True Gotham

I know, I know, I'm a broker so of course I say that. But this is not the same old argument you have always heard. I have put my money where my mouth is. Please, hear me out.

As many of you know, I just sold my own investment property. It was one of several on the block for sale. However, it was the only one that has sold in the last several months. Why did it sell? Because I hired an agent who did her homework and figured out the right price. I trusted her, she did her job, priced it aggressively, and found a buyer who saw the value in the home. For that quick and stellar performance, in a soft market, I am more than happy to pay her 6% commission.

It's no secret that the 6% pricing structure is under fire. It has even been called a war. Brokers are doing their homework, girding for the fight.

My thought is that when real estate professionals do their jobs well, like my agent did for me, they will always be worth a lot. People who can make big deals happen are valuable in any industry.

Take a look at my current listings: every client who has let me do my job--and has taken my advice about pricing--is under contract.

Of the 20 times I have represented sellers in the last eight weeks, 16 have already gone into contract. The common characteristic of these 16 sellers is that they hired me because they trust my guidance.

The other four have had questions. They have second guessed my analysis of the market, and have insisted on high prices. As the weeks now pass without ready buyers, I believe we have watched the value of their property decline.

My job is to convince them of the reality: this market is nothing like six months ago, and the sooner we all accept that, the sooner we'll find buyers ready to jump back in.

The moral here is that in a flat to down market, sellers need to make sure they are hiring an agent whom they trust implicitly to guide them through the process of selling. Interview multiple agents and make sure that you believe what it is they are presenting to you. Get specific data from them to support their analysis of the market and your home. Scroll through these posts for more tips including the all-important signed marketing plan.

There is nothing worse in a cooling market than being the seller who drops the price too slowly. That results in an extended process of chasing the market down, scaring off serious early would-be purchasers, and selling at a significantly lower price than if it had been priced accurately early in the process. A broker who can get you the right buyer early in the process is delivering real value.

I agree with you about pricing "right" - nothing sells an apt/house faster, especially in a cooling market. If you look at the big-fish players in Manhattan that still dabble in less-than-ultra luxe properties (Lenane, Kory et al.), one common characteristic is that they price very competitively and don't let sellers dictate the price. I always shake my head (mentally) when I visit open houses and the apt is just not priced to the market and doesn't have anything (triple-mint reno or whatever) to justify the price.

One thing, though, are you being ethical in knocking down your own listings? I mean, if I were one of your more stubborn sellers, I would be annoyed at your post.

I don't think I'm "knocking down" my own listings as I did struggle with the possibility of "annoying" a current seller. The greater commitment here is to honesty and a proper pricing strategy based on real data. I have had this conversation with all of my sellers and in rare instances, I have let them call the shots. In my 15 years in the business, it never benefits me or my sellers when I give up the reigns.

For the record, give those other brokers a call and you'll see that in this market, they too are experiencing the same.

I see what you're saying but nothing you mention above is beyond the capability of a FSBO. What I did with my apartment was have a broker come over and, fully disclosing I may or may not use her as my broker, asked her the value of my apartment and why. I then used that price to get an accepted offer within a week.

I agree that maybe a FSBO situation could theoretically make it harder for someone to set the aggressive price -- too close to the property or whatever, but in today's market, it's fairly easy to match what very little the brokers do anyway. Place an ad in the NY Times and have an open house or two -- hardly worth $6K per every $100K of asking price.

Where I see the value in using a broker, over and above figuring out the ask on the property is the salesmanship aspect. A good broker (like Heddings here) will be able to sell the apt better to the buyer than you will. Figure out the body language of the people walking in the door, point out the salient best features of the apt in the most appealing fashion to the buyer and bring the deal to a close. While I have been in the market long enough to know how to price my property, I would not be able to "sell" my apt. The higher the price, the less fungible a property and the less like a commodity it is.

I can only speak for my experience in viewing numerous properties as a potential buyer, but usually what I've seen is a broker who stands by the door, acts pretty damn artificial, asks you to sign in, states the obvious about the apartment, and that's about it. And I've seen just outright lying too many times to be swayed, too.

