So What Does Real Estate and E Harmony Have in Common?

Like many other relationships throughout our lives, a Real Estate agency relationship is often equally mismatched. Stop, and think about this. You can’t help but when you look at certain couples to say to yourself, My God, what does he /she see in her / him. Go ahead, admit it! Sometimes throughout our past dating endeavors we often witness men seeking out the most beautiful women, even though they themselves are unkempt slobs. Women perhaps layout a plan to catch a wealthy man, even though they know in advance that romantic unhappiness will likely prevail. And…while I am sure that everyone of us can relate to those experiences of great excitement during the stages of pursuit, we can also relate equally to the later pain of our mistakes. 

So, why am I attempting to compare romance to business? Well … it happens to be the first thought to come to my mind, but It is more that, I believe there is a certain behavioral pattern that explains our actions The point is that, often times, even if our common sense advises us otherwise, we still feel compelled to reach for the best of the best, even if the “best” is not the best match for us. So, if you are not yet confused, then the question is, why do we do this?

In the Real Estate business I witness this same phenomenon. I constantly see sellers who, when they decide to place their house on the market, simply call the top producing agents in the area. No questions – no discussion. Their impulse is simply that a person who has achieved that top producer status, did so by being the best. And, yes that is true. However, consider, for just a brief moment that, they may not be the best for you. Doesn’t make any sense does it! Let me explain.

I expect that you will think I am exaggerating with these next examples, however, they are fair representations. Typical of most top producing agents in my area, they typically have multiple listing contracts in their portfolios, and often with 7 to 10 homes in the price range of from say $3,500,000 to $9,000,000. And then, in the far bottom corner, there is your lonely little home sitting in their active listings at $900,000. But don’t be insulted… I would love to have your $900,000 listing – I really would. Although it is possible… I am going to say that it is highly unlikely that such houses sitting in one’s portfolio ranging in these prices, will  sell to the average person walking in, if it were hosted as an open house. These homes will sell mostly by the networking and prospecting efforts of the agent going through their Rolodex of “celebrity names”. But you see, in these cases they are matching their resources to the task. They have built their businesses to the point where they attract very affluent people wanting to trade very expensive homes. Yet, for some reason, and this is what confuses me, you have selected them to sell your home. This is the part I do not understand!

Now, let’s examine this from the earnings side of the equation. Because this agent is a top producer they are likely to earn a commission split with their broker that provides them with say 2% (just to keep the math simple) instead of 1.5% split (if that is typical). If the average price of all the other homes in their listing portfolio is closer to $5,000,000, instead of the $900,000 like for your home, then the average commission check, payable to them, to sell the “other” homes is about $100,000 each. The commission check to sell your home is about $18,000. So, without having a degree in Accounting (which by the way, I do have), where would YOU, spend more time?

Now this may piss you off because you probably believe strongly that the agent should provide you the same service as to the other clients. Well … yes, I would agree, except for the fact that the agent had reached a point in their business model where they may no longer be interested to provide compatible and satisfactory service to you. Yet, they took your listing, why? Well, why not! They have the expectation that the reputation of their name alone will cause your home to sell. And by-the-way, you thought the same thing... I know. It may be difficult to admit now, though.

I often review with great awe at the listing portfolios of top producing agents. I mean after all, I want to keep a keen eye on my competition as well as the market. All too often, I find that the average time on market for a home in a top producer’s portfolio is greater than 180 days. In the case of the $9,000,000 home, well, the pyramid gets smaller at the top, with fewer people able to purchase at that level – so, you might expect the time on market to be long. However, in the case of the $900,000 listing, perhaps it implies that your poor little house has been neglected. L

I saw a classic case of this situation recently. A long-lost friend now living in another State contacted me, and asked if I could help her father. Her father has a great condominium, and had listed it for sale at a price of $1.3 million with a well-known top producer. The condo has now been on the market for over 200 days. There could be many reasons why the condo has not yet sold, some the result of the agent, some to blame on the “market”, and well, others unknown. The other day at a weekly broker caravan, I previewed a new listing of this same agent. This new listing is a drop-dead WOW house, 8,000 square foot ocean front, listed north of $11,000,000. Now think this through carefully. Would you rather spend the majority of your time selling a home to make a commission of $220,000 - a very respectable annual income from just a single sale, or would you beat your head against the wall to sell the other house for a commission of $26,000. The latter commission is barely enough to pay for the fixed costs of doing business. And while we are at it, let’s not overlook the publicity exposure in magazines and the like, peer envy, and end-of year ceremonies where awards and accolades are handed out… well, in part, because of those “BIG listings”.

The other day, I was saddened by a finding. It happens all too frequently though. A homeowner had listed their home with a top producer. I do not know the arrangements, expectations, or any other factors. I know this much. Natasha and I hosted open house events at this property on several occasions. There was casual interest expressed among visitors, although the price was considered too high, and the house was vacant, which does not cause any house to show well. The homeowner had their home listed with this particular agent for nearly 10 months. The home did not sell, and perhaps, because of the emotional attachment to their decision, the seller chose to remain with this particular agent. I estimate that the cost of ownership during this extended listing period burdened the seller with about $70,000 of extra costs. I saw that finally, the house had been re-listed with another agent which is… well, maybe the good news, however, the bad news is that the bank foreclosed on the mortgage – so it is being sold as a bank-owned property.

So my friends, I would strongly suggest that when selecting a Real Estate agent, whether you are selling or buying, or perhaps doing both, that you seriously consider matching your needs to be compatible with the agent. I have nothing against top producers of course – why should I – after all I also aspire to that level one day. I do however, think that my personal satisfaction level is higher to service someone buying or selling a $1,000,000 home versus a $11,000,000 home. So, instead of seeking out one of those Match com agents of the world, and being blinded by all that “bling”, try using the E Harmony approach, and find someone who “glitters” for you, by matching yourself on the 29 compatibility factors of chemistry. Just a thought!

We offer you value through our excellence in Real Estate services, however, we are not relationship experts.   J

Statement of disclaimer; “these are my personal opinions and not those of Prudential California Realty”

  

Our goal is to help and guide people to buy and sell San Diego Homes:  Contact us soon - and let us apply for the job of being your Real Estate agent.

Charles M. Schevker (CPA)
DRE # 01875556    
Broker Associate
Prudential California Realty
1299 Prospect St.
La Jolla, CA. 92037Google Keyword = Homes in La Jolla CA

Main Office:                           (858) 551-3319
Home Office # 1:                   (858) 750-2578

Home Office # 2:                   (858) 412-6082

Mobile:                                  (858) 449-8250

Cschevker@san.rr.com

http://www.San-Diego-Cal-Homes.com

http://www.linkedin.com/in/charlesschevker

http://www.sandiegojewishrealtor.com/

http://realestate.yahoo.com/California/San_Diego