Is the Hot Real Estate Market Going to Burn up Your Commission Dollars?

Is the Hot Real Estate Market Going to Burn up

Your Commission Dollars?

by Jennie Norris, ASP® Master, IAHSP®-Premier, ASP-SRS®, ASP-REO®

Official ASP® Course Trainer,

    Is the hot market going to burn up your commission dollars? It depends. It depends on how you approach listing and selling houses and how much education you provide to your Sellers. Fact is, the real estate market is picking up around the country. This is good news for homeowners that have been waiting out the recovery. It’s good news for markets where inventory remains low and demand high. With this good news comes mixed feelings for those working IN the industry. As a professional Home Stager, this means the opportunities increase because more people will be selling their houses, and the challenge is that pricing will be more competitive for services. I can deal with that because there is plenty of business to go around. But a valid concern is that Sellers and Realtors might believe the house is going to sell anyway so why bother putting any effort into the listing? Why Stage it and invest money to present a house its best to market which may include painting, decluttering, landscaping, updating, and/or furnishing a house when the statistics say that the house will most likely sell anyway? The answer is that a Staged house will always sell for MORE than the un-staged competition (apples to apples) in any market. In a hot market, a Staged house can get multiple offers, a higher than list price offer, and can be listed at a higher starting price because it does show better than the un-Staged competition. Statistically this is anywhere from 5 percent to as much as 20 percent more for the Seller. A Seller wants ALL the money possible from the sale. $5,000 MORE could be a trip somewhere, pay off bills, or added to savings. $15,000-$30,000 more is HUGE for your client. They don’t want to leave that on the table. Bottom line: Staging helps guarantee the house will sell at the very best price compared to the un-Staged comparable house. For Realtors, a hot market means more people will jump into real estate, believing it to be an easy money endeavor. More competition means more agents will be looking for ways to get a Sellers’ business and some will use discounted commissions as a way to attract business. How will you compete with these discount agents? Will you reduce your commissions or will you find ways to add value? Realtors that are eager to “just get houses sold” need to think about the impact a hot market has on their bank account. The seller is not just thinking about whether or not they should invest in Staging to make their house most appealing. They are looking at the commission they are paying to the listing and buyer agents. As the market gets hotter, they naturally want to decrease the payout to the agents involved in the sale. Some even believe they do not need a Realtor and will cut you off altogether and go FSBO. Your commission IS at risk. The good news is Staging is a tool that helps you KEEP your commission and compete with discount brokers by bringing measureable VALUE to the table. Because Staging a house has been demonstrated to bring 5-20 percent MORE for a Seller with either a better starting price, multiple offers, and higher than list offers, you help the Seller increase their net profits by more than they are asking you to reduce your commission. Paying you as a full service Realtor that does not discount and includes Staging you are bringing them a tool that helps them get MORE for their property. Your 1 to 1 ½ percent that you do not discount to compete with discount agents brings your seller up to 5-20% more so you are helping them net much more than they are asking you to give up. Your professional Home Stager is your key to keeping your commissions, not having to work harder – just work smarter. And because your listings will look better and sell faster, you will become the “go to” agent in the neighborhood which will increase your number of houses sold each year! More means more for everyone. For the Seller. For the Realtors. For the service professionals that partner with both to ensure the best price for the sale in the shortest time. Staging is a vital marketing tool for the house – and it will become and even more important financial tool for both the Seller and the Listing Agent. Contrary to what the public may believe, houses do not sell themselves. Poor marketing, little or no focus on selling the house, and/or little motivation to generate activity are strategies enlisted by discount agents. They have to work 2-3 times harder than a full-service Realtor in order to earn the same income so they have less time and attention to devote to a sale. In their head whether right or wrong they are not as focused on the sale because they are not making the same as a full-time focused agent. These are the listings that have a few or no photos, no marketing flyers, no real marketing focus other than toss it on the MLS and say a prayer that is sells. I just worked with a client that has had her house on the market for 8 months. She lives in a very desirable area. The inventory in this area is 1/3 of what it was this time last year. Her house should have sold by now. But it has not. The listing agent did NOTHING to market the house other than plop it on MLS. When she asked about making improvements to help it show better, he told her she did not have to bother. He got fired as her Realtor and the house is now listed with a pro-active listing agent that believes in best-foot-forward and Staging. When you have a way to help Sellers get the best price possible they should want to use it. When you know a tool like this exists you should want to share it with all your Sellers.  Whether the Seller invests up front in the Staging or the Realtor helps cover the investment as part of their listing services, the fact is both parties will end up recouping more than the Staging investment with a house that is sold at a great price. That truly is a win-win. A hot market does not mean you should get burned. Staging before listing is a red-hot winner for everyone involved in the sale!

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