For What It’s Worth
March 18, 2005
Full Exposure
I’m about to list a very nice house in Riverside whose owner generously offered to let Round Hill Partners hold it as an “exclusive” for thirty days before submitting it to other brokerages in town via the Greenwich Multiple Listing Service. I appreciated the offer—if you sell your own listing you get twice the profit—but I declined because it wouldn’t have been in my client’s best interest.
Valuing a house is an imprecise science; an experienced agent can make a pretty good guess where a particular property should sell based on recent sales of comparable houses and what is currently on the market but the ultimate test comes when the house is put on the MLS and all twenty thousand agents in town can show it to their clients. The market will always correct a mistake in pricing. Too high, and your house will attract no bids. Too low, and any number of people will bid its price to the proper level. And you won’t know that you made a mistake unless and until you expose the house to the entire market.
Some owners understand this. My brother Gideon tells me that recently his firm, Cleveland, Duble & Arnold got a listing because, the owner told them, theirs was the only one out of five firms interviewed who didn’t promise him an “in-house buyer”. The owner wanted the best and highest price for his house and he obviously recognized that the way to achieve this was to offer it to the entire world of buyers.
I am aware of one instance where, after three different firms priced a house in the low-to-mid $4,000,000s, another agent received the listing because he claimed to have a buyer for the property at $5,200,000. He did, too, and the seller profited handsomely, but either the other firms were all wrong or the listing agent sold his own client an over-priced house. Since I wouldn’t trust the agent in question with my pet snake collection I think the latter is more probable, and why would you want to do business with someone like that? If he’ll sell out one client one day, he’s likely to sell you out the next.
In my opinion, the multiple listing service is the best thing to happen to sellers since record low interest rates. While it’s possible that an ‘in-house” buyer will over-pay for your property, in my experience it’s far more likely that you’ll have cheated yourself.
Bidding Wars
Andy Healy of this office recently listed a prime building site in Havemeyer for $929,000. Not surprisingly, a bidding war broke out and the house went for way above its asking price. My own client didn’t win that war—so much for company loyalty, Andy—but I was impressed, again, with the bidding process now becoming common in town. A seller’s attorney—in this case, Tom Ward—draws up a proposed contract with the price and closing date left blank. Interested bidders pick up the contract and have a few days to consult with their own attorney, make any changes they like, fill in their price and return the signed contract with a deposit check. At an appointed hour, the seller’s attorney opens the contracts and whoever has submitted the best bid wins. The seller signs on and voila—the deal has gone to contract.
I like this procedure because it serves both parties’ interests. Sellers benefit because it weeds out insincere bidders and buyers aren’t tormented by “accepted” offers that then get tossed in favor of a later, higher bid. Another benefit: while bidding wars generate a feeding frenzy that often produces a much higher bid than the original asking price sometimes, when informed that they have submitted the winning bid, buyers get cold feet and decline to proceed. The second highest bidder is then offered the property and he starts thinking, “if the first guy doesn’t want it, why do I?” and so on down the line until that wonderful winning price has sunk below the horizon. The signed contract procedure eliminates this risk and locks the price exactly at it’s frenzied highest point. And that’s good for sellers.
Rock’em Sock’em Robots!
I’m told that fisticuffs broke out at a recent open house between two agents angered over each other’s driving skills, or lack thereof. I’m sorry I missed that because it would have livened up an otherwise dull day spent driving around town touring other people’s houses. We often have policemen at open houses to direct traffic. Now, I suppose, they can add maintaining law and order to their job description. Professional Realtor; an oxymoron of the first order.
March 18, 2005
Full Exposure
I’m about to list a very nice house in Riverside whose owner generously offered to let Round Hill Partners hold it as an “exclusive” for thirty days before submitting it to other brokerages in town via the Greenwich Multiple Listing Service. I appreciated the offer—if you sell your own listing you get twice the profit—but I declined because it wouldn’t have been in my client’s best interest.
Valuing a house is an imprecise science; an experienced agent can make a pretty good guess where a particular property should sell based on recent sales of comparable houses and what is currently on the market but the ultimate test comes when the house is put on the MLS and all twenty thousand agents in town can show it to their clients. The market will always correct a mistake in pricing. Too high, and your house will attract no bids. Too low, and any number of people will bid its price to the proper level. And you won’t know that you made a mistake unless and until you expose the house to the entire market.
Some owners understand this. My brother Gideon tells me that recently his firm, Cleveland, Duble & Arnold got a listing because, the owner told them, theirs was the only one out of five firms interviewed who didn’t promise him an “in-house buyer”. The owner wanted the best and highest price for his house and he obviously recognized that the way to achieve this was to offer it to the entire world of buyers.
I am aware of one instance where, after three different firms priced a house in the low-to-mid $4,000,000s, another agent received the listing because he claimed to have a buyer for the property at $5,200,000. He did, too, and the seller profited handsomely, but either the other firms were all wrong or the listing agent sold his own client an over-priced house. Since I wouldn’t trust the agent in question with my pet snake collection I think the latter is more probable, and why would you want to do business with someone like that? If he’ll sell out one client one day, he’s likely to sell you out the next.
In my opinion, the multiple listing service is the best thing to happen to sellers since record low interest rates. While it’s possible that an ‘in-house” buyer will over-pay for your property, in my experience it’s far more likely that you’ll have cheated yourself.
Bidding Wars
Andy Healy of this office recently listed a prime building site in Havemeyer for $929,000. Not surprisingly, a bidding war broke out and the house went for way above its asking price. My own client didn’t win that war—so much for company loyalty, Andy—but I was impressed, again, with the bidding process now becoming common in town. A seller’s attorney—in this case, Tom Ward—draws up a proposed contract with the price and closing date left blank. Interested bidders pick up the contract and have a few days to consult with their own attorney, make any changes they like, fill in their price and return the signed contract with a deposit check. At an appointed hour, the seller’s attorney opens the contracts and whoever has submitted the best bid wins. The seller signs on and voila—the deal has gone to contract.
I like this procedure because it serves both parties’ interests. Sellers benefit because it weeds out insincere bidders and buyers aren’t tormented by “accepted” offers that then get tossed in favor of a later, higher bid. Another benefit: while bidding wars generate a feeding frenzy that often produces a much higher bid than the original asking price sometimes, when informed that they have submitted the winning bid, buyers get cold feet and decline to proceed. The second highest bidder is then offered the property and he starts thinking, “if the first guy doesn’t want it, why do I?” and so on down the line until that wonderful winning price has sunk below the horizon. The signed contract procedure eliminates this risk and locks the price exactly at it’s frenzied highest point. And that’s good for sellers.
Rock’em Sock’em Robots!
I’m told that fisticuffs broke out at a recent open house between two agents angered over each other’s driving skills, or lack thereof. I’m sorry I missed that because it would have livened up an otherwise dull day spent driving around town touring other people’s houses. We often have policemen at open houses to direct traffic. Now, I suppose, they can add maintaining law and order to their job description. Professional Realtor; an oxymoron of the first order.
posted by Chris Fountain at 1:29 PM
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