Perceived Value of Real Estate Services
I was talking with another Realtor recently who had been the listing agent on a home sold to Buyers I had represented. I was shocked to learn today that his Sellers thought he did a lousy job on that deal. The reason for their unhappiness – the home sold too fast.
When I did the market analysis for my Buyers on this listing, my price came out exactly the same as the list price, so I felt comfortable advising the Buyers to offer full price. “They have it priced right” I told my Buyers.
Offering less than market value ran the risk that another offer would come in that looked better while we negotiated below the asking price. It was right before a summer weekend; the home had only been on the market for two days and was located in an area where sales were very strong. It wasn’t worth trying to mess around with a low offer, so we wrote an offer that we hoped the Seller could say ‘yes’ to without changes. The offer was submitted and accepted.
After the inspection, we negotiated some repairs into the deal (usually easier to do when your paying full price) and I was impressed at how well the listing agent handled these repairs for the Sellers, and kept me informed of what was being done and when. In short, he knew good repair people who accomplished the repairs at a much lower price than the Sellers would have had to give up had we gone with cash repair allowances, which saved the Sellers money. He communicated very well the entire time, all the way through the closing, and impressed me as a competent and very capable Realtor.
Now I found out that the Sellers were angry because they thought the home sold too fast, which meant (in their minds) that it was listed at too low of an asking price, which they thought was the Realtor’s fault. They thought, since a full price offer came in after just two days on the market, that it should have been listed about $7,000 higher, he told me.
I couldn’t help laughing at hearing this because, as I told the other agent, my market analysis would have come out just exactly the same no matter what the list price had been. We prepare offers based on market conditions, not the list price. In fact, when we come across homes that are priced well above market value, it makes it less likely that our Buyer will want to submit an offer because they often (correctly or not) perceive that the Seller is not motivated and is going to be unreasonable.
Also, had the home been listed $7,000 over market value, it’s very possible, after doing our market analysis, we would have offered $10,000 below the asking price ($3,000 below market value), to leave some room to negotiate up to market value. So, the idea that the home was sold too cheap is simply not true. It sold for exactly market value. The listing agent priced it right and that’s why it sold in 2 days for full price.
But the Sellers were so upset with the sales price that they extracted a 0.5% commission rebate plus some closing costs (over $1,500 total) out of the Realtor’s commission. And they still were not happy. The agent seemed pretty good natured about it, didn’t seem bitter or angry, but it really is a shame that his clients did not like the outcome he created for them in selling the home.
We both marveled at how the quality of the service we provide as Realtors is so often entirely subject to the perceptions and interpretations of those we serve.
I believe this Realtor did a fine job for his Sellers. The home was properly prepared and staged. It showed very well and had excellent photos taken, which really helped my out-of-town buyers visualize how nice the home was. He took great care of the Sellers during inspection negotiations and the completion of the repairs, and stayed on top of the deal all the way through closing. He did everything a good agent should do, as far as I could tell.
But his Sellers will not be recommending him to friends or family. He won’t be receiving referrals from them, much less a Thank You card. Instead, they have probably been spreading ill will, telling others how their Realtor “blew it” and cost them the extra money they are convinced their home would have sold for had they priced it higher. The Sellers felt like victims. The Sellers felt ripped off.
A job well done, by most reasonable standards, resulted in unhappy real estate customers.
How do we avoid this as Realtors? We don’t. It happens sometimes. It happens to us all. From a Buyer side, the same thing can happen when an offer below list price is accepted right away without a counter-offer. The natural inclination is for the Buyer to wonder “maybe we should have offered even less. Maybe we’re paying too much. Why didn’t the agent tell us to make a lower offer?”
This second-guessing can never be answered or resolved though, because one never knows how different circumstances or different numbers would have caused a different outcome. We can only guess and wonder.
Yet, as in the example of this other agent, as human beings, we often treat our speculation as fact. We base our opinions and reactions on perceived or imagined scenarios with 100% certainty that the better outcome we imagine as being lost is exactly how it would have been. Then we choose to feel angry and disappointed instead of grateful and happy.
For these other Sellers, they are 100% convinced that their home would have sold for $7,000 more, but I know for a fact that my particular Buyers would not have been willing to pay more than they did. I do NOT know for a fact though whether some other buyers would have come along later and been willing to pay over-market value for the home. I can only say that it’s very unlikely.
The bottom line though, the way I look at it, if the customer isn’t happy, I failed. I may be able to say I did everything right, or that I “did a good job”, and that a good outcome was achieved by all reasonable measures, but if my customer feels let down, I will still wonder what I could have done differently.