Short-Circuited Promotion

September 6, 2013 | Selling

Many homes are getting sold prior to officially going on the market these days. It can happen for a variety of reasons. Some are outright sinister and unethical. Even when done innocently and naively, it is a strategy that often causes you to put less money in your pocket than you otherwise would.

Here is a scenario that happened recently. Names have been changed for privacy.

John and Jane Smith called Shirley, an agent/realtor in my office. They wanted to sell their house. Jane had an associate at work (Peter) who was interested in buying the house. John and Jane wanted to know if Shirley could just “do the paperwork” to sell the house to Peter.

Shirley explained that they might be short changing themselves because Peter might not be the best buyer. True, there would be much less commission expense if Peter purchased the property without Shirley listing it. However, other and more motivated buyers might actually give John and Jane a higher net price.

John and Jane saw the wisdom of Shirley’s advice to list the house and have the friend from work see it the first day it came on the market. If Peter bought it, the fee due to Shirley would be fairly modest but Shirley would earn a full commission if another buyer purchased the home.

Peter saw the house on Saturday and made an offer on Sunday. Another buyer working with an agent also made an offer on Sunday.

The offer from this other buyer was much higher and provided John and Jane with more money in their pocket even after paying higher commissions! Additionally, this alternative buyer did not have a house to sell, while Peter needed to get his house sold before he could complete the transaction.

We know this is counter intuitive. However, as a general rule, you are always likely to get the very highest net price by fully exposing your home to the broadest possible market rather than having it viewed by only a selected buyer that you happen to know.

Short Circuited Promotion

When CHR agents help people sell, they always discuss this issue with you. There can be very legitimate reasons why you’d want our agent to pre-promote your property and show it to some limited number of buyers prior to it officially hitting the market. However, for the most part, this is likely to be a technique we avoid except in special circumstances.



Innovation Series-Thinking Outside the Trapezoid



Now Reading Part 4: Short-Circuited Promotion

Intro: Thinking Outside the Trapezoid
Because “thinking outside the box” is too conventional for the innovation we value.
Part 1: Home Pricing Nonsense
It turns out that the dangers of over pricing your home are largely a myth.

Part 2: Marketing Mayhem
Why quality over quantity is important in marketing a home quickly and efficiently.
Part 3: The No-Cost Refinance Gambit
How a no-cost refinance can cost you thousands of dollars more in the long run.





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