Agent: Based upon this CMA (comparative market analysis), your home should sell somewhere between $400,000 and $500,000. Agent Right: Folks, that’s too big a spread. If an agent truly knows his or her market, a $25,000 price range (for a home priced somewhere between $400,000 and $500,000) would be acceptable. A good rule of thumb would be that the price range should not exceed 5 percent of the highest suggested selling price. Pricing a home correctly is critical. When a property is fi rst listed, it generates a very high level of interest from many prospective buyers. That level of interest declines dramatically over time. Therefore, your price needs to be in line. NOTE: Don’t just take the agent with the highest price. He or she could just be looking for a listing agreement.

Agent: If I were you, I would accept any price that falls within that price range in the CMA. Agent Right: That’s not a sound strategy. If the offer is high up in the price range, then it might be a good idea to accept it. But even then, it would still depend on what the rest of the terms were. For example, are you being asked to pay any closing or loan-related costs? Are you being asked for a decorating allowance? Does the closing date and possession date work for you? It’s also important to know the market. If it’s a seller’s market, then holding out for the highest price makes sense. Whereas in a buyer’s market, any offer in the price range would be acceptable.

Agent: It’s a determination of the current market value of your home. Agent Right: It’s much more than that. The CMA (comparative market analysis) is a comprehensive analysis to determine the correct selling price and the best marketing strategy for your home. The correct selling price is the highest possible price the market will bear. While some agents seem to pull this number out of the air, others may subject you to a fifty-page thesis. So which one do you believe? For starters, have at least three CMA presentations. There’s no charge, no obligation, and they should be interesting and informative. It’s a good idea to let the respective agents know that you will be interviewing three of them. That should prevent them from pressuring you too much. It will also motivate them to produce an outstanding analysis for you, maybe even give you their best deal. During the presentation and interview, keep an eye out for the following things: • Look for comparable homes that are currently for sale to compare your home against the competition. • Look for comparable homes that were recently sold or pended (sold but not yet closed) to obtain a clear picture of how the market has valued homes that are comparable to yours. These are the same sales statistics that banks and other lending institutions analyze to determine how much they can lend to qualified buyers. • Look for comparable homes that failed to sell (i.e., cancelled or expired) to avoid pricing at a level that would not attract buyers. • Look for a marketing plan that clearly spells out the methods that will be used to promote your property to the widest possible audience of prospective buyers. Finally, make the agent stand behind his or her market analysis and price determination. Ask for a way out of the listing agreement if there is no progress made in selling your home. It would be best to ask for this at the end of the CMA sales presentation. It could be jotted down on the last page of the presentation. It should say that if the agent does not act in accordance with the methods and objectives in the marketing plan and/or the plan is not working (not resulting in showings, feedback, or offers) after forty-five days, the seller may: • ask the agent for a revision of the plan, or • cancel the listing agreement.

Agent: Somewhere between three and six months. Agent Right: If an agent is good at analyzing the available home selling statistics and understands the current market conditions, “within a specific number of months” would be a better response. The time it takes to sell your home will be affected by the price and the condition of the home. With the right marketing, your home could sell in less than a week.

Agent: We’ll lower the price and extend the listing. Agent Right: Here’s what your response should be to that agent: “Okay, I’ll lower my price if you’ll lower your commission.” An agent should stand behind the pricing of your home. If the house was priced right in the first place and then effectively marketed, it should have sold. Valuable market time would not have been lost. Sometimes an unscrupulous agent may suggest a higher price to get the listing. Then when it doesn’t sell, the agent tells you the price is too high. Before you sign a listing agreement, ask the agent if he or she believes that your home will sell in the suggested price range. If the agent says yes, then ask that agent to agree to lower the commission if the house does not sell in the price range suggested. What can be fairer than that? If the agent won’t agree to that, don’t list with him or her.

Agent: Our company charges 7 percent. That’s for full service and proven results. Agent Right: That may be a true statement, but how much service do you actually need and how much money do you want to pay? It’s a good idea to shop around for agents and companies, not just for price, but for services offered and proven results. A good way to accomplish this is by speaking to real estate company broker-managers by telephone or by reviewing their company Web sites. For example, in Real Estate Five, we charge a variable commission ranging from 5% if other agent finds the buyer to as little as 3% if you find the client.

Agent: This is the rate that the firms around here charge. Agent Right: That’s the wrong answer and the wrong agent. There’s no set rate in any area. That would imply price-fixing, a big no-no in the real estate industry. Fees and commissions are independently established and usually based upon the quality and quantity of services provided. When discussing rates, there are two rates of commission that you should be aware of: • the total rate of commission that you, the seller will be required to pay, and • included in that total commission, the rate of commission that will be paid out to the company bringing in the buyer. For example, in Real Estate Five, we charge a variable rate that ranges from 5% if other agent finds the buyer to as little as 3% if you find the buyer.

