This is the type of stuff that happens every day all around us. Agents make no effort to hide their shenanigans – instead, they flaunt it, to make the deal.
With so much focus on HGTV real estate shows, it’s inevitable that our marketing will go Hollywood too:
A woman in a red dress twirls with a dark and mysterious man through light-filled hallways. Music flutters and surges in a romantically lit courtyard overlooking the twinkling city. A mischievous coda plays, and then the credits roll.
It’s a classic scene plucked straight from Hollywood. But this eight-minute mini-movie is far from a silver-screen blockbuster. It’s a real estate advertisement for an $8.5-million, 1.5-acre compound in Encino:
Successfully marketing a mansion now requires much more than panning shots from an iPhone or even expensive videos shot by drone. Real estate agents with luxury listings are now experimenting with full-on property movies — films featuring actors, story arcs, scores and Tinseltown-caliber cinematography.
“The classic old-school walking tour of the house is becoming more and more obsolete — with all the content that’s thrown at us these days, it’s hard to hold someone’s attention with that,” said Kristine May, who directed the Encino shoot and owns If I May Films in Woodland Hills. “People get attached to a story, and they want to stick around and see what’s happening.”
So what if the narrative and performances are sometimes more Razzie than Oscar? Real estate agents contend that movies showcase their properties in a way that helps buyers envision themselves there.
Real estate agent Ben Bacal, an early innovator of high-gloss property films, worked with married clients Ori and Nafisa Ayonmike to craft a $20,000 film to market their home in Hollywood.
The Ayonmikes star in a fictional narrative that begins with Ori skulking through the sleek, contemporary rooms of his 5,500-square-foot, five-bedroom estate. In the next 11 minutes, Ori tells Nafisa he wants a divorce, a passionate fight ensues, Ori gets kicked out and Nafisa chucks her massive diamond ring into the pool.
Amid all the high drama, production company Rafiki captures the home’s 20-foot ceilings, high-tech security system, marble fireplaces and tony Hollywood Hills neighborhood. The video of the property listed at $3.65 million has generated nearly 61,000 views since being posted on YouTube last year.
Online video platforms have become a key component in property sales. Some 36% of home buyers used YouTube, Vimeo or another video hosting website in their search last year, despite only 8% of real estate agents using film in their marketing strategies, according to the National Assn. of Realtors.
Bacal posted another movie trailer-esque listing video last year for a Bel-Air property, in which two children develop Ferris Bueller fevers and spend the day playing hooky. The pair splash in their infinity pool, shoot golf balls over the Los Angeles skyline from their lawn, try on outfits in their generous closets and have a puppy delivered by drone.
The 14,230-square-foot spread sold in December for $39 million.
Typically, the filmmaking cost is covered by either listing agents, sellers or both. Movie-style real estate videos can cost anywhere from $5,000 to upward of $30,000 to make, directors estimated.
Read full article here:
“With a record number of home buyers out there, this is officially the most competitive, fastest-moving spring housing market in decades,” said Javier Vivas, manager of economic research at realtor.com. “Following a furious start to the season, the median days on market for homes on realtor.com in May is the lowest since the end of the recession, and marks the first time that 1 in 3 homes is selling in under 30 days nationally.”
The median age of properties on realtor.com in May is 60 days, which indicates that properties are selling five days (8%) faster than this time last year, and two days faster than last month.
“The lack of affordable inventory remains a critical issue, particularly for a growing number of first-time home buyers and millennials lining up for starter homes and urban dwellings.”
So where in the U.S. are things the craziest—those places where homes fly off the market the fastest, and buyers are up all hours, clicking on listings? When we pulled together this month’s list of the hottest markets in the country, the top markets were a one-two punch for the Bay Area, with San Francisco (including nearby Oakland and Hayward) at No. 2 and Vallejo, just to the north, at No. 1.
I don’t think a faster-moving market is crazy – instead, the tight inventories have caused us to naturally evolve to quicker pace. It’s not just the buyers – agents, lenders, appraisers, and inspectors all move faster now, and you could say, ‘it’s about time’.
Words like ‘craziest’ are just headline porn – the market evolution is on track.
Is there a potential benefit to slowing it down?
Agents dig the face pace – buyers and sellers have less time to think, and deals close quicker so we can get on to the next one.
How would sellers and buyers benefit from slowing down the process, and how could it happen?
Imagine if we eliminated the ‘Coming Soon’, ‘Sold Before Processing’, and other ways that agents wrongly tilt the table. Instead, we adopt an industry-wide standard process for selling homes so everyone has a crack at buying each house. After all, shouldn’t that be in place already?
