Last week Toby was doing a preview tour and on a home where the seller was home. As always he found the time to talk with the seller and find out the situation regarding their selling.
An interesting discussion arose. The sellers were on their second agent and the house wasn’t selling – not uncommon in this development – but the topic moved to the length of contract.
“We wanted to sign a shorter contract than six months, but he [the first agent] wouldn’t do it. He said ‘it was free advertising to sell your home’.”
Umm … okay.
So let me get this right, he “advertised” their home for 180 days and it expired. So rather than having them move to a new agent after 90 days, he spent 180 days “advertising” their home? Which would have been better for him? Of course advertising is in quotes because his idea of advertising was lowering the price.
But forget about him, he’s not important.
Let’s talk about you and why you shouldn’t accept a six-month contract “just because†the agent says too.
The problem is that most agents don’t take as good care of their clients as they should. The typical time line would look something like this:
- Month 1: Excited about new listing, so go out and do a ton of marketing and promotion
- Month 2: Still going on euphoria and marketing
- Month 3: Listing gets old and marketing has fallen off
- Month 4: They still have this listing?
- Month 5: This listing is going to expire, marketing picks back up
- Month 6: The “deadline†euphoria hits again and the marketing and push is on to get in contract before the listing expires.
Okay, so how does that change on a 90-day contract?
- Month 1: Same
- Month 2: Still going on euphoria
- Month 3: Listing about to expire, so the agent had to keep moving to show that she has worked hard.
Now how can you tell me that a six-month contract is better than a three-month contract?
If you mention a shorter contract then, you’ll usually get a couple of replies.
- Everybody Else is Doing It.
- Days on Market to Sell Determines Length of Contract.
- You Are Asking Me to Give This Away.
All of these are focused on one thing: the agent. Don’t get me wrong, in this market we need time to sell your house. The days of having offers as you put the sign in the ground are gone (at least for now) but why are they scared of a house expiring?
That is a good question.
I want a 90 day contract for your property. Is it because I’m better than the other agents? I’d love to say that, but, no. So what’s the difference? I like a challenge.
What is wrong with a listing expiring? Nothing, if you are doing your job. That’s right. If the agent is being upfront with you and is taking care of you, then what does it matter if the listing expired? It doesn’t.
So expect more from your agent.
Photo courtesy of Roland Maier on Stock.xchng.
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Great post. I do 3 month listings as well, and find it works great. When the listing agreement is about to expire, it really forces the agent and the seller to take a look at why the house hasn’t sold. Much better to do this at 3 months than at 6 months.
For me, the bottom line is that I want to work with clients that want to work with me. When we talk about relisting, I encourage clients to express any concerns about how the home is marketed. Those with concerns usually they feel better after discussing them. Sometimes it’s a matter of tweaking wording, changing the way I schedule showings, or something like that, other times it’s just a matter of educating them on how the process works and the reasons we do things a certain way.
I totally agree with you. And the most interesting thing is that if you had allowed these feelings to grow for six months — they would probably not be reversable.
Toby:
Nice site, and I especially liked this article. So on target. There are brokerages I know that require a certain length of contract, regardless of the market conditions. I suspect there are many out there who are not concerned about their client’s best interests when determining the length of contract. Plus having a long contract makes it easy to coast and not do the marketing you should be doing.
Keep up the good work. Love your dog!
Cheers,
Jeff (in Carlsbad, CA)
I think 90 days is sufficient to :
a- get the house under contract
b- determine that the house is priced wrong
c- decide that the time isn’t right to sell this particular property
Great Post Toby…
I guess that I will be the lone dissenter
I take longer listings (6 months ish) and have since I joined my current company in 1995. I offer an easy out agreement, seller’s can cancel at any time with no penalty prior to the acceptance of an offer. I’ve always felt that people will like you better if they don’t feel like they are stuck with you.
Oh… I guess we don’t really disagree all that much after all.
Thanks for the comments Brian and Angus. I think you are both exactly right in your thoughts, though a little different than what I presently am doing.
Thanks for stopping by!
6 months is barely an option in Chicago – it’s 90 days & follows your pattern. This past year then I’ve reupped them for another 90 days. It keeps me sharp having to do a listing presentation again and recharges that month 1 enthusiasm
Toby, I like your style but like Angus (I’m an olde timer too), I must disagree. Taking a listing for 90 days in a market where the average DOM (days on market) is over 100 days is selling yourself just a little bit short. Now a 120 day listing I can deal with. It’s just not a good idea to added stress into a situation.
Selling a home needs teamwork. I’m in charge of marketing, the homeowner is in charge of marketability.
kk
Kristal,
I understand your point, and you’ve been so successful with your style that it is very hard for me to challenge.
But, I’m going to try. I use the tools just like you are talking about. “Here is the realistic picture of this event you are entering into. Here is what a similar home will sell for and how long it will take.” Give them the “market” picture of their home and get them to understand it.
Now, we’ve established the marketing needs of the home and a realistic timeline for when it is going to happen.
But where does the length of listing contract come into this? I guess that’s what I’m struggling with. If the average DOM is 300 then should we go for a 300+ day contract? I don’t think that the biggest reason for expired listings being moved from one agent to another has less to do with the house selling — and more to do with communication, updating, keeping them in the loop and making the seller part of the process.
I don’t think an expired listing is a problem, but rather a “check” on what they think of your ability as an agent.
Just my thoughts. Thanks for reading!
Toby
Great questions and points to wrestle with.
We offer our sellers two guarantees – One is that we will sell their home in a specified amount of time or we take a hit in the pocketbook. The other is our cancellation guarantee – they can cancel at any time if they are not happy with our service.
We can offer these guarantees because we know our business and we conduct our business with integrity and attention to the clients needs.
Great read! Makes you wonder, if ODOT and MDOT hold their contractors to terms based on tiered penalty for failing to meet construction deadlines, then why not structure a tiered commissions listing?