Why I FIRED my listing agent: My Listing was a Lemon!

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Submitted by paramount on August 29, 2015 - 5:56pm

Here's the scenario: I want to sell a 1500 sq ft 3/2.5/2 house built in 1989 in short order. The house is on a very quiet street and is a 3 minute walk to a highly rated elem school and a 2 min walk to a large park. It's less than 5 min to a new hospital. All in a low inventory environment.

The house is vacant so I need a quick sale!

After 2 weeks on the market from mid July to August there were (4) showings. That's 4 showings in total.

I lowered the price and did get more traffic, but no offers. I pulled the house off the market and it rented in 3 days. I had 118 rental inquiries in a week.

The house was on the market for 21 days and it cost me over 3k in carrying costs. My realtor kept telling me an offer was coming in, but I never got an offer.

Bottomline: My realtor gave me bad advice on pricing, and it cost me big time.

Mistakes I made:

1. Hiring a realtor because I used them in the past as a buying agent. Buying and selling require different skills; buying is easier than selling IMO.

2. Should have narrowed down the field to a few realtors then interview then make a decision.

3. I don't need to like the realtor personally - it's all about business and getting the job done. Trust yes, like no.

4. If I want to sell quick, pay full commision (6%). Maybe even offer a bonus to the buyers agent.

Always remember: There's a reason 10% of all realtors make 90% of the sales. I think my realtor *maybe* sold 5 houses in the last year.

Mistakes my realtor made/Issues

1. Not nearly enough research on price vs DOM vs my exact model of house (or very very similiar). I don't think any was done. Just a feeling as to where the price should be.

2. No marketing plan - just put it on the MLS and wait. Well, waiting costs me $$$ everyday.

3. There were signs my agent was more like a used car sales person and not a realtor. Possibly deception.

4. A reluctance to embrace social media to market.

5. To many open houses. I don't count open house lookers as showings. Doesn't work with me.

YOU'RE FIRED!!!

Submitted by CA renter on August 30, 2015 - 4:16am.

If your house isn't selling in a hot RE market like today's, there is only ONE reason for it: your price is too high.

Never trust a Realtor to look out for your best interests, and don't think that having a Realtor absolves you from doing your homework, I don't care who the Realtor is. You must take charge and know what you are doing.

If you wanted to get a feeling for the price of your house, you could have linked a similar home here on Piggington with explanations regarding similarities and differences. You could even take pics of the inside (and possibly outside, if you don't have privacy concerns), and we could tell you what your house is worth.

No need to ever pay 6% in a hot market, not even in a cold one. Just give your house an exceptionally good cleaning; maybe paint the interior in neutral colors if the walls are looking scruffy; *maybe* put in new, relatively inexpensive carpeting if the old carpet is really stained and ugly; and give the outside a good cleaning and perhaps plant a few plants if there are bare patches, though the planting is optional. If you don't feel like spending any money, just CLEAN it like crazy, and adjust the price accordingly.

If you do the above, you can sell your house within a week, or less, if you price it correctly. Heck, ask one of our Pigg Realtors, maybe SDR, if they can help you or recommend someone.

I think you were right to try to sell it right now. This is a fantastic time to sell -- you might even manage to sell it at/near a market peak. Not sure why you gave up so quickly and rented it out, instead. Might want to re-think that.

Good luck!

Submitted by paramount on August 30, 2015 - 12:14pm.

CA renter wrote:
If your house isn't selling in a hot RE market like today's, there is only ONE reason for it: your price is too high.

Never trust a Realtor to look out for your best interests, and don't think that having a Realtor absolves you from doing your homework, I don't care who the Realtor is. You must take charge and know what you are doing.

If you do the above, you can sell your house within a week, or less, if you price it correctly. Heck, ask one of our Pigg Realtors, maybe SDR, if they can help you or recommend someone.

I think you were right to try to sell it right now. This is a fantastic time to sell -- you might even manage to sell it at/near a market peak. Not sure why you gave up so quickly and rented it out, instead. Might want to re-think that.

Good luck!

Thanks CAR for the comments.

