Getting your home sold is what we all want. But it is harder sometimes than you think. Wouldn’t it be great if there was a guarantee?
I was taking to a guy the other day who was thinking about listing his house this spring. Naturally, I would like to be his agent, but he is a tough one. He’s been doing his research. He thinks he’s found the holy grail.
He asked, “Do you have a guarantee that my house will sell fast and for top dollar?”
I wanted to tell him that a monkey could sell a house in this market. But I didn’t. I told him that I have a great track record that I could happily show him of my recent sales successes.
“But no guarantee?”
“No, I don’t play those games” I told him, “Read the small print.” A lot of real estate agents have “guaranteed sold” type programs, so I will try not to be too specific dissecting the program’s small print.
The large print giveth and the small print taketh away. — Tom Waits
Here is the small print
1. There is an “application fee” of almost $700 that you have to pay upfront. As much as the people hate paying real estate commissions, I think having to pay a $700.00 application fee will deter the majority of potential home sellers right off the hop
2. Property has to be listed at 6% commission. That’s at least 1% more than the going rate. That is going to cost the home seller another couple thousand bucks.
3. Minimum listing period is 90 days. 60 is typical, but what is another 30 days when selling your home right? You like having strangers traipsing through your home in the evenings and on weekends.
4. If the house does not sell in 90 days, we will buy it at 95% of market value. That sounds good but do I really want to sell my $300,000 home for $285,000. I don’t even need a monkey to help me do that.
5. Market value is agreed upon between:
an independent appraiser.
First of all, I hope this happens before I pay my $700. My experience with appraisers is that they undervalue homes. It makes sense. If the bank sends an appraiser out, he’s there to protect the bank’s money (your mortgage). Naturally, he will say it’s worth less that it really is. If the bank has to kick you out and sell it, or if it burns down and they have to pay you the replacement cost, they will be happy that they have under-appraised its value.
6. There is a minimum 90-day closing period and if the property sells prior to closing the seller will get the net gain. A 60 day close is most common, but 90 is not uncommon. It is the second part that is tricky. It is usually worded something like “If the subject property sells prior to closing any net gain will be to the benefit of the seller and above commissions will apply. I don’t know (or care) how they would do this. Is it assignment? Is it conditionally sold? I don’t know, but in essence, after the first 90-day list period elapses and the brokerage has agreed to pay you 95% of so called appraised value, the second 90-day period begins – that’s 180 days (6 months) you have given them to sell your home. Of course, if your house sells, you get the money less the 6% commission.
Is it me, or does this seem a little one-sided?
Last year, single family homes in Kitchener Waterloo rose in value by about 4%. (It was actually 4.2%). If your house is on the market for half a year, wouldn’t it’s value have risen by 2%? Put another way, wouldn’t your $300,000 home that you are selling for $285,000 now be worth $306,000?
7. Maximum listing price $300,000, (or $400,000 or $500,000 depending on the agent). More than that and you don’t qualify anyway.
8. Available for new to market listings only. If you listed before, too bad you’re disqualified.
9. The brokerage has the right to change or cancel at any time, without notice. I hope you get your application fee back.
10. The brokerage has sole discretion about which properties qualify.
Other possible small print restrictions
11. Rural properties do not qualify.
12. Multi-residential properties do not qualify.
13. Conditional upon property inspection.
14. Listing period 120 days.
15. Closing period 120 days.
16. Subsequent price adjustments may be deemed necessary.
There are “home buying satisfaction guarantees” too.
“If you are not satisfied with the house we sold you within the next 12 months we will list it for free.”
“If you are not satisfied in 24 months with one of our listings you bought, we’ll buy it back.”
Restrictions apply of course, much like the ones for the seller programs.