Welcome back to my Ask a Realtor section! This is an actual question from a Seller who wanted to list their home and my response.
Q: I need to sell my Tampa house, as I have found another house already. I heard about a program one Realtor was offering called Guaranteed Sale where they will sell my home in 25 days or buy it themselves. Sounds great! Is there a catch?
A: Run, don’t walk, away from Realtors that offer a Guaranteed Sold or Sold or We Buy It program. In my opinion, this is a deceptive marketing tool that some Realtors use and it’s a major bait and switch.
Here’s how it works: The Realtor will advertise, “I’ll Sell your Home in 25 Days or I’ll Buy It Myself”. Sounds great. They must just be SO confident in their sales abilities that they can afford to buy your home if they don’t sell it, right? You happily set an appointment with the Realtor and then they go over the fine print in the contract.
Here’s what the contract says: You will be charged X (very high) commission to list the home with the 25 day guarantee (I’ve seen as high as 9% to 11% commission). WHAT? Why so high? Because they are taking on the risk that if they don’t sell your home, they may have to buy it! The other fine print you’ll find in these types of contracts includes language that allows the listing agent to set the asking price of the home, not you, and the price will be a good 10 to 20% below market value in order to make sure beyond a shadow of a doubt that it will sell, and thus minimizing the Realtor’s risk in the transaction. There also may be additional price reductions built into the contract. No Realtor WANTS to buy your home if they can’t sell it.
Then, you sit back in your chair, appalled at the thought of paying 9% to 11% commission, and tell the agent so. The Realtor says, “But wait, there’s another option we offer! We also have the standard contract in which we don’t guarantee the sale of your home, and you set the pricing at market value. And that commission rate is only 6%”. (I’m just throwing out numbers here – commissions vary from Realtor to Realtor, brokerage to brokerage).
You are so relieved that you can get your home listed for less than 11% commission that you excitedly sign the normal listing agreement at 6%, thinking you got a deal.
Now wait – think about this for a minute.
The Realtor lured you in with what I would consider to be deceptive marketing practices, and then bait and switched you to the standard Florida listing agreement that all Realtors use, at a more typical commission rate. You see, this Realtor never intended that you would really sign at 11%, their goal was just to lure you in with the deception of guaranteeing a sale, get you to sign and list with them at the 6%, and not have to buy your home.
Did you fall for it?
And is this really the Realtor that you want representing you?
What do you know about their sales track record, marketing programs, or anything else they do?
They just bait and switched you, and you might even be able to get the same or better deal from a better Realtor who doesn’t have to rely on such deception!
I once spoke with a Realtor who used this type of program and I asked how many of his clients who listed with him actually signed up for the higher rate commission and take the guaranteed sale? He said less than 1% of clients. WOW. If that doesn’t prove this is a classic bait and switch, I don’t know what does…
You are better off to use a good Realtor in your town who’s highly recommended, has a proven track record and has excellent marketing strategies and who sets a realistic asking price for your home. This is what will get your home sold in under 90 days. I’ve done it many times – its rare that a home stays on the market over 30 days anymore! Your Realtor shouldn’t need to rely on a deceptive marketing practice to get listings.
If you live in the Tampa Bay area, you can find out here what your home may be worth in today’s market. Don’t fall for the bait and switch! By the way – I am listed in the Top 1% of Realtors in our area – is the agent who just bait and switched you? Does this agent also have a 98% list-to-sell ratio, like I do? That means if a house is listed at $1,000,000 – my average listing sold for $980,000. Not too shabby, and I often have listings sell at 100% of the asking price or even over. Isn’t that figure a lot more important than some bogus guarantee?
If you live outside of the Tampa Bay area, and would like a recommendation of a Realtor with an excellent track record in your city or town, please contact me. I have a great network of real estate professionals all over the country.
Read more Ask a Realtor questions and answers here!