estate brokerages are doing the same. For example, I recently talked to an agent in a large brokerage who said that they shared an office with less than 20 desks with over 300 agents. This office represents a small area of Denver, so I would assume that there is alot of overlap between the agents. Most businesses in sales don’t have that many agents for a small area. It wouldn’t be fair to the salespeople. They would limit the number of agents so their agents would be as busy as they would like to be while still achieving saturation. But the truth about real estate is that brokerages make a lot of money off the agents themselves through various fees. They also know that the new agent will immediately go after their friends and family who might not otherwise use their company. So on top of the fees, there is perhaps another $10,000 to $20,000 to be made simply by bringing on another agent who may even be paying you to be there. Of course, most agents won’t be successful but the brokerage doesn’t really care. Most brokerages provide general training and services to make it appear that they want an agent to succeed but the truth is their business model is at odds with that premise.

To establish yourself in real estate requires time. If you’ve been in the business long enough, you have made the contacts and have the client base to pull from to sustain yourself. If you’re new to the business, you need to build your business in the face of a vast and entrenched competition. But the brokerages tell you you shouldn’t drop your commissions. They then proceed to charge you enough or split the commission in such a way that you agree, “There’s no way I could work for less.” There is no way that these agents that have no momentum will ever gain a foothold against the entrenched agents who are actively marketing in a neighborhood. So the new agents are left to help their friends and family (assuming there are not more agents in the family) then slowly fade away, back into the careers they came from.

Technorati Tags: Denver, Real, Estate, Brokerage, Business_Models

Filed Under: Business, Denver, Denver Real Estate, Marketing, Realtor

Just because I was fast doesn't mean it was easy.

January 30, 2007 by Spencer Barron

Picasso portrait Portrait de Francoise I first came across this Picasso legend a few years back with regards to valuing someone’s time. I believe the moral also applies to the valuing of services in real estate. After all, real estate is a business.

Legend has it that Pablo Picasso was sketching in the park when a bold woman approached him.

“It’s you — Picasso, the great artist! Oh, you must sketch my portrait! I insist.”

So Picasso agreed to sketch her. After studying her for a moment, he used a single pencil stroke to create her portrait. He handed the women his work of art.

“It’s perfect!” she gushed. “You managed to capture my essence with one stroke, in one moment. Thank you! How much do I owe you?”

“Five thousand dollars,” the artist replied.

“B-b-but, what?” the woman sputtered. “How could you want so much money for this picture? It only took you a second to draw it!”

To which Picasso responded, “Madame, this took me my entire life.”

It’s always amazing how the public views what you get paid strictly by the amount of time you spend on something. Truth is, it’s not that simple. There are costs and risks that are above and beyond the time itself that you spend. Not to mention that nothing can replace the experience you gain going to more closings in a month than most people do in their entire life. There is definitely a line you have to draw with clients when it comes to valuing your time. The public wants a Realtor’s opinion, access to people’s homes, and access to the database that Realtors have been maintaining for years. But few want to pay you for it. I’m not here to argue the point of how much an agent should make. Should it be flat fee or a percentage? I don’t care. But when it comes up, each agent needs to decide what the best long term approach should be for his or her business. There are still good agents out there that bring real value to their clients. I’m sure every Realtor who reads this will feel that statement applies to them. We aren’t offering a free public service. Sooner or later you need to decide what your time is worth and let those that want to ‘go it alone’ do just that.

Technorati Tags: Realtor, commissions, picasso, real_estate, buying, selling, home

Filed Under: commissions, Denver Real Estate, FSBO, Realtor

What should be in a Comparative Market Analysis and how long will it be accurate?

January 24, 2007 by Spencer Barron

What should be in a comparative market analysis (CMA)? A CMA shouldn’t be just a list of solds or actives. It should reflect the current conditions of the market. I was recently asked how long I felt a CMA was accurate and personally, in this market, I don’t think I would want to blindly price a home off a CMA I completed even two months ago. In most cases, my paranoia leads me to double-check solds and similar active listings even an hour before driving over to take a listing. There is a huge disparity in home pricing mainly because brokers use a wide range of largely ineffective models to determine pricing.

What I would look for in a Comparative Market Analysis (CMA).

New Sold Comps – This one is obvious but probably one of the most overrated when it comes to pricing. I don’t think this is the most important factor in pricing, but it’s important because once buyers have found that they liked your home more than the competition, this is where they will look to see if you’re worth it. You don’t have to be priced less if you can justify it, but both the initial offer and the appraisal will be based on this. Because of this, and to make sure you will appeal to the buyers in the market, you need to be priced in the ballpark that your buyer is looking in. Be prepared with a list of sold comparable homes and a justification of the price based on the homes’ differences. Sold data will likely not show a significant change over a short time frame and usually one low or high sale isn’t enough to support pricing.
New Competition - How many similar homes are you competing against? What does it cost to buy the other home? How do you compare to what is currently for sale? Lots of competition? It can have a huge effect on time on market and how much you’ll get for your home. If another seller comes on the market and prices below your home it will reduce your ability to compete at a higher price. Unless, of course, your home is truly different in a substantial way, this is not very likely when your home was a new construction home in a subdivision full of homes just like yours. How you compare to other homes that your potential buyers will be looking at is the most important factor in determining price.
Changing Absorption rates - This is a measure of how long the current inventory would take to sell if no new homes were added to the mix. Demand varies seasonally and as the result of the weather (super obvious) and the school year, as well as economic pressures and even poor media coverage of the market. Supply also varies greatly, peaking in the summer in most cities. It’s a great indicator, especially when applied directly to the homes of similar type.
Change in Days on Market before a sale – It’s also much easier for most people to grasp when compared to other indicators, but it’s one of those pieces of information that gets abused. Unfortunately, just because something sells quickly doesn’t mean it was under-priced. It could have just been the best home that the buyer was able to get an offer accepted on when they were looking. (see #2) There are too many variables to use the fast sale of a recently-sold property to support the idea that your home should sell for more. I find that of the homes that sell quickly, they usually don’t sell to some new buyer that just wandered by. Most new listings sell quickly when they are priced right when compared to what’s available. Buyers usually look around before they’re ready to buy. The homes that sell quickly likely sold to someone who was looking for a while already and recognized that the home was priced appropriately.

