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Carmel Valley
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jim@jimklinge.com


Posted by on Mar 25, 2013 in Frenzy, Listing Agent Practices, Why You Should List With Jim | 7 comments | Print Print

Gauging The Frenzy Properly

archer 003Realtors copy what they see others doing in the MLS, and these days it has become common for listing agents to mention when they will be presenting offers, which is rather presumptuous.

How do you know you are going to have offers?

I guess you can call it a marketing technique if you are trying to bluff buyers into thinking you have a hot listing, but it seems arrogant.

But it is also reveals how oblivious agents are to the different levels of frenzy.  The frenzy is not wide-spread, though it could be if pricing was more precise.

The last two weekends showed the difference.

At the Manzanita open house, buyers arrived 15 minutes before the open house started, and we had 100 people attend each day.  At the open house at Archer on Saturday there were no lookers until 10 minutes after the publicized start time.

A big difference.

When you have a legitimate hot listing (Manzanita is remodeled one-story, 3-car, 8,800sf lot, no HOA listed for $649,000 in Carlsbad) buyers will endure because they know that there aren’t many like it and their patience level is higher.  Even though we had offers on Saturday, we went ahead with the Sunday open house and made the deal on Monday.

There was sincere interest in Archer, but it wasn’t going to go crazy.  A slightly larger house a block away that backed to open space had just closed last week for $640,000, putting a cap on our value.  We were listed for $599,000, so the best case scenario was to end up between $599,000 and $640,000.

Most listing agents would go on automatic and let it run for 5-7 days and look up to see what happened.  But buyers fall out of love quickly these days, and if it is a standard offering, they’re not going to wait, or pay over list price if they feel like they’ve been played for a few days.

BUYERS WANT TO PAY LESS.  They don’t like these conditions, and if you give them any reason to back off, they will gladly take it.

We made the deal on Archer the first day on the market.

I’m not going to risk it – we had three acceptable offers, let’s sell the house.

The most motivated buyers come the first day, so the chances of a better offer coming in later dwindles immediately.  If I can sell it for over list price to a solid buyer who will stick, I think it is a smart strategy to make the deal now and not mess around with it.

I had a good example of the opposite a couple of weeks ago.

A house that was listed last year for $1,150,000 but didn’t sell for four months, came back on the market for $1,295,000.

My client made a $1,250,000 cash offer on the second day, with a 24-hour expiration.  The listing agent told me that she wanted to shop it around for 4-5 days, and refused to respond to our offer – she wouldn’t even counter-offer!

We walked, and it is still on the market.

Being able to interpret the frenzy, and adapt a sound strategy to selling your home should be the listing agent’s primary function.  Get good help!

7 Comments

  1. “The most motivated buyers come the first day, so the chances of a better offer coming in later dwindles immediately.”

    that is so true. there’s so little inventory that serious homebuyers are combing through the new listings and showing up bright and early. past the initial week and no offers? you are priced way too high.

    Jim, any plans to go back and offer $1.15 mil after a month or two?

  2. what obligation, if any, does a listing agent have in regards to responding to an offer?

  3. OCR,

    No plans to go back.

    Once buyers feel burned, they move on.

  4. what obligation, if any, does a listing agent have in regards to responding to an offer?

    Good question.

    No response to offers is required by listing agent or seller.

    There are two obligations.

    The listing agent is obligated to the seller a fiduciary duty of utmost care, integrity, honesty and loyalty in dealings.

    The listing agent is also obligated to the buyer and seller: 1) diligent exercise of reasonable skill and care in performance of the agent’s duties, 2) a duty of honest and fair dealing and good faith, and 3) a duty to disclose all facts known to the agent materially affecting the value or desirability of the property.

    The seller is not obligated to sell the property – only to pay the commission if the agent brings in a full-price offer.

    The biggest problems occur under the “diligent exercise of reasonable skill and care in performance of the agent’s duties” category, when most agent don’t have any skills or experience in handling bidding wars.

    Or they cop an attitude.

  5. Our neighbor had a full price offer and then changed their mind and decided to rent it instead. I wonder if the agent was paid?

  6. thx for the insight jim.

    @ LCV res

    I would think the agent would be entitled to a commission since the agent performed their duties. Now getting the money would be another story. I would imagine they would have to sue them to get the money and that would involve attorney costs that might make the economics a wash. maybe jim could elaborate on this?

  7. Are you really trying to say that it was the agent’s decision not to counter? You really mean the Seller’s decision, right? I am sure we could discuss the selling agents lack of client control and the like, but it is not as though the agent made the decision on her own, or at least I hope not. I would also guess that they rejected your offer because it was the exact amount the Seller paid for that house in 2004 and he probably wants to get a price to cover at least part of the commissions ;)

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