Happy New York Values Day!
Today on the docket: what does this commission pay for when I sell my place and hand over a hefty check? On the buy side you usually don’t end up paying anything, but as a seller you are paying both your agent and the buyer’s agent. But where does this money actually GO?
Well, half of it goes to the buyer’s agent, which is great when they are good at their job and terrible if they’re a mess=. But as a seller you don’t have control over which agent represents the most qualified buyer. Although you can maybe see who is PRESENTING his/her client in the best light, and is the most organized, and choose to work with that person. But leaving this aside, what are you paying the listing agent to do?
Back in the day one of the biggest jobs of real estate agents was having the connections: both connections to GET listings from, and connections to SEND these listings to. Because in order to sell an apartment you need to find a buyer. But now listings go online, and your appeal is less in who you know than what you can do with the listing overall. To note: there is some resistance to changes in the industry from people who want to keep being mediocre and making a bunch of money because they’ve been doing this for so long. Obviously I’m having NONE of that BS. If something is worth doing, it’s worth doing well, and you should view more educated sellers and buyers as an asset, not an impediment. You don’t have to figure out marketing on your own; there are so many resources to help you. And if you already have the network and the listings, you’re still at a HUGE advantage over those of us coming in brand new.
So now that people have access to a catalogue of listings online as buyers, or can post their own listings on StreetEasy as sellers, what on earth is the value of your listing agent? Why would you need to pay someone this 6% of the sale price?
I’M SO GLAD YOU ASKED!
First and foremost, this person is getting your property in front of as many eyes as possible and making it stand out. This is how you achieve the highest price and best fit for the unit. This involves getting great photos done, which costs a significant amount of money. Floor plans aren’t free either, and are necessary for consumers to have an idea of the size and scale before they walk in the door. It also involves putting the listing on sites that may charge you, like StreetEasy, and paying for ads on Facebook/Instagram. If it’s a really high-end property an agent may pay for placement in publications with wealthy viewership that may not be searching online for properties, but will be drawn in by a glossy ad in Fancy East End Yachts Magazine (which I just made up but sure). These things are all direct costs out of an agent’s pocket which are reimbursed by the commission paid after the sale.
So that’s step one — direct out of pocket costs that the agent will incur and takes the risk of spending EVEN IF the place doesn’t sell and they’re left holding the bag. Step two is the time and services we provide during the sale.
There are the obvious things: holding open houses, showing by appointment, talking on the phone/emailing prospective buyers and making sure we keep on top of it all. I can now say from experience that it is emotionally draining to manage all the offers coming in and people asking you for information and making sure you know the building and the co-op board from top to bottom. So this is time plus emotional taxation plus organization. But it’s still not super high-level thinking.
Something I’ve found my strategy/PR background surprisingly useful for, and something that requires more finesse, is mitigating any negatives and making sure potential buyers are aware of them from the beginning. If there is an assessment, this should be in the copy on the listing AND brought up at all open houses. The time any negative will be the least big deal is the first time someone views a property. The further along you are in the process before bringing it up, the more leverage you are giving a buyer. If you are selling a stand-alone property have an inspection done up front. That way you can put anything that needs work in the copy and price it accordingly. This will help you in the negotiation process, which is another one of the high-level parts.
Negotiation is an art, and I actually believe it’s a very feminine art. It’s often depicted as a bunch of men in suits trying to give off BDE and one-upping one another. But there is a lot of power in listening, asking questions, and connecting with the person on the other side of the deal. If you are an empathetic but strong negotiator, people will remember and respect you. If you yell and strong arm, you’ll have a bad reputation and a combative deal. You want to work with an agent who knows how to negotiate, whatever their style, and has kept a good reputation in the industry. If people WANT to do a deal with your agent, that could potentially help you!
As I’ve written about before on the buy side, your agent is the quarterback for the deal, and makes sure everyone else knows what is going on and is doing what they should do.
OK, so you’ve hired someone. How do you know if your agent is doing a good job, even if your place isn’t selling? Because it may not sell right away! But there are things to look out for.
You should be receiving regular updates about the property. I send out a weekly email on Monday with all info about showings, online traffic, any paid campaigns, and status of offers. I am also in relatively constant contact because you never want the seller to wonder what is going on; they should always have a very clear idea!
The listing consultation should be a consultation. If someone comes in and lets you price it however you want, asks for no staging and has no clear plan for the way they want to market your listing, they are not the agent to use in this market. Pricing in a conversation; there’s a strategy behind it. Figuring out what, if any, staging is necessary and how to minimize negatives/maximize the best parts of the home is also a conversation and part of the marketing strategy. Planning what to highlight in the copy and what should be photographed at what time of day is a strategy.
They should be asking you for a real commission. Since I don’t want to get involved in price fixing, I’m not going to give you a number. I will just say I am firm on mine, and I don’t do discounts. If I see a listing where the agent is down to like 3% total (split between buyer and seller agents), I know that agent isn’t going to do the work necessary. It usually comes with an incoherent or lazy listing description and iPhone photos. You cannot do the amount of work that is necessary and pay for the marketing necessary in a “Buyers’ Market” without charging a more substantial commission. If your agent is giving you whatever you want, why would they be good at negotiating on your behalf?
They should be excited! It’s one thing to be experienced, but if you are jaded and don’t care about the places you are selling, that will come across to buyers. And why would a buyer get excited about a place that the seller’s agent can’t wait to leave, because he doesn’t care about it? I trust you all to know the difference between Music Man-level sleaze and actual excitement.
The New York Value here is that this is NYC specific. I don’t recommend selling with someone you don’t hold to high standards, or selling by yourself, in pretty much any market. But NYC it’s non-negotiable. Ask any agent you know the last time they brought a buyer to a For Sale By Owner listing, other than one that was clearly WAAAYYYY under priced. Same with something offering basically no commission that has awful photos. We don’t have time to be running around going to things that the agent on the other side doesn’t care about. You deserve better from anyone you’re going to pay a chunk of change to. Do the right thing, work with someone amazing, and you’ll walk away (relatively) stress-free and with more cash in your pocket.
Til next time!