I reluctantly decided to re-rent for these reasons:

1. Once the listing price was to high, I felt the listing was botched or as I noted a lemon.

2. I barely had any traffic and the heavy buying season was on it's way out. If this all would have happened in April I would have kept it on the market knowing we were going into the buying season.

3. The house costs ~2k/month to carry when water, elec, etc..are factored in - maybe a little less. It was critical to get the price right from the start.

4. Given that the listing was a lemon, I wanted to get the property back on the rental market ASAP. After labor day it gets more and more difficult to rent or sell - at least that's my impression.

I agree I have some responsibility, but I also depend on a realtor to provide competent advice. That didn't happen.

And yes, this may end up costing even more in the long run. That's why it's so critical to hire a competent realtor.

The house is in very good/move-in condition. But it's essentially a starter home.

First time buyers are a smaller and smaller share of the market - there are many more renters than 1st time buyers.

On top of that, millenial buyers IMO have very unrealistic expectations.

Submitted by XBoxBoy on August 30, 2015 - 12:41pm.

CA renter wrote:
Never trust a Realtor to look out for your best interests, and don't think that having a Realtor absolves you from doing your homework, I don't care who the Realtor is. You must take charge and know what you are doing.

Couldn't agree more!

Submitted by scaredyclassic on August 30, 2015 - 2:22pm.

is this really possible?

if the price is too low, wont the listing attract attention, cause people to bid about what they want to pay.

if the price is too high, wont people think, huh, let me throw a lower offer out there, see what happens.

i mean, is precise pricing really that important? if it is, then why not go lower than one thinks, just to draw attention and let the free market sort it out...

?

seriously would liek to know. theres a house i ride my bike by that was recently ont he market for 600, no seller, then they took it off market, now its over a million.not sure what theyre thinking..

Submitted by paramount on August 30, 2015 - 2:55pm.

scaredyclassic wrote:
is this really possible?

if the price is too low, wont the listing attract attention, cause people to bid about what they want to pay.

if the price is too high, wont people think, huh, let me throw a lower offer out there, see what happens.

i mean, is precise pricing really that important? if it is, then why not go lower than one thinks, just to draw attention and let the free market sort it out...

?

seriously would liek to know. theres a house i ride my bike by that was recently ont he market for 600, no seller, then they took it off market, now its over a million.not sure what theyre thinking..

Very good question(s). When I listed my property I was well within comps although slightly (5k) higher than the zillow zestimate.

I thought the same thing you did: why not just make an offer. But there was very little traffic.

In general I think pricing needs to be low enough to attract, but high enough to optimize profit. It's not that easy...you really need to research the comps IMO.

That's what my realtor failed to do - it was laziness IMO.

Submitted by paramount on August 30, 2015 - 3:02pm.

And as mentioned by another pigg in the past, when the emotion of the bidding settles down and 'cooler heads' prevail - how many deals fall apart or never make it through escrow?

What happens when the house doesn't appraise?

Submitted by bearishgurl on August 30, 2015 - 3:39pm.

paramount, the problem with a "starter home" in a lower cost area like Temecula is that it may attract marginal-buyer looky-loos (either first-timers or those who lost a home to FC or SS in recent years), who (a) are not sure if they can qualify to buy anything; and, (b) probably should really stay tenants for a few more years to give them more time to get their (financial) sh!t together.

Also, a <=$2000 month carrying cost is troubling to me for a "starter home" in Temecula. Not sure when you bought your rental home or how much you paid for it but I paid under $347K for my home 14 years ago and it is 700 sf bigger than your rental house and probably has a bigger lot, as well. If I had it advertised for rent, my carrying cost would likely be about $1650 mo (PITI + utils) and it would likely fetch $2200 - $2400 in monthly rent. There are, however, a few "starter homes" around me (of 1100 - 1400 sf with larger than avg lots).

With nearly $2000 month carrying costs, I can see why you can't leave it empty very long waiting for an offer but I can also see why you want/need to sell it.

What is the monthly rent you can get from it . . . $1650 - $1850? If so, $2000 a BIG carrying cost for a property like that. If you get another qualified tenant in there, make sure you get a 1-2 year lease with them to protect yourself from frequent vacancies.