What is most disturbing though is the vast majority of sellers already have a price in their head that they want. Of course, I’m usually willing to hear why the seller thinks his home is worth the pie-in-the-sky price. They are usually trying to compare their home to homes with extra bathrooms, a finished basement, or more square footage. Even worse, many work backwards from how much they want to walk away from the closing table with or what they owe to arrive at their number.

For me though, I believe that the CMA’s should give you a range of what pricing will be acceptable to the market. It should also indicate where offers are being accepted when compared to the list price and what concessions (if any) are common. For Denver, as a general rule, most Denver homes homes sell within 2-3% of their current list price and buyers get less than 1% in concessions. Most also sell within 10% of their original list price of the current listing period. That means most homes priced more than 10% higher than what comparable homes would sell for usually end up expiring without a sale. In case you missed it, most Denver Homes are overpriced on average of 20% when compared to the average list price of the solds.

In the end, it comes down to the feeling you get walking in the door. The same feeling the buyer will get. Look at the competition and know what price can be justified. That’s the only way you can nail down the real value.

Also see: How to sell your home quickly for top dollar.

Technorati Tags: Denver, Real, Estate, CMA, Selling_A_Home, Pricing

Filed Under: Denver, Denver Real Estate, Featured, FSBO, Marketing, Realtor, statistics

Money Magazine – Buyer's agents co-ops and how to get a better deal buying or selling a home.

January 17, 2007 by Spencer Barron

Money Magazine - Is your Realtor on your Side? How about that. I actually got quoted in Money Magazine. Albeit my statement appears a bit truncated, it is not incorrect. I’m quoted as saying “People offer higher commissions because it works”. I’ll stand by that. Offering a higher commission to a buyer’s agent does help sell your home. It doesn’t necessarily help you get a better price but it will get you slightly more traffic. I’ll explain, but first, this is what I’m talking about. The February 2007 Article entitled “Is your Realtor on your Side?” by Stephen Gandel discusses the value of having a buyer’s agent. More than that, it actually gets into the morality of the strategies some homeowners and builders are using to sell their homes.

Steve’s seems to be trying to get his fingers on the pulse of real estate but can’t seem to get past the waiting room. I spoke with Steve on the phone after he wrote an article in the December issue of Money Magazine, “Best Ideas for 2007″. I had disagreed with him on many of the assertions he had made regarding strategies buyers could use to get a better deal. To be fair, I agreed strongly with his suggestions for sellers. In our conversation, he admitted that he ‘doesn’t have access to the same information that agents have’. Thus he has to “rely on other people” in order to write these real estate articles. He’s essentially trying to analyze data from hundreds of markets and collate that into advice that could be applicable nationwide. He’s not an expert in the sense of personal experience but rather is forced to rely on so-called experts from across the country to give him accurate information regarding the stories he researches in order to make the valuable conclusions. I’m honored that I can fall into that category. Unfortunately, I disagree with some of the advice in the latest article. It seems the article plays more to what buyers would want to believe rather than the truth about what will help get you a better deal. But then again, who knows what agents across the country tell him. This is how it works in Denver and what I disagreed with…

(If your not sure what commissions are and how they work, check the end of this post)

Why would offering more money to a buyers agent work? Because brokers want to make a living and will be more likely to show your place in among others of the same type. This is often true in the case in newer condos or builder-owned homes where there is often a lot of competition. If you have ten other condos in your building that are essentially the same home at the same price, and then there are lots of other condos in other buildings, most agents want to narrow down what building their client wants before showing them everything that is available in one building. There are literally hundreds of condos that are similar. Do you want to go view all of them or would you like someone to help narrow it down? Most people would like some help here. Well, if I have to pick which one to show first, and they appear all the same, why wouldn’t I pick the one that pays me better, especially if they’re are all priced the same? That’s just good business.

Unfortunately for sellers, this doesn’t seem to bring them a higher price, it just gets you more showings and helps to sell your home faster. From all the home sales I analyzed to prepare my information for Steve, I noticed that of the homes that had higher commissions sold slightly faster than homes that didn’t. It’s not obvious when looking at homes offering co-ops slightly higher than the average because often that money is being offered to get brokers to overlook the obvious problems with the home and bring someone by. While it might not have been as clear in the ‘slightly more’ group that higher commissions bring faster sales, it definately becomes clear in the ‘slightly less’ group. When you offer less than the average commission, there is a marked difference in time on market.

I took a look at this and noticed that time on market goes up immediately when offering even slightly less than the average co-op. Days on market increased by 12% when agents offered less than the average co-op. This can affect the sale price since a long time on the market is viewed poorly. …

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