How to Lose $21,000
Recently I had another agent ask for advice on how to respond to a situation they were in. To protect the innocent and for clarification, names and other details have been changed for the purpose of this blog post.
Minerva had worked with the Potters off and on over the course of a couple of years. The Potters knew that they wanted to be in a very specific area and didn’t want to put their home on the market until the home within that area was found. I won’t get into the problems, especially in a seller’s market, that strategy could produce. That’s a post for another time. Needless to say the Potters hadn’t found what they were look for…until they did.
The Potters found out their neighbors, the Grangers were going to sell their home. It met the needs the Potters had, especially for the location. The Potters and the Grangers agreed on a purchase price and worked towards getting the deal to close. After finding the home, the Potters then needed to sell their own home. Word traveled and the Potters were able to procure a buyer for their home. The Potters and the Slughrons agreed on a price of $195,000. All of this negotiation, pricing, and marketing was done without the help of a real estate agent.
Minerva didn’t know all this had happened until she reached out to the Potters about a possible home that she had found. Minerva was gutted. She knew what was going on in the real estate market around their house. She knew the Potters grossly under priced their home and didn’t know what to say to them since they were already under contract. Here is the estimated run down at market value, assuming the seller is paying for an agent, buyer’s closing costs, etc. I am not accounting for loan pay off.
Market Value of the Potter’s Home $240,000
Estimated cost of selling a home at market value $24,000
Net amount at Market Value $216,000
Do you remember how much the Potters were selling without an agent? $195,000! That brings the difference to $21,000! Had the Potters called Minerva and relied on her knowledge and her expertise they could have netted more from the sale of their home. I know that I’m a real estate agent and of course, I would advocate using one most of the time. Especially if that agent is me, I’m a little biased. People do buy and sell real estate everyday without an agent. It can be done. Speaking in generalities can sometimes get you in trouble but I’m going to throw one out there. Unless you are a real estate agent or are involved within the industry, you don’t know what is going on. Leave it to the professionals.
There are a ton of different pricing strategies when it comes to selling a home. I don’t know how or why the Potters came up with $195,000 or why they decided not to talk to Minerva sooner. A common reason why people don’t want to use an agent is because they want to save money on agent commission. I agree they saved on agent commission without using one. No doubt about that. But had they used one they would have netted $21,000 more at minimum.
Let me know what your thoughts are. The good, the bad, and the ugly.