Agent: I’d be careful about those discount companies as nobody will show their listings. Agent Right: That’s not true. Real estate is very competitive, and there are a variety of business models out there, giving the consumer many choices. It’s a good idea to talk to different companies and compare their commissions and their services to fi nd the one that’s best for you. You may be pleasantly surprised to fi nd that your home will be shown just as much and maybe more regardless of the amount of commission that you pay.

Agent: If you go with us, I’ll see if the manager will agree to 6 percent instead of 7 percent. And you’ll still get all of our services. Agent Right: The manager will, and I’ll bet the agent already knows that. But maybe you can do even better! Negotiation is the key here, and if one company won’t negotiate, another company will. Do you really need all of their services, or can you get by with a little less? If you can get by with less, then you should pay less commission. You know, some companies may give you more services and still charge you less commission. It’s best to compare and negotiate.

Agent: No, but I can get the job done to your full satisfaction for 6 percent. Will that work? Agent Right: There are many options available to the savvy seller. They include the following: for sale by owner, for sale by owner with assistance, online listing service, limited MLS (multiple listing service), full MLS, discount real estate companies with limited service, discount real estate companies with full service, local full-service companies, and national full-service companies. For example, in the “for sale by owner” option, you might be doing everything on your own. With the “online listing service,” you should receive ongoing exposure to many prospective buyers. If you went with a full-service company, many agents would be trying to sell your home. Choose the option and company that works best for you.

Agent: Not really. For the 7 percent, you’ll get our full service regardless of what the market is. Agent Right: That may be that company’s policy, but current market conditions will have an effect on how homes are sold and marketed. Therefore, some companies might consider modifying the commissions accordingly. For example, in a seller’s market, the broker’s job is much easier. There’s less work to do, fewer resources to be expended, and the sale cycle is considerably shorter. This might be a very good time to negotiate a lower commission. On the other hand, in a buyer’s market, maybe that 7 percent is a good deal all around (depending upon what and how much the agent and real estate company will do for you).

Agent: No, you’ll still pay 7 percent. Agent Right: You won’t have to pay additional commission per se, but it will probably cost you more to sell your home. That’s because in a buyer’s market, the brokerage may have to offer incentives to buyers and cash bonuses to selling agents to make their listings more competitive. And the seller usually winds up paying for these.

Agent: By keeping your home spotless, picture-perfect, and always ready to show. Agent Right: Great advice. You want to wow them as they drive up the driveway and as they enter the house. However, in a real buyer’s market, you and your real estate agent may have to do even more. You may have to offer a home warranty on all mechanicals and appliances or a decorating allowance or a rebate for closing costs or maybe even a cash bonus to whomever brings in the best offer.

Agent: No, you have to wait until the listing agreement ends in six months. But if you want something done differently, just let us know. Agent Right: This answer is unacceptable. Tell the agent that a cancellation clause has to be included. Make it become effective forty-five days after the date the home was listed. That will give you the option to get out of the listing agreement if your home doesn’t sell or if you’re not satisfied with the service. The cancellation clause must be written within the listing agreement. Incidentally, if you are told that your home will sell within three months, then make the listing agreement for three months. If you’re told that it will take more than three months to sell, still make the contract for three months and include an option to extend if you so desire. If you decide to extend the listing, you would usually make that decision a few days before the listing expires. At that time, you would meet with the listing agent and modify the listing agreement accordingly. Always state the new expiration date to avoid any confusion. If all terms of the listing agreement remain the same, include a statement to that effect. However, if you and your agent agree to change some of the terms (and it’s okay to renegotiate terms and make changes), make sure that those changes are included in the modified listing agreement. You both should sign and date the modified agreement, and that’s it. In the absence of a written agreement to extend the listing, the listing agreement expires at midnight on the last day. There’s nothing you have to do. You’re free to go with another company, sell on your own, or take a breather while you decide what you want to do.

Agent: We’ll you can try it; but there are a lot of pitfalls and potential problems, and you won’t get the full service and assurances that you’ll get from our company. Agent Right: If you want to try it on your own, there are plenty of resources and companies that provide advice and assistance. There are books that prepare you for selling on your own. There are for sale by owner shops that will provide you with supplies and forms. There are companies that will offer you online listing services. There are also full-service companies who will partner with you and market your home at the same time that you are trying to sell your home on your own.

Agent: Oh, we can’t do that. The listing agreement is standard and specific as it is. But we can certainly modify our marketing plans to include all of your concerns. Agent Right: The listing agreement is the contract that spells out the specific terms that the seller and real estate brokerage agree to. And like any contract, it can be modified to include what is agreed upon. If it’s written in the listing agreement, then that’s the way it is. If it’s not written in the agreement, then it will not happen. I’m going to repeat something now that I said before. The seller should add a cancellation clause that allows termination of the listing agreement before the expiration date. Now we have to be reasonable here; we are not trying to hang the agent. We just want a way out if we are dissatisfied with the service we’re getting.