If everyone knew that the seller would pick the buyer on Friday afternoon (or some other deadline), then we’d have an open, honest, and predictable marketplace. If we added a open bidding process at the deadline, the resulting transparency would help even more.
The frantic running-around today is from agents abusing the system, which causes buyers to pull their hair out every time they lose a property unfairly. They are determined to get the next one, no matter the cost, because they abhor the way they are treated.
You could say that the realtors’ unethical behavior that has helped to create the frenzy does benefit the sellers. Most will say that as long as sellers benefit, then all is good.
But is it a long-term solution?
We will eventually run out of buyers who are willing to put up with this environment. Then what, another dip? Great.
The conversion to The Slow-Down Plan outlined above (adopting a industry-wide process for selling homes) is our soft landing. If we continue at a break-neck speed with no solution in sight, won’t we crash….again?
The onslaught of new-fangled ways to sell homes is getting bogged down in their own zeal – there are so many choices now, which way do you go? You have the sexy off-market package driven by celebrity realtors above, or the typical new-age mobile app at a discount below:
- The widget that spends $100 million/year on advertising.
- Single agency.
The scarcity of sales should drive more agents out of the business, and the those agents who remain will be increasingly focused on putting their own buyers and sellers together.
We have the listing agents who hold listings off-market in order to find their own buyer, but there are also agents who will do ‘sold before processing’ with an outside agent. This happens quite frequently.
If a listing agent isn’t going to round-trip the commission, and instead let a second agent represent the buyer – why wouldn’t you do what is best for your own client (the seller), and expose it to all agents via the MLS?
An old veteran agent told me that he hoped he would sell his new listing before MLS input, and he did – and an outside agent represented the buyer. The house had been vacant for years so there wasn’t an occupant who held up the showings – all he had to do was install a lockbox, take a few photos with his phone, and spend 15-30 minutes doing the MLS input.
He did input the listing onto the MLS after he found the buyer, so was it the installing of the lockbox and taking a few photos too much of a burden?
Why wouldn’t he do what is best for his seller?
He must either be flat out lazy, or he wanted everyone on the MLS to see that he was the latest to breach his fiduciary duty. It is like a badge of honor!
The realtor business is slowly eroding right before our eyes.
Part of a realtor’s job is to help manage expectations – not only those of their own clients, but expectations of the other agents and their clients too.
Recently I received an offer on a listing that was 25% under the list price. They also wanted my seller to carry the financing for 30 years – which is unheard of – and oh yeah, it was contingent upon the sale of the buyers’ home too.
I told the agent (whose email-signature noted they were in the Top 10 statewide for their company) that if I was the seller and that offer was presented, I’d fire my agent.
Just like when we’ve seen a home with range-pricing that is too wide, it becomes impossible to bridge the gap – for three reasons:
- Once a buyer puts a number on paper, their mind starts believing it’s real.
- Buyer’s remorse is real too, and they cool off quickly.
- Sellers are skeptical, and don’t feel like negotiating much.
It may be discussed as just a place to start, but once a buyer submits their price in writing, it becomes a comfortable number. Going much higher than where they start is usually a function of how fast agents respond. My rule-of-thumb is two counters max for each side, in less than four days.
In this case, my sellers weren’t desperate, they had already determined that they wanted to sell for at least 93% of list and were willing to wait for it. I told the buyer’s agent that our price gap was too big, and I nicely asked the agent and buyers to go back to the drawing board.
Three days later, I received a new offer with bank financing, instead of seller-carry, but it still had the original price of 25% under list. It came with the buyers’ love letter; a full-page of reasons why my listing was the perfect fit for the buyers.
Was the love going to make the looming price gap surmountable?
In spite of houses around the county selling for 99% of list this year, we countered with a price that is 4% under our list – not bad, considering the original offer price. On their counter, the buyers came up to 82% of list, but it took two days to arrive. I knew the remaining price gap and time left wasn’t looking good.
I always want to respond promptly, because of #2 above – buyers cool off quickly. We dropped another 2% within a few hours, but it wasn’t enough. Two days later, the agent emailed that they lost interest – no counter, no love.
Five days gone by (seven days since the original offer), and the initial 25% gap killed our chances. They knew before writing the offer that it would take at least 93% of list to buy the property, and they still offered – so initially there was some willingness to pay that or close.
If they would have started at 82% of list, and trimmed the time spent to 3-4 days, could we have made it to escrow? I think so!
