I received an email from the owner of a two-family house asking if I could list the property for sale. He lived in another state and worked in another country. We got the paperwork signed and in May of that year, the house was listed.
He was a very lucky landlord because his two tenants kept their apartments in beautiful condition and they were very easy to contact when showings were scheduled. The property was in a neighborhood that had several other multi-family properties. There was off-street parking for four cars and each apartment had a washer and a dryer. A future landlord would not have a problem renting the units.
He had paid $550,000 ten years before. Over the years he had listed it with four different brokers starting at $684,000. Each time, he listed the property at a lower price until now when he insisted on $475,000. I explained to him that it was unfortunate that he had purchased the property when prices were high but now, ten years later, the market was very different. I recommended a lower price based on comparable, sold properties but I could understand why he wanted a higher list price.
That was May 22nd. On May 30, he received an offer for $440,000. He countered and the offer was increased to $455,000. He said it was still too low and he rejected it. The Buyer’s Agent, working diligently for her client, contacted me about three weeks later. She said her buyers were still interested and proposed a new offer of $462,500. I delivered that information to my client and he said he would agree to sell for $462,500 if I agreed to lower my company’s commission.
I am not going to state here what the commission was to be as per our contract. Suffice it to say it was less than what the media like to report. So far in managing this sale, I had met with each tenant to ensure easy access for showings (I was their direct contact), made a number of trips to the village hall to verify building and tax information, taken dozens of photographs and edited them to show the property in the best light. I had provided updates for him, keeping in mind different time zones, by speaking with him or his wife here in the U.S. I had promised him to help his tenants find new homes to ensure the property would be empty at closing. (One accepted my offer and the other found housing on his own.) I visited the property regularly and when I saw that the town had been digging in his backyard, I inquired as to the reason and kept him informed of the progress the town was making to return the yard to its previous state. In addition, I provided print and online marketing for the property. I would incur more time and expense before the property sold. After discussing it with my broker, I told him we could not reduce the commission.
There were no price reductions and there were no more offers. The listing expired in November and the Seller said he wanted to wait for the Spring market before re-listing. It was no surprise when I saw that he re-listed the following February with another company for $449,000. In July, the house sold for $430,000.
After my nearly 20 years in real estate, I still don’t have a good answer for why this happens over and over again. If you are an agent reading this, and this has not happened to you, it will – I assure you.
In this case, it took five sales attempts to convince the Seller of the market value of his property. More often, the listing only has to expire twice before a seller finally listens to an agent’s advice. Ignoring the market data I presented to him was a costly mistake. Listing and sales history is readily available for Buyer Agents to share with their clients. When a property has gone unsold for a significant length of time, assumptions are made by buyers that lower the prices they offer. Not only did this property sell for so much less but the extra time to finally sell cost the Seller mortgage payments, taxes, insurance, etc.
A house is worth what someone is willing to pay for it. Part of my job when I represent a seller is to determine what that worth may be. The goal is to sell the property at the highest price the market will bear; not to have it on the market for months priced too high. In the latter case, very often the first offer may be the best offer.