Maybe the lower price range I've been in (around $500-600K) leads to less motivated brokers, but this idea that there's all this sophisticated work being done by brokers seems a bit of a myth. At a lot of these places, I'd be pretty peeved if I were the seller and my broker was acting that lackadaisical.

Sure, you can say the 'good' brokers do more, but the good brokers are pretty far between and, well, I'm sure they all talk a good game up front and are smooth but when it comes to the actual footwork, I don't see much value addded.

On the buyer end, I've had brokers offer to take me around. Well, I'm always looking at the NY Times site and all the broker sites and know all the properties on those. Along comes a broker to 'assist' me and just sends me the same listings I could have found for myself. Where's the added value in that (except for the broker?).

I see where you're coming from in that exceptional brokers may do more, but exceptional brokers are, by definition, few and far between. Expecting someone who sells a home once every five years to be able to sort through the hundreds of agents is a pretty tall order. And, how can someone tell if they're good? They sold their last 3 places quickly for good prices? Maybe they were just good apartments to begin with and required very little salesmanship.

Thanks for commenting Bing, and congrats on doing well... A couple of assumptions that you have made that are worrisome...how do you know that broker that "priced" your apartment did an accurate job and you didn't leave a considerable amount (perhaps more than 6%) on the table? Also, you assume that a savvy and knowledgeable broker wouldn't have been able to broaden the market for your property thus selling it for significantly more than you did. I sense some bitterness toward real estate brokers and I hear you! But please keep in mind that many of us take our profession very seriously and bring much more to the table than "an ad in the Times and a couple of open houses." I'm sure you're pleased with your result and that is all that matters. Congrats again!

I don't want to turn this into a broker bashing session and this will be my last comment on this post.

First, like any good seller, I did my homework and kept track of what similar apartments were selling for -- and in my own co-op building I was able to get the actual sale prices for those apartments in the same line.

The broker merely confirmed the price range I was seeing. Even if they had underpriced (or overpriced it) a bit, the range was still less than 6 percent of what I was planning on anyway.

I'm sure there are good brokers out there, and in situations in the burbs where there is a much more generic housing stock, maybe a broker is more beneficial in making your's rise above.

But in my situation -- selling my apartment in a desireable neighborhood -- I don't feel like I needed to spend around $20K on commission to move it. I'm not saying my situation is completely representative of every market everywhere, but it worked very well for me. If I had a $1 million place and was competing with a much more competitive housing stock, maybe I'd have sought help.

Well, maybe that is where our experiences diverge - price points. In the 3m+ range, I really felt I needed a broker to negotiate when I wanted a specific property. Same with negotiating the co-op board process.

Bing-

Looks to me like you are a smart person, spent a lot of time on it, had a good strategy, and did a lot of work. There are probably lots more people who need to sell their apartments then can meet those qualifications. For them, I would imagine it makes sense to find a good broker.

Thanks again Bing and I feel it necessary to sincerely commend you on your sale and disclose to you that I respect and appreciate your position about my profession. This is precisely why I strive everyday to break the stereotypes that the public has of the real estate industry. Just as I believe that some are well suited to do their own investment planning and income taxes, I also maintain that some owners out there are well-enough equipped to sell their own properties. That said, I'm terrible at picking stocks and mutual funds and I'm certain the IRS would be knocking on my door if I did my own taxes.

One thing I note is that Bing is only considering a Broker "worth a percentage" if they know how to properly price a property. There is a lot more to selling real estate than just knowing how to value property. Writing a good contract in the best interests of the client, negotiating with the other party, inspections, transaction management, problem resolution among many others. In the interest of time and expertise I would say most people would lose a fortune in these area's alone. That said, I have met a lot of Brokers not worth hiring if they were free, but that's true of any industry if you think about it. I've had bad doctors, CPA's, teachers, car repair mechanics, etc.
Just wanted to make sure that people don't think pricing is all there is to selling. It isn't.