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Are you looking for an experienced agent to help you buy or sell a home? Contact Jim the Realtor!

Carlsbad
(760) 434-5000

Carmel Valley
(858) 560-7700
jim@jimklinge.com


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Auction Questions

David from Louisiana sent this in:

Jim,

I just watched your first attempt at the auction and must say that you did a fine job as the auctioneer. I have been a real estate auctioneer/realtor for 30+ years and have often recommended an auction to fellow realtors in high demand situations such as yours. Of course, it usually falls on deaf ears as the realtors usually feel that they don’t need the service nor do they want to share the fee.

I hope you don’t mind the questions but I have been trying to work with realtors for many years and it seems to be a constant struggle.

I’m curious about what made you suddenly decide to utilize an auction when you could have easily achieved more than the asking price without it?

JtR:  Because there were multiple people at the open house that said they would be interested in purchasing the house, I thought this would be the best way to determine the winner fairly, and create maximum urgency.  The agents involved were willing, and so was the seller, so it worked out.  We did close escrow with the winning bidder at the price determined by the open bidding.

What was the seller’s opinion when you told them you were having an auction?

JtR: She was motivated to sell, so that made the difference.  Sellers who aren’t that motivated are suspicious of selling too quickly, thinking that this is like most jobs in the world where you work hard for weeks or months to achieve the desired result at the end.

But selling real estate in this low-supply, high-demand environment is the exact opposite – you stand the best chance of selling for top dollar in the beginning when the property is a hot new offering, and has max urgency. Buyers think something must be wrong with houses that aren’t selling in a hot market.

Did you consider actually marketing the property as an auction for a longer period of time and possible having more bidders?

JtR: No, because the highly-motivated buyers are there first.  There could have been other people interested later, but if they aren’t interested enough to come to the open house, then they probably weren’t willing to pay 4% or more over list price.  Yes, there could always be two in the bush, but our environment has trained buyers to race to hot new listings that might be a perfect match for them.  Not only will they be the most likely to pay more than others, but they are more likely to close escrow too.

I consider the quality/suitability of the property too.  This was a 1,541sf two-story house with a steep slope behind, so it wasn’t for everyone.  There were 3x as many people who didn’t bid.  Sellers and listing agents should consider how many people who came and didn’t offer.

Will you consider using the auction method in the future?

JtR: Absolutely, it is the best way to achieve top-dollar sales.  The animal spirits are driven when competing with your opponent eye-to-eye.

But auctions aren’t commonplace yet, so when I have multiple offers on a listing, I create a similar experience by pitting bidders against each other to increase the price.  I tell them the price to beat, which nobody does. Realtors want you to think it is better to bid blindly, but buyers are much more likely to go higher if they have a number to beat.  I take advantage of the competitive spirit, which you don’t have with blind bids.

For those who might think an auction format would only work for lower-priced properties, let’s note that there have been three sales in Rancho Santa Fe that utilized the no-reserve auction process, and closed for more than $10,000,000.

Those three are the ONLY sales over $10 million in the last five years in the Ranch, and there are 30 for sale today.  Let’s give auctions a try!

Of course, I would be happy to answer any questions that you may have.

Thanks, David

JtR: David, if a trusted name-brand company brought a slick and easy auction process to home sales and advertised it properly, do you think they could succeed?  Do you think they could change everything, and potentially eliminate realtors as we know them today?

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Posted by on Feb 21, 2017 in Auctions, Jim's Take on the Market, Listing Agent Practices, Realtor, Realtor Training, Realtors Talking Shop, Why You Should List With Jim | 6 comments

Market-Rate Sellers

Marc Davison suggested here that we re-brand the word ‘realtor’:

http://www.inman.com/2017/02/14/the-case-for-killing-the-term-realtor/

He was met with the usual drivel from agents, some of whom mentioned the big difference between a real estate licensee and a Realtor is that we subscribe to a strict Code of Ethics.

