THE SUBJECT AND SITUATION
I felt compelled to write to this subject after a recent conversation. I was trying to explain how superior marketing can provide the return on investment that we are all looking for when selling your home.
Someone mentioned (..well yelled in my ear actually...some people can be quite emotional and stressed when selling their home) how they had received an offer from someone to sell their home for 1%. Off the top, I am familiar with this strategy, where this value represents the listing end but another 2-2.5% needs to be offered the cooperating (selling) agent. Now 1% turns into 3-3.5%. Naturally, there is never a set fee for services and everyone is free to negotiate such. I am aware that there are many approaches, graduating scales and other tactics that are employed when soliciting a listing but this is not what I am wanting to speak to.
I want to crunch some figures. Exactly how marketing can bring you superior attention, maximum exposure and thereby, provide top market value for a home. Needless to say if there are multiple offers upon a home it will receive what will be market value, for this is the most the market is willing to pay for the said property.
This must be the goal!
Now, if your property is overvalued and sitting on MLS® or any other listing service for an extended period, you will not receive the concentrated attention which will maximize the return you receive. This is done through effective marketing which includes infiltrating the internet, newspapers, and neighbourhood with marketing directed towards your home. I try to achieve this with a system which you should call me about, for it is a subject for a whole other blog.
THE NUMBERS
If someone lists your home for $350,000 (arbitrary figure) and it is sitting on the market, you have then capped your return on investment. No one will now offer you more than list price. The industry acknowledges that 5% is very reasonable negotiating point and should not insult any vendor. If you are marketing on your own to save/make more money, why would the buyer not want you to split the savings with him? And why would anyone pay full price for something nobody has wanted and is sitting... the house down the street sold for ____ ... there is always going to be another home in the neighbourhood for sale, why not wait for that better deal. With market value being negotiated from the price (5% for sake of argument) due to competitive pressures, now your home is receiving a single offer of $332,500.
With maximum attention and quality marketing, even 2 competing offers on the home could conservatively provide a sale of say ...$352,000
If you are to pay fees of 5% this would derive a cost of $17600... Providing a net return of...
352,000 - 17,600 = $334,400 Net ROI
Let us say you are paying a phenominal 1% for the quality of service that produced a sale of $332,500
332,500 - (1%) 3325 = $329,175 Net ROI
or what if you payed $733 and chose to work for yourself; 332,500 - 733 = $331,767 Net ROI
THE BREAKDOWN
This ... entirely too expensive marketing (sarcasm) just put $5000 dollars more in your pocket, and still more if you wish to include the costs upon and for your own time while doing the work yourself. Perhaps this return could provide you even more with the negotiation of a better rate and possibly even more again with the pro-offering of supplemental services by a professional that provides you even more extended value. (ask me about my supplemental services)
I suppose that 1% sounded like a pretty sweet deal!!! .... With that, I am going to continue to provide excellent quality of service to my clients so that I can work towards achieving their goals and mine!!! This achieved by making them the most money I can from their most valuable asset, their home, and I will do this every time.