Helping Sellers avoid Agents who “Buy the Listing”
I came across a post with a very clever method to help ethical agents combat an often used practice of competitors who might “buy the listing.”
When a potential seller asks to get a listing presentation on their property, a conscientious real estate agent will work very hard to figure out the actual price that they believe their property will sell for in the market. However, it is not uncommon for an agent to go in and knowingly present a price to the potential seller that is substantially higher than the market price other agents are likely to present. That is “buying the listing” and is a deceptive and destructive tactic. It can also often be a pretty effective way to sign listings because the seller would like to believe their property may be worth more than it actually is. When an agent confidently tells a seller their property is worth more than others may say, they want to believe it and often sign a listing agreement based on a false hoped for price.
What happens after that is simple. The property does not sell, as any overpriced property will not sell. Then the seller, who notices that they don’t have any potential buyers coming to look at their property, or the agent who knows they listed the property too high a price, will ask to reduce the price. The practice often has the seller making small price cuts until they finally reach market price. It is painful in that it takes time and money to keep paying for the property which they are trying to sell as each price cut causes additional pain and anxiety for the seller. In a declining market, the price cuts usually end up at a lower final price than if the price had been correct to begin with.
Frankly, it is simple to tell potential sellers what they want to hear to get a listing. It is simple, deceptive and destructive.
Anyway, the best part of Jim Crawford’s Post was the language he suggests sellers use in their listing agreement to an agent they are choosing because they suggested a higher sales price. Here it is:
“It is fully understood between sellers, and listing agent that at no time during the listing agreement will the listing agent approach seller for a price reduction!”
If the other agent feels strongly that their higher price is attainable, they won’t have any problem with incorporating such language in their listing agreement. If a potential listing agent questions such language, the seller should question the validity of their suggested listing price. This is a clever way for either an agent to plant the seed in the seller’s mind that the highest suggest list price may not be a good reason to select a particular agent, or language for a potential seller to insist on to flush out the agents who are being most forthright.
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Al, This is a good suggestion. I hate it when agents “buy” listings. It is such a disservice to the sellers and shows the agents total lack of confidence in themselves.