Submitted by bearishgurl on August 30, 2015 - 3:54pm.

A first-time buyer ("FTB") or "former homedebtor in recovery" could possibly get an accepted offer on a single family home in SD County for $350K to $400K. It may be smallish (1000-1400 sf) and may need a little work for habitability, but nonetheless, it is located in SD County vs. RIV County. There is a HUGE difference between the two counties (in the absence of considering age and condition of a SFR listing).

Just sayin ....

Submitted by bearishgurl on August 30, 2015 - 4:36pm.

paramount wrote:
. . . millenial buyers IMO have very unrealistic expectations.

So true. This is mainly due to exposure to too much "reality TV," IMO. After regularly watching the Kartrashians and all these young (mostly unemployed) roomies living very comfortably together in $2.5M++ homes in Encino, I could see how the average college-aged young adult believes that it is so easy to have/obtain a life like that and that they "deserve" a home like this (no matter what the kind of home they grew up in).

In the past 15 years or so, reality TV has played a big part in "managing up" millenials' housing expectations through the stratosphere. It's going to be interesting to see what this group typically buys once they start buying homes en masse, which (at least in CA coastal counties) hasn't happened yet.

Submitted by njtosd on August 30, 2015 - 5:41pm.

CA renter wrote:

If you do the above, you can sell your house within a week, or less, if you price it correctly. Heck, ask one of our Pigg Realtors, maybe SDR, if they can help you or recommend someone.

Good luck!

This reminds me of a piece from Freakonomics that compared homes listed by RE agents on behalf of clients vs. homes owned by RE agents and listed on their own behalf. Using lots and lots of data, the authors of the study found that RE agents, on average, left their homes on the market 10 days longer when it was their own home, and RE agent owned homes sold for 3% more than matched controls.

One might wonder whether the extra 3% was a result of RE agents knowing how to stage their homes in a way that led to higher prices, but then the extra 10 days on the market would not make sense.

One thing that I got out of law school that relates to many many things in life is the concept of an agency cost. Whenever you pay someone else to do something, the cost includes not only the money you pay them, but the difference in the job that gets done (might be better, might be worse) compared to the case where you did the job yourself or if you chose a different "agent". For example, when we pay someone to clean our carpets, they want to go fast and they usually leave a lot of soap behind that attracts new dirt quickly. If we do it ourselves, it takes a few house/room but the carpet stays cleaner longer. You only have so many hours in a day, though, so overall it might be better to have them come every three months rather than taking the time to do it yourself every six. So, what was the cost of using this agent - even though s/he didn't receive any $? Paramount's time and frustration, the carrying cost of the house while it was empty, and the possible loss of a profitable sale.

I also think that purchasers expect to get a deal when a house is FSBO, while the sellers think they are going to keep the money that they otherwise would have paid an agent. So I think it leads to more contention between the parties.

Submitted by scaredyclassic on August 30, 2015 - 7:19pm.

Would a,listing agent tell you what they'd list it for?

If so wouldn't it be worth getting a few opinions maybe avg them out?

Submitted by Reality on August 30, 2015 - 9:21pm.

paramount wrote:

Very good question(s). When I listed my property I was well within comps although slightly (5k) higher than the zillow zestimate.

I recall when you were whining about the house not getting offers in an earlier thread you mentioned you were a little above Zillow.

Why would anyone use Zillow as a benchmark?

Submitted by paramount on August 30, 2015 - 9:25pm.

Reality wrote:

Why would anyone use Zillow as a benchmark?

Because they have sophisticated algorithms.

Submitted by Reality on August 30, 2015 - 9:26pm.

paramount wrote:
Reality wrote:

Why would anyone use Zillow as a benchmark?

Because they have sophisticated algorithms.

OK. LOL.

Submitted by paramount on August 31, 2015 - 12:21am.

bearishgurl wrote:
A first-time buyer ("FTB") or "former homedebtor in recovery" could possibly get an accepted offer on a single family home in SD County for $350K to $400K. It may be smallish (1000-1400 sf) and may need a little work for habitability, but nonetheless, it is located in SD County vs. RIV County. There is a HUGE difference between the two counties (in the absence of considering age and condition of a SFR listing).