H/T to Susie for sending in another edition of photos seen in the MLS:
We are in the business of selling thousands of homes every year (last year in San Diego County we sold 23,962 homes worth $17,168,811,888).
Wouldn’t you think that there would be a set of rules to guide us? There isn’t, and what’s worse is that you don’t know what to expect on each house for sale:
- Will the listing agent create a bidding war?
- Will the listing agent take the first offer?
- Will they do their advertised open houses, or not?
- Will the listing agent tilt the table, and take his own buyer’s offer?
Each sale is different, and there is no telling what will happen. The uncertainty creates an environment where qualified buyers are denied the ability to compete, and the chaos helps to fuel the buyer frustration, which keeps the frenzy going.
Think if we had a marketplace where you knew that every home was going to be sold the same way. Pick any process – it would bring a logical, business sense to the market if everyone played by the same rules!
I believe that the auction format is the process that is the fairest, but there isn’t a consensus among the big industry players to change anything about the current environment. Will it ever improve?
This week I submitted an offer on behalf of a buyer, and the listing agent reported that he had multiple offers. I asked:
“Are you the kind of agent who discloses the other offers?” and included this video from last week:
He said he would need to ask someone, and then wondered, “Are you one of those agents who would”? I said, “Absolutely, it’s in everyone’s best interest – agents, buyers, and especially sellers.”
Twenty minutes later, he tells me the price and details about the offers on the table, and the price of a previous escrow that didn’t work out – it was the highest of the bunch. He also said that he expected more offers, and that they will just take the best one.
He also added, “You were the only one to ask for more info, so there you go 🙂 Good job working for your clients.”
The industry will be reluctant to adopt the auction format, but maybe we can take baby steps and get there eventually.
Broker supervision is a nice idea but rarely practiced. We need perp walks!
In September 2015, the California Bureau of Real Estate (CalBRE) issued an advisory which was captioned “Disciplinary Warning to Real Estate Salespersons Who Act, Conduct Themselves, and/or Advertise as ‘Independent’ Real Estate Professionals — and a Simultaneous Caution to Brokers Who Allow or Support Such Practices”.
Licensees of CalBRE are well advised to review that prior advisory since we continue to see some of the same bad practices identified in that writing.
This discipline “advisory” is being issued as a supplement to that prior warning since CalBRE has taken notice of the use by some real estate salespersons of names and designations (and attendant Internet and marketing materials) that suggest to the public – and mislead consumers into falsely believing – that such salespersons are real estate brokers.
A scenario that we have repeatedly seen is the use by a salesperson (who for this illustration we will identify as John Doe) of a fictitious business name that would lead members of the public to incorrectly believe that the business is operated and managed by a real estate broker. In this example, salesperson Doe conducts business using the name Doe Real Estate. Doe advertises using that business name, and the advertisements are connected to, or accompanied by, a webpage and other materials that extol the virtues of Doe Real Estate. The public would not think that Doe is a salesperson who must be supervised by another, and would most certainly conclude that Doe Real Estate is a real estate broker or brokerage. And the above practices are unlawful.
In addition to the above, many salespersons continue to brand and identify themselves as “independent” real estate practitioners, and they practice and advertise as such. Unless those salespersons are operating as “teams”, in full compliance with the California laws and rules pertaining to teams (e.g., the disclosure of I.D numbers and the name of responsible broker, and the surname of at least one of the licensee members of the team along with the use of the terms “team”, “group” or associates” with regard to the team), that is unlawful as well.
Further, and depending on the specific language employed with respect to the name(s) and designation(s) used by the real estate salespersons, there might be a violation of the law relative to the use of fictitious names. Please see the prior guidance given by CalBRE on the proper use and licensing of fictitious names.
As was also stated in the prior warning, under California law, with its two-tiered licensing system, real estate salespersons cannot provide – or advertise that they can provide – real estate services independently of their responsible brokers.
Likewise, salespersons must be associated or affiliated with, and be reasonably supervised by (which supervision includes broker review of the advertising used by the broker’s salesperson or salespersons pursuant to Commissioner’s Regulation 2725(e)) a responsible broker in order to engage in real estate licensed activities in California. The law provides no exceptions.
CalBRE will take appropriate disciplinary action (including the imposition of significant fines, and – where appropriate – the revocation of licensure) against real estate salespersons who engage in the unlawful activities discussed above, and against real estate brokers who permit their salespersons to engage in such activities.
More introduction to our favorite home-staging company, Transformed to Sell. In this video you will hear third-party testimonials of how home staging benefited the sellers – and buyers too!
David from Louisiana sent this in:
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.
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?