But if we’re going to re-brand the name Realtor, then let’s stop the charade about ethics.  Realtors have stood by idly while their fellow agents have fleeced the banking industry with fraudulent short sales.  We intentionally deceive consumers by re-inputting our listings to make them appear like hot new offerings.  We make off-market deals and boast about them in the MLS that they were ‘sold before processing’, when every realtor has signed an agreement to share their listings with each other.

None of that is ethical, and if you participate – or stand by and watch others participate and do nothing about it – then you’re not an ethical agent.

Let’s put an end to it.

Either be ethical, or let’s stop saying we’re ethical, when we’re not.

Because the industry is so fragmented and independent, we’re not going to get a million agents to be ethical when you can double your commission by telling sweet little lies.

But we could educate sellers on the truth, and save our jobs.

The auction format would help to drain the murky cesspool of home selling.  Buyers and sellers would enjoy full transparency, and everyone would have a shot at paying what they think a property is worth.

Auctions would invigorate the marketplace!

But sellers are leery of the idea, and they don’t want to give it away.

Here’s my idea:

The MLS is a dinosaur, and has been complicit in the fraud.  Instead, let’s take this idea straight to Zillow – they already have different categories of listings on their website: Pre-foreclosures, Coming Soons, Make Me Move, etc.

Let’s add a new category: Market-Rate Sellers.

First, we properly educate a seller by having them read and understand the definition of a property’s value.  We give them this disclosure:

A property’s value is defined by how much a ready, willing, and able buyer will pay for it.  After proper marketing, I am willing to sell my property for what the market will bear.  Signed, Seller.

Why don’t we already have this piece of education?  Because sellers think they determine the value, and agents do nothing to convince them otherwise.  Instead, we encourage the idea just to get the listing.  Is that ethical?

If a seller is stuck on his price, then they go into the Make Me Move category.  No problem, I take listings like that – and I might get lucky some day.

But for the sellers who want to control the entire process and move promptly, we will have a solid game plan to get them top dollar now:

The Slow-Motion Auction:

  1. Tune-up house.
  2. Open house for 5-10 days.
  3. Buyers engage in open bidding at the house on X date.

Sellers and buyers deserve to have this full transparency, and the ethics it would impose on agents will save our jobs.

Posted by on Feb 20, 2017 in Auctions, Ethics, Jim's Take on the Market, Listing Agent Practices, Zillow | 11 comments

Inventory Watch

The selling season is underway!  We have had roughly twice as many new listings as new pendings in each of the last three weeks, which is about right.  Either we will have bursts of new pendings over the next two months, or eventually those unsold listings will begin to stack up.

Click on the ‘Read More’ link below for the NSDCC active-inventory data:

Read More

Posted by on Feb 20, 2017 in Inventory, Jim's Take on the Market | 0 comments

Real Estate Kiss of Death

How do you know when your offer isn’t going to go too far?

When the listing agent tells you, “I sent your offer to my sellers”.

Come on Jim, don’t you expect the sellers to read it?  Yes, I do, but it would be nice if the agent also offered some advice.  I always include my own opinion on why they should take the offer, because I know the other agent probably won’t.

As a result, this is the phone call the following day:

Agent: Did you receive the offer?

Sellers: Yes.

Agent: What did you think?

Sellers: We didn’t like it.

Agent: OK, thanks, have a nice day!

Of course, they didn’t like it because it was less than full price.

After all the showings during the first week on the market, the sellers were telling all their friends and family that they were going to have a bidding war, and sell for over list price.

But nothing materialized, and a few days or weeks later this snot-filled punk has the audacity to offer less than list price?

It reminds me of the Realtor Facts of Life.

It is best to be:

  1. The first-born child
  2. The second spouse
  3. The third realtor

Once sellers hear the same thing three times, they might start believing it.

It is easy to forget or ignore the truth about real estate.  A property’s value is defined by what a ready, willing, and able buyer will pay for it.

Instead, we convince sellers that they determine the sales price.

I might have a solution though – stay tuned!

Posted by on Feb 19, 2017 in Jim's Take on the Market, Listing Agent Practices, Why You Should List With Jim | 5 comments