Just sayin ....

The answer is simple: school districts. TVUSD was recently ranked as one of the best school districts in California.

#29 Temecula Valley Unified (nerdwallet)

There are relatively few school districts in San Diego county that can compare favorably to TVUSD. And for the ones that do, most can't afford to live in the district.

It's the sacrifice parents make to be in a high quality school district like TVUSD.

Not to mention the excellent athletic activities and numerous fields/parks that the city provides.

It's a big part of the reason I rented my house for $1750 in 3 days.

Submitted by flyer on August 31, 2015 - 5:29am.

Agree school district performance is a major determining factor when it comes to attracting buyers and tenants, and your post reminded me that a friend who has been researching the topic (for relocation purposes) recently sent me this info noting that Poway ranks 8th in the state, followed by Coronado and San Dieguito.

1
San Marino Unified School District
San Marino, CA
2
Palos Verdes Peninsula Unified School District
Palos Verdes Township, CA
3
Palo Alto Unified School District
Palo Alto, CA
4
Los Gatos-Saratoga Joint Union High School District
Lexington Hills Township, CA
5
Acalanes Union High School District
Central Contra Costa Township, CA
6
Tamalpais Union High School District
Northwest Marin Township, CA
7
Irvine Unified School District
Irvine, CA
8
Poway Unified School District
San Diego, CA
9
Coronado Unified School District
Coronado, CA
10
Los Alamitos Unified School District
North Coast Township, CA
11
San Dieguito Union High School District
San Diego, CA
12
Arcadia Unified School District
Upper San Gabriel Valley Township, CA

Submitted by scaredyclassic on August 31, 2015 - 8:29am.

Perhaps, but some of my kids' teachers are just unbelievably dumb.

Submitted by bearishgurl on August 31, 2015 - 8:55am.

Perhaps (for the parent demographic of tenant) but why don't you list the exact public schools here which serve your rental house, paramount? As we all know, school quality varies wildly among schools in the same district.

What is the percentage of prospective tenants out there who are parents of school-age children?

And how much extra in monthly rent is a particular public school actually "worth" to a prospective tenant and will tenants actually overpay for a particular rental (all physical attributes about the property being equal to its competition) if its corresponding public school(s) are good.

It doesn't sound like $1750 mo is actually a great deal of rent to collect for a 1500 sf SFR (putting you in the hole by at least $200 mo, not counting repairs, replacements and vacancies). That's on the low end and just might get you a 2/1/1 1000-1100 sf SFR in Chula Vista, where the schools are very good, btw, and the avg teacher tenure likely far exceeds the avg tenure of teachers in a school district of a newer area (such as Temecula) by a landslide. Tenants seeking this level of rent in a SFR likely aren't members the "educated professional set" themselves.

Teacher experience and competency means everything. These two attributes go hand in hand, no matter where the school district is or its supposed "reputation" (among the ignorant masses).

scaredy, as you may be aware, experience and tenure eliminates the "`dumbness' factor" in public school teaching staff :=]

Submitted by poorgradstudent on August 31, 2015 - 10:22am.

I haven't sold, but a big part of your agent's job is to facilitate the transaction. They need to be fully available during business hours to protential buyers in a way you as a person with a full time job can't be.

They also should provide some good guidance on pricing, although ultimately the price is set by you the seller. I've been to enough open houses where once the person showing the home has figured out you're not remotely interested they become pretty open about the fact the price is too high and will likely be dropping soon.

I do agree that sometimes traits that I find personally grating in social contacts actually make someone better at sales. I like associating with people who are laid back and mellow, but for a realtor you want a shark, someone who is hungry and eager to close the sale, and not afraid to get a little pushy and beligerant if paperwork isn't being processed quickly enough.

By the second open house that's a pretty strong sign the price is too high, at least in this market. As buyers if a house had been on the market for more than ~21 days we kind of just assumed a price drop was on the way.

