I’ve been watching a real estate agent list a ton of houses in University City for the past few years. That isn’t really all that unusual; in the office we run monthly real estate agent and real estate brokerage reports on every community in the St. Louis area. This agent confuses me though because of the actual production that they do. Here is the pattern. They take a listing to market way higher than the property would actually sell for. Then, after months of being on the market, the price on the property gets lowered and lowered until it’s finally in a range of where someone would buy it, OR, they lose the listing. I know that they aren’t the top agent in their office, but this agent does a ton of business. Putting aside the ethical considerations, I’ve been wondering if this agent is really smart, or if they are really dumb, and if it’s working out for them.
The case for really smart.
- This agent gets a ton of listings. If they sell 5-10 in a year, they are likely to have made a decent profit. The thing is, the houses this agent lists don’t sell in short periods of time(less than 60 days), so it’s not like they can bank on any closings.
- Three quarters of their listings sell. If you are listing a home and not putting too much money into the listing itself, when it does eventually sell, you aren’t hurt by those houses that don’t sell. I’ve been to a number of the listings this agent has. There isn’t anything special about them; there are no video tours or purposeful staging. There aren’t any special brochures, and they don’t follow up after a showing.
- It’s possible they’ve made a name for themselves because of all the listings they carry. There’s an old real estate saying, “list to live”. The idea is that it’s better to list properties than represent buyers because all things considered you should be able to carry more listings than you can buyers. I don’t know if that’s really true anymore, but it is something to think about. When you consistently carry listings in a particular neighborhood or part of town, more people notice. This helps with your ability to list more property because you’ve become a bit of a local celebrity.
The case for really dumb
- This agent is discounting listings heavily. There’s no skill in under cutting everyone else. There just isn’t. There are also costs associated with being an agent. I’ve seen many agents over time transition from a discount model to a full service one. It’s usually because they can’t make it on the discount model long term. I’ve never seen an agent go from full service to discount brokerage model.
- They aren’t giving great advice to sellers. Pricing your home for sale can be difficult. This is especially true when comparable homes sold are not of the same style, or haven’t sold recently. Home sellers are asking for your advice and experience when selling their home. If their goal is to sell quickly, they aren’t getting that advice from this agent.
- Other agents notice what you are doing. There is a group that does high end listings here in St. Louis very well. When you go to an open house or showing, as a real estate agent, they treat you with the utmost respect. They call you after a showing and ask you what you think of pricing. A lot of the time, these sellers have asked the listing agent to be at all showings, and not only do they attend, they show up early to get the house ready for the showing. They are 100 percent class. They also price homes in a range likely to sell. As a real estate agent who shows many of their houses, I can tell you that it makes a difference. With the agent who we aren’t really sure what they are up to, I don’t get excited to see their listings. The reason why is because I have come to believe that the house will be over-priced and waste my buyer’s time.
The tricky listing agent
In our analysis, we have three for smart and three for dumb. See how hard it is to figure out? One of the things I’ve noticed through the years is that real estate agents can get on a good run for a while, but if they start taking liberties with their clients, you will see that reflected in their numbers. Many agents have had a good month, a good year, and then disappear. I don’t wish any ill on anyone…if this agent has something figured out, good for them.