Note: This is a chapter in my new ebook called The Ultimate Guide to Buying (and then Selling) Your First Home. I will post a chapter a week. If you like what you read, you can pick up a copy here for the price of a candy bar! Buy a candy bar or be a real estate guru! This chapter is about mortgages and first time home buyers. This one is about online listings and continues the story from the previous chapter found here.
Steve and Sally sat up and leaned towards me after I told them to be watchful of certain tricks listing agents will utilize to get buyers to come visit the property. I copied them and leaned towards them like I was telling them some trade secrets that no one else would reveal. Although, this was not the case as most people who have bought a home know these tricks. Still, it was fun to think I was sharing something important with these eager home buyers. I told them that real estate agents have been around for a very long time and as with any old profession, we have developed some tricks to get buyers into our listed properties. I told them they should keep this in mind as they look through properties because what they see on the surface, either in the online listings or in person, might not be the realty underneath. Property inspections will uncover most all hidden defects, but it is always a good idea to know when buying your first home that some showmanship is involved in selling a home.
Leaning in even closer to them, I whispered to them “Here are the three common ways that agents lure buyers into homes.”
1. Staging a home – One of the best ways for a listing agent to show off a home is to have the seller stage the home. What does this mean? Staging a home puts a home in its best light by strategically placing furniture, wall hangings, floor coverings, etc. If you have ever visited a model home in a new development, this is staging at its best. Listing agents want you to be able to visualize the home as your own. Many sellers will even hire a specialist to come into the home to stage it properly and even rent new furniture from the staging expert. Why do they do this? Staging a home sells homes so much more quickly. Some studies have shown homes go from an average of being on the market for 90 days to less than two weeks when staging occurs. Sometime agents will stage a home strictly for taking pictures, so you might see a stellar house online that looks less so in realty. Steve looked at Sally, who looked shocked to hear about this trick. I smiled at their innocence and went on to the next trick.
2. Open House – I asked them if they had ever been to an open house. They nodded. Steve said they had hit a few last weekend, just to get a feel for some houses in their target area. I nodded my approval and told them that open houses go along with selling a home like baseball and hot dogs. Open houses are events with standing invitations for anyone to come into the home to look it over without having an agent with them. For a buyer, it is a great way to see several homes quickly over an afternoon without having to engage with an agent. Sellers like open houses because it means more buyers will see their homes with the possibility of one of them purchasing the property. Listing agents especially like open houses because it gives them access to buyers who might not be represented by an agent, resulting in the listing agent gaining a new customer. As with staging, agents have learned a few tricks to lure the buyers into the home. Some will offer refreshments while others will have a drawing for door prizes. Some of them even provide entertainment, like piano players, during an open house. Open houses, however, does not work nearly as well as staging when it comes to selling a home. Studies have shown that less five percent of homes are ever sold at an actual open house. Steve whistled at this last stat. Sally asked what was the point if it didn’t sell the home. I told them most listing agents will gain a buyer or two from open houses so for them it was well worth the effort. (Authors Note: You will learn more about this later in the book when we discuss selling your first home).
3. Price a home below market price – My final trick I revealed to the young couple is one that I am seeing utilized more in seller’s markets than buyer’s market. This trick is not always employed by agents because the market is not right for it to happen. If the market favors buyers by having more homes than buyers, agents will refrain from intentionally marking homes below market prices. However, if the market is favoring sellers, this is a handy technique many agents will use to drive up demand for a house until it becomes a bidding situation. After all, how can you walk away from a good deal on a home if it is marked five to ten thousand below market price. In cases like this, many buyers will make many offers driving up the price of the home to its market value, or even higher. Is this unethical for an agent to do? Many might think so, but it is a bit sales showmanship that will work wonders for a property selling well above its value, especially if you are in a tight inventory, and it will usually attract many buyers to visit the home.
Sally didn’t like this trick at all, frowning at how unfair it was to buyers. Steve thought it was smart way to drive up prices on a home. Before they started an argument, I jumped in to remind them that all three tricks are part of the game of showmanship all agents play in the market in their attempts to get the best value for their sellers, which I hope to use with them when they sell their first house. Sally saw the point when I made it more personal to her. I finished up my presentation with them and we decided to go visit five homes the next day. They left happy and eager to get started. I breathed a sigh of relief, filling satisfied with the afternoon. I really liked this young couple and hoped I could find them a house soon!