That Keller Williams Kool-Aid
May 13, 2008
I recently completed a transaction as the buyer’s agent with an agent for Keller Williams. It was a short sale, and yes, it dragged on for months - we got into contract in January, and closed in late April. After all was said and done, the seller’s agent and I agreed to meet for coffee and to exchange some final documents and so I could get the key to pass on to my buyers.
You may not be aware of this, but Keller Williams agents are kind of messianic about their company. They love it over there. A few months back during the Watsonville REO tour that we had, I had met another KW agent, and she spoke in glowing terms of her company, and in particular about this training that they had, which was open to agents from any brokerage, not just Keller Williams.
So when I was sitting down for coffee with the seller’s agent, I started talking to her about Keller Williams and the training that they provide. Not surprisingly, she was very enthusiastic and encouraged me to come on down for the next training session they were putting on. I agreed to do so, and so yesterday I sat through 2.5 hours of training on getting listings, put on by a very able and passionate trainer.
As promised, the training was excellent. Honestly, probably better than any real estate training I have been to. There’s one thing in particular I took away from that training, which I want to share with you. If you are a seller, please sit down, pour yourself a nice tall glass of kool-aid, and listen to this.
Keller Williams has a pretty good pricing strategy. It’s simple, and it goes like this: price your home below “market price.” A good bit below. Like, 10% below. Then, market the heck out of it and wait 21 days before taking offers. The buyers will beat a path to your door so quick it will make the neighbors upset because obviously, you’re having one heck of a party and they didn’t get invited.
A home which is priced clearly below market value will attract multiple offers. There is good example of this every day, with these REO properties. The banks price these things low. They price them to sell. And they do, quickly, and usually with multiple offers. It is very common for these properties to sell for over asking price, often by 10%.
This pricing strategy is an excellent one, especially in a market like today’s. In an appreciating seller’s market, it’s not such a bad thing to over-price your property by 10% - sooner or later, the market will catch up to you, and you’ll probably end up getting that extra 10% if you wait long enough. However, when you are in a declining market, if you do not sell your home quickly, the market will probably pass you right on by.
In a declining market, people don’t want to buy for fair market price, because the market price is dropping, and next month, it’s going to be worth less than it was the month before. You need to list your property under fair market price, attract multiple offers, and sell it for the most the market is willing to pay for at the moment.
That’s a winning strategy, and it’s working spectacularly for the banks selling their foreclosure properties, and it is also working for sellers who price their homes to sell.
I’m going back to Keller Williams on Wednesday for another training. Not sure what it’s about. And yes, I know, it’s all a trap. They want to seduce you into signing up with them by providing world-class training gratis and showing you that there’s a better way to sell Real Estate. I have no intention of leaving Thunderbird Real Estate at the moment - I’ve long thought that my next step after Thunderbird would be to open my own brokerage (I’m a licensed real estate broker, after all). But if one day you see me sportin’ a mustache and talking feverishly about how great KW is, you’ll know how it all began.
Posted by SantaCruzBroker at 8:28am
No Comments »
Discount Broker = Caveat Emptor
March 31, 2008
I was hanging out in my office today, talking to one of my colleagues about a short sale listing we’re working on. Another colleague wanders in and says, “Hey, a woman just called in on floor, and she wants to know what’s up with your listing on Peace Drive. She said she put in an offer but hasn’t heard anything back.”
I was a bit nonplussed by that. Wait wait - I’ve got a confession. This is the very first time I have ever used the word nonplussed . I must be getting old!
But anyway, there I was, all nonplussed and all, but I finally managed to say, “Really? I called every agent who put an offer in and let them know that we had accepted another offer!” To which my colleague replied that well, this lady hadn’t heard anything, but that she’d been using a discount broker up in San Francisco.
Ahh. Gotcha. I know who her agent is. This is the guy who sent me an offer, and after I received it, I called him to let him know I’d be e-mailing him a “multiple offer disclosure” which I would need to have him get his client to sign and return to me by the end of the next business day, along with what his client’s “highest and best” offer might be.
At the end of the next business day, I hadn’t received back his signed disclosure, so I called him up. “Hey, I didn’t get back your signed multiple offer disclosure!” I told him. “Oh, I never got it!” he said. Hmm. Well, that’s possible, we all know that e-mail isn’t 100% reliable, but even so, you think he would have followed up with me when he didn’t receive it. “No problem,” I said, “I’ll send it right now.” Which I did - I sent it to the very same e-mail address I’d sent it the day before, because my e-mail program auto-completed the e-mail address for me. “Got it,” he said. We agreed he’d get his buyer to sign it that day and get it back to me. I got his cell phone number from him so that I’d be able to stay in good communication with him.
By 9 PM, I hadn’t received anything back from him, so I called his cell. No answer, so I left a message. I called the next morning at 9 AM on his cell phone - no answer, I left a message. I called again in the early afternoon, this time on his office phone, and left a message, still wanting to get back the multiple-offer disclosure, even though we were past the deadline.
By the next morning, the seller had accepted another person’s offer. Later that afternoon, I called up all the agents who had submitted offers, and I let this agent know that a different buyer’s offer had been accepted, but thanks for putting his offer in. Again, he didn’t answer, and he never called back.
Well, it looks like he never called his client back, either. I guess this guy figures his being a “discount broker” allows him to cut some corners on his fiduciary responsibility to his clients. I don’t think that the Department of Real Estate would look at it that way.
I’m not saying there’s anything wrong with being a discount broker. I myself offer discounts to my clients, through my Buyer’s Reward Program. When a buyer does participate in my Buyer’s Reward Program, do I work any less hard for them? No, of course not. I don’t believe the amount of compensation an agent receives should reflect the amount of diligence that is employed during the real estate transaction. I am sure there are many discount brokers out there who work just as hard for their clients as I do, whether I’m rebating a portion of my commission or not.
I think the lesson here is not necessarily that you should avoid discount Realtors. I think there are two lessons here - one is an axiom we’ve all heard a thousand times: you get what you pay for. Another is this: don’t be penny wise and pound foolish by entrusting one of the biggest financial transactions of your life to someone who hasn’t earned your trust.
Profound, I know. But sometimes we all fail to see the forest for the trees. Ever the optimist, I feel that every dark cloud does indeed have a silver lining. It may work out such that my colleague, who is not a discount broker and who works very hard to fulfill his responsibilities to his clients, will pick up a new one as a result of this other broker’s negligence. I’ll say Ommmmmmmm to that!
Posted by SantaCruzBroker at 7:52pm
No Comments »
Blog Entries
