Anatomy Of A 400 Day Listing
A troubling wind is blowing and the destruction it leads too if left unchecked could lead to a serious black eye for our industry. Most everyone knows that it is our (REALTOR) code of ethics that separates us from other licensees.
It is these code of ethics that establishes our conduct, standards of performance and customer care. And, it is our Code of Ethics on which we lean when we seek to rehabilitate an agent who fails to live up to those standards.
Consumers on both sides of the transaction can be hurt. So with that I will (if you will indulge me) lay out for you the Anatomy Of A 400 Day Listing.
- Keep the listing out of the Multiple Listing Service (MLS) with the intent of securing the buyer yourself. Historically it has been the "Best Practices" of the National Association of REALTORS(R) (NAR), and of most MLS service providers that a listing be put in the MLS within the first 24-48 hours of a listing contract being executed. Failure to do so could result in fines. The reason for this requirement, is that at the consumer benefits (both seller and buyer) when the property offered for sale is exposed to the maximum number of agents. In California there are about 180000 REALTOR members. And nationwide, total licensees exceed 2 million. So it stands to reason the more agents who have access to the listing information and availability, the more interest will be raised. And, competition, creates the opportunity for higher values for the seller. On the buyers side, when they are represented by an agent of their choosing, the fiduciary duty of their agent is to get them the best possible price on the house. This adversarial relationship is healthy for the consumer. When the listing agent also represents the buyer his obligation is solely to the seller, regardless of "Dual Agency". It is tantamount to having a lawyer represent you in a criminal case even though he is employed by the prosecutors office. To be fair, dual representation can be done effectively, and both the buyer and seller can walk away feeling like they have won on occasion. But, dual agency historically has been a once and a while scenario. The icing on the cake so to speak. When you build your business model on double ending the vast majority of your listings, it is too easy to put the dollars ahead of the client. This creates a conflict of interest that cannot be condoned by an industry that prides itself on being ethically superior.
- Make it impossible to show: This is one that is happening more and more. We are seeing listings where buyers are only allowed to see the home after they have been prequalified. And, after they have submitted an offer. This is very much like asking an archer to hit a target blindfolded. How can it be fair that a buyer must be asked to place a value on a property he or she has not seen. They cannot possibly know if the house even meets their needs or wants. In short, discouraging buyers from viewing a property, limits the number of buyers who will ultimately engage in the process. This means fewer offers. And the potential for a lower sale price.
- Require that a well qualified buyer apply with your lender. Here I want to discuss the difference between cross qualifying and submitting a full application. Cross qualifying requires that the buyer's lender provide to the sellers (more likely listing agents) lender a copy of the documents and information that was used to qualify the buyer with all relevant account numbers (bank and Social Security) redacted. Since a copy of the buyers credit report is also provided there is no need for a second credit report to be run. This process can alleviate any concern by the seller might have as to the ability of the buyer to close the transaction. And for that reason can be considered a very good practice. However requiring all buyers to have a full application complete with all relevant documentation places an undo burden on the buyer. And, may discourage a buyer from considering the property at all. In this scenario everyone loses. And in an age that is dominated by identity theft, no one wants to unnecessarily provide our private information nor should they be required too.
- Asking the buyer to waive their contingencies (such as inspections, appraisal, Loan etc) these contingencies are there as protection. for the buyer, so that they fully understand what they are committing to.
Finally, it is a fact that our market is changing. Many of the people who have been able to use (and abuse) these tactics along with many others, do so because I believe, they don't know any better.. But, as the market shifts, Their leverage will change. And the buyers agents who were closed out of so many transactions will be in charge of the market we are emerging into. Rest assured that they will remember the abusers. And, will think twice before doing them the favor of showing their listings.
At the end of the day we need each other. Our system works better when we work together. Our clients benefit. And, our industry benefits. All of this came up because, while showing my daughter and son in law homes, I saw listing after listing having been on the market for 200-400 days and we still could not overcome the hurdles before us so that we could see those homes. Too bad. The sellers missed an opportunity to achieve their goal of selling. All because some agent didn't put their clients needs before their own.