There are clearly some houses that are tricky to sell for fair market value. Some homes are very unique. Saw one once that was a beautiful home at a great price... and everything had been customized for the previous owner who was below five feet tall. This meant all the kitchens and bathrooms were too small, especially for tall guys like me.

Anyways, it does sound like you went with a discount agent and got what you paid for. If you want to sell quick you do have to compromise on cost/price.

Submitted by poorgradstudent on August 31, 2015 - 10:24am.

paramount wrote:
And as mentioned by another pigg in the past, when the emotion of the bidding settles down and 'cooler heads' prevail - how many deals fall apart or never make it through escrow?

What happens when the house doesn't appraise?

For us it was 50% :)

First house had some major roof issues that came up in inspections and the seller wasn't willing to credit us enough to make it worthwhile and we walked away. We closed on the second.

Submitted by CA renter on September 1, 2015 - 5:46am.

paramount wrote:
CA renter wrote:
If your house isn't selling in a hot RE market like today's, there is only ONE reason for it: your price is too high.

Never trust a Realtor to look out for your best interests, and don't think that having a Realtor absolves you from doing your homework, I don't care who the Realtor is. You must take charge and know what you are doing.

If you do the above, you can sell your house within a week, or less, if you price it correctly. Heck, ask one of our Pigg Realtors, maybe SDR, if they can help you or recommend someone.

I think you were right to try to sell it right now. This is a fantastic time to sell -- you might even manage to sell it at/near a market peak. Not sure why you gave up so quickly and rented it out, instead. Might want to re-think that.

Good luck!

Thanks CAR for the comments.

I reluctantly decided to re-rent for these reasons:

1. Once the listing price was to high, I felt the listing was botched or as I noted a lemon.

2. I barely had any traffic and the heavy buying season was on it's way out. If this all would have happened in April I would have kept it on the market knowing we were going into the buying season.

3. The house costs ~2k/month to carry when water, elec, etc..are factored in - maybe a little less. It was critical to get the price right from the start.

4. Given that the listing was a lemon, I wanted to get the property back on the rental market ASAP. After labor day it gets more and more difficult to rent or sell - at least that's my impression.

I agree I have some responsibility, but I also depend on a realtor to provide competent advice. That didn't happen.

And yes, this may end up costing even more in the long run. That's why it's so critical to hire a competent realtor.

The house is in very good/move-in condition. But it's essentially a starter home.

First time buyers are a smaller and smaller share of the market - there are many more renters than 1st time buyers.

On top of that, millenial buyers IMO have very unrealistic expectations.

Yikes...you're in the hole every month. :(

Are you planning to put it on the market in late winter/early spring of 2016? Do you have a shorter-term lease with this tenant?

On the other hand, if you want to sell it sooner, you might be able to swing a deal with the tenant who might be more attached to the house and willing to pay a bit more in order to avoid having to move, etc. You could complete the transaction without a Realtor, in that case, and split the benefits of not paying the commissions between the buyer and seller. But do consider consulting with a RE attorney just to be sure that everything is in order.

I know of a few families who did this and everyone came out a winner. We even tried to buy our last rental, but the LL decided against it once they realized how much the price had fallen after the bubble burst.

Submitted by paramount on September 2, 2015 - 11:01pm.

CA renter wrote:

Yikes...you're in the hole every month. :(

Are you planning to put it on the market in late winter/early spring of 2016? Do you have a shorter-term lease with this tenant?

On the other hand, if you want to sell it sooner, you might be able to swing a deal with the tenant who might be more attached to the house and willing to pay a bit more in order to avoid having to move, etc. You could complete the transaction without a Realtor, in that case, and split the benefits of not paying the commissions between the buyer and seller. But do consider consulting with a RE attorney just to be sure that everything is in order.

I know of a few families who did this and everyone came out a winner. We even tried to buy our last rental, but the LL decided against it once they realized how much the price had fallen after the bubble burst.

I might try some of those strategies.

It is a 1 year lease.

I refer to carrying costs as:

PITI
HOA
Elec
Water
Gas

For the purposes of selling the property.

As it is I'm doing a little better than breaking even.

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