choosing a listing agent

Why List Price to Sales Price Ratios Are Useless Agent Comparisons

business, finances and economics - businesswoman studying economics and financesI get it that’s it’s super difficult for many people to hire a Sacramento real estate agent, but comparing list price to sales price ratios is meaningless. I also realize that it’s especially challenging to hire an agent if those same people don’t really understand the profession nor harbor much respect for agents. It’s tricky for some of us to operate in an environment where so many in the public openly despise real estate agents. I think our popularity lies somewhere between used-car salesman and funeral home directors. What a wonderful world.

The way I make it through decade after decade of selling real estate is not to pay a lot of attention to the negative opinions that some people form because they don’t apply to me. I know that I do an excellent job for my clients, and these people are happy with my performance. Sometimes, though, I run into potential clients who have not dealt with a real estate agent like myself, and they don’t understand how I do what I do, and they expect to understand it instead of appreciate it. The only way to really understand the real estate business is to put on my six-inch heels and amble down railroad tracks wearing headphones with your back to the oncoming train.

Although I have never been asked for my list price to sales price ratio, a potential seller asked me for it. I didn’t even know my number because it carries no value. It’s like a Select Comfort sleep number. Some people like 40 and others 100. I ran my production numbers for last year, and that number is 104.21%, including the good deals buyers got –which contained some under-market transactions in a seller’s market when most buyers paid over-market, if they were able to buy at all in last spring’s frenzy.

See, this is the problem with list price to sales price ratio. So many variables. You can have a short sale, for example, in which the market value is, say, $300,000, but the bank demands $310,000 at the 11th hour, holds the buyer hostage, and it ends up closing at $310,000. Does that make the listing agent a much better agent? Not really. Out of the agent’s control. Or, what about the sellers who insist their home is worth $500,000 and secretly hope a buyer will lowball. I take some of those listings because it’s not my place to choose the sales price. If that overpriced home finally sells at $450,000, does that make me a bad agent? Not really.

What about changing markets? Markets that shift from a seller’s market to a buyer’s market, which can happen in any given time period. That affects the list price to sales price ratio. On top of this, there are a dozen other scenarios that can affect these ratios, including who is to say an agent who routinely sells at 104% is not deliberately underpricing her listings? Hmmm? But probably the biggest factor is every agent has the ability to change the list price to match the final sales list price prior to closing, and then the ratio is 100%. I know some agents who do it just so they can say their ratio is 100%.

List price to sales price ratios mean very little, and then mean even less when an agent’s production is limited to say, 6 or 8 homes a year. The moral is don’t judge an agent on list price to sales price ratios. If an agent with a high ratio is telling you it’s meaningless, that in itself should speak volumes.

Thinking About Selling a Home in Sacramento?

Selling a home in Sacramento seller’s market can be a bit daunting. All of your real estate activity should be timed to coincide with the best time to go on the market to garner maximum exposure, and an experienced Sacramento real estate agent can be invaluable to you in that regard. Not only do you want to receive an exceptionally good offer, which is highly doable in a seller’s market, but most people want to quickly sell. You know who wants to sell the fastest? The people without equity, and that means a short sale seller.

See, putting your home on the market right now is kind of like tossing a piece of bread in the air to a flock of seagulls. That chunk of bread will never hit the ground. If you’re selling with equity and don’t mind the traffic of Grand Central Station, you can take your time, position your opening market day and employ a bit of strategy to get a bunch of offers. You’re going for price. You’re hoping for an all-cash offer and to avoid having to rely on an appraisal. Appraisers are all over the board right now.

If you’re selling a short sale though, that’s a totally different approach. You don’t need a bazillion offers. You need one committed buyer with a strong offer meeting market value who will close. That’s it. Not 55 offers, like I hear that some sellers are receiving. That’s insane, and there is absolutely no logical reason for it. A short sale seller with 55 offers is a seller whose agent is a butthead.

There are some communities in Sacramento in which this real estate agent won’t even put up a For Sale sign. That’s because I can’t trust agents not to use a lockbox without discretion in those areas even if I do not disclose there is a lockbox. Yes, believe it, it’s so bad — no For Sale sign! Can’t chance it. What happens is an agent is out showing property, and they drive by a brand new listing sign. Oooo, their buyer points at the house and asks to see it. The buyer’s agent, instead of calling the listing agent for information and looking up the listing on MLS, might just stop the car and look for a lockbox. Are they supposed to do this? No, they are not. But they do it.

Buyers are desperate to buy a home. I imagine at least half of the buyers out looking at homes this month will not buy a home. That’s disappointing. We need more inventory. If you’re thinking about putting your home in the market in the Sacramento Valley, call Elizabeth Weintraub at 916-233-6759. It doesn’t matter if you have equity or if you need to do a short sale, I’ve got strategies and proven plans to make your home selling process as profitable and painless as possible. I will customize a home selling strategy for you that fits your personal situation. It doesn’t get any better than that.

This Sacramento real estate agent sold over 150 listings last year. More than $32 million in sales. More than 100 of those listings were short sales. Other agents hate it when I say this but it’s the truth: in this business, you can hire experience and a proven track record for the same price as a brand new agent! Which do you deserve?

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