An old reality in a buyers' market stands true
Building upon Zillow's report on home sellers in denial about current home values, I am finding some Franklin Township sellers are equally unrealistic of what it takes to aggressively market their home in today's tough environment.
On a recent listing presentation, I provided the customary Competitive Market Analysis (CMA) and my personalized and complete Marketing plan to sell a 3 bedroom ranch home. The homeowners seemed to be motivated, as they were unsuccessful in their attempt to sell on their own, without representation.
Among the things that I explained is the best way to have their home stand out from the crowd is to first price it right from the start. The CMA provided the suggested price range based upon recent sales and direct competition was identified. Next, I explained that incentives will differentiate the property for potential buyers and their agents.
When it came to discussing the commission, which is negotiable here in New Jersey, there was resistance by the sellers to paying 6%, with the homeowner stating, "why are all you real estate agents back to asking 6%?" I calmly responded, "I thought you told me that wanted to sell your home." That was a couple of weeks ago, and the house is still not active in the local MLS, at this time.
A posting on The Real Estate Bloggers asks the question; Is the 6% Commission the Winning Formula...? Their conclusion, as well as mine, is a resounding yes. A full commission, "to get the word out as effectively and powerfully (to buyer agents) makes a great deal of sense." In fact, truly motivated sellers might consider paying 6.5-7% to generate increased showings and possibly a quicker sale.
Here is the math behind my reasoning. You are selling a $250,000 dollar home. The commission at 6 percent is $15,000. If you added a 1% bonus to the buyer’s agent the commission would be $17,500, a difference of $2,500. It would also put you at the top of the chart on buyers commission paid in the local area and improve the odds that your house would be shown a great deal more than others in your price range.
If the house sells a month quicker you would be very close to breaking even at a 6.35% mortgage and with typical utility and tax costs added in.
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