Revealed: Why Many Home Sellers are Loosing Tens of Thousands of Dollars on the Sale of Their Homes

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I can tell you first hand that Many Home Sellers are Tens of Thousands of Dollars and More on the Sale of their Home.

Did you know that for every dollar your Real Estate Agent invests in your listing, you could make 40 times that in profit?

This is what you aren’t told as a home seller, and this is the kind of information that the typical agent doesn’t want you to know.

Let me explain.

When home owners are thinking of selling, many times they choose to interview a number of real estate agents, to see who is the best fit for them. I think this is perfectly fine, but where they usually go wrong is that they don’t ask all the right questions. Questions sellers normally ask include:

  • How long have you been in real estate?
  • How many homes do you sell a year?
  • What is your commission rate… and so on.

I know because I go on a lot of listing appointments and these are the typical questions I receive. While these questions are perfectly fine, they don’t really tell you about a person’s character, and they definitely don’t give an idea about how your experience will be selling with them, or are any indication of the results you will receive. That’s because by only asking simple questions, you can only compare realtors on simple metrics. What’s worse is that questions like these are really only useful when we assume ALL agents are the same. But here’s the deal.

Just like you, real estate agents are people, and everyone is different. Some are smarter and some are not, some have more experience, some are tech savvy and some are not, some have your best interest in mind and some don’t, some are running a good business, and some are not.

What if I told you that your decision on the realtor you hire could mean the difference of $20,000 or more that ends up in your pocket at the end of a transaction?

A lot of it comes down to character. Character will determine how hard a person works for you, character will determine how much they care and character will determine how much effort they put into the sale.

Let’s say that you have a house that falls in the $500,000 range. In most real estate markets this means that it’s not uncommon to see similar homes selling anywhere between $490,000 and $510,000. You may see the comparable sales and not even understand why there’s such a difference in selling prices between homes, but I will let you in on a secret…

If someone sells on the lower end of the spectrum, many times it comes down to the realtor they hire and how much effort they put into the sale. The seller is loosing money and doesn’t even know why…

At this point you may be thinking, “doesn’t every real estate agent try to get their clients the highest price? Since they are paid on commission don’t they make more by selling my home for a higher?”

The logical answer is YES, but the answer in many cases is NO.

The truth is, to many realtors, the extra effort and investment on their part to get you an additional $20,000 is not worth it to their bottom line.

Google The Law of Diminishing Returns and you’ll find out why. Simply stated, this economic law says that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain at a constant. As investment continues past that point, the return diminishes progressively.

To a real estate agent, your home is an investment to them before it is sold. They are investing their time, effort and resources in exchange for payment on a successful sale of you home.

What if it cost an extra $1,500 invested by your realtor to get you $20,000 more on the sale of your home? Would they do it? Most won’t and I’ll show you the logical reason why.

Take the $500,000 range home as an example based on a common (but not standard) commission.

2.5% commission of $490,000 = $12,250

2.5% commission of $510,000 = $12,750

In the above example, while the home seller could make and EXTRA $20,000 on the sale, the agent only stands to gross an extra $500 before deductions. When you include the additional money and time they spend marketing your listing, selling a home for $20,000 more is actually a loss for them. And if the agent is slashing their commission to get the business, then it’s definitely not going to happen….

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For every dollar your Real Estate Agent invests in your listing, you could make 40 times that in PURE PROFIT.

This is what you aren’t told as a home seller, and this is the kind of information that the low information agent doesn’t want you to know.

Instead, The low information agent will promise whatever it takes to get your business and then invest as little time, effort and money as possible, because they will make it up on sales volume.

The smart, ethical agent doesn’t see the extra money and time invested in your sale as a loss, they see investing in your listing as a smart business decision. The smart, ethical real estate agent invests in relationships, and realizes that if they do a good job, that there is a good chance they will receive referrals from happy clients and sell even more homes in the future.

The ethical real estate agent wants to get you more on the sale of your home.

The low information agent doesn’t think this way, they can’t see past next week. That’s because getting the better result involves time, effort and money, something the low information agent doesn’t have. It’s much easier to tell people what they think they want to hear, sign you to contract at any cost (link to high pressure sales article), get the sale and move on.

What does an extra $20,000 mean to you?

A new car? Upgrades to your next home? An investment in your children’s education?

The decision on who you hire to sell your home is a big one, make sure to do the research ahead of time because you can find out a lot about a realtor by simply googling their name.

Thoughts or comments, I’d love to hear them!

 

 

 

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