Last week I posted on the #2 Myth About Selling Your Home - the silly idea that you need a real estate agent that is the neighborhood (or building in the case of a high rise) expert to get the highest price for your home. But I saved until today the whole topic of how some home sellers decide who the neighborhood expert is and, even more interestingly, some of the lame tactics used by realtors to position themselves as the neighborhood expert.
Let's start with what those crazy realtors are up to - usually promotions they pour money into to try to convince you that they are the neighborhood expert. You get their stuff in the mail all the time. Does any of this stuff work or does it go straight into the garbage? Would realtors do it if it didn't? Who knows? Many are not exactly the sharpest knives in the drawer.
Announce That They Live In The Neighborhood
A letter or a postcard (not cheap to do BTW) comes in the mail announcing that so-and-so is a realtor and they have lived in the neighborhood for X years and their kids go to the school. They know where the grocery stores are and that the school has a new principal. Maybe they are involved in community activities or if it's a high rise they are on the association board. So apparently this makes them a neighborhood expert, imminently qualified to sell your home and get you a higher price in less time than any other realtor.
This seems to work very effectively in the high rises downtown where you often see someone who lives in a building totally dominate sales in that building. But please connect the dots for me. How does any of this "knowledge" a) help them get a better sale on your home and b) change the way they market your home. And isn't most of this neighborhood information available on a Home Turf or eNeighborhood report anyway?
Buy A Sign That Says You Are A Neighborhood Expert
I couldn't even believe these exist and they're only $5: Neighborhood Specialist
Disgorge Useless Facts
This approach is executed in person and, from my experience, it can be quite effective at convincing both buyers and sellers that they have found the neighborhood expert that they need to work with. Basically all the realtor has to do is spew out a bunch of useless facts like this baseball player just bought a place down the street or this news anchor is moving or everyone goes to this new doughnut shop. It's apparently so effective because it operates at a subliminal level in the mind of the consumer and really creates the impression that this realtor knows things that are hard to know unless they really are the expert. But how exactly does this result in an advantage in helping you buy or sell a place? I've never understood it and what's amazing is that I've seen some really smart people fall for it.
The Data Dump
This is a really popular, though incredibly lame, technique because it doesn't require any substance and it's incredibly easy to do, though it gets expensive on a per household level. The realtor simply sends out a letter or a postcard that shows what's for sale or recently sold in the neighborhood - like you can't look that up on Zillow or Trulia.
Want to know how easy this is? If it's a letter they just print out a bunch of copies of a computer dump and send that to you. But the postcards are way more impressive and just as easy because you can get them produced by a company called Corefact or eNeighborhood and they can look pretty impressive. Various providers will do a lot of the work for the realtor in getting the data together, including customizing the information for each address.
I especially like the part where you are supposed to call Lisa Thompson to get your home sold for the highest price possible...because....well....she gave you this data so she must know how to do that with her special realtor powers.
My Results In Your Neighborhood
This is one of the more impressive tricks that I've seen, very effectively executed by the so-called neighborhood expert in University Village (my old neighborhood) but it does require that the realtor have a critical mass of activity in a neighborhood. The realtor publishes a selective list of properties he's sold, selectively shares the best facts from each sale, and leaves out any critical information that undermines the message. Here is a summary of tricks you might find in such a mailing:
- Expand the definition of neighborhood to include areas on the fringe
- Highest price per square foot in the building - not mentioning the fact that the unit was also the most highly upgraded.
- Sold with multiple offers - sure, but the price was incredibly low
- Sold in 4 days - again, the price was incredibly low
- Sold at 95% of list price - after 3 rounds of price cuts
- Sold after FSBO (For Sale By Owner) - and the price was cut
But it looks really impressive on the surface and apparently works.
Just Sold/ Listed!
You've definitely seen this trick and it gets really annoying after the 10th piece comes in the mail during the month. It's actually the most common ploy used by realtors. The realtor proudly announces each new listing and sale of theirs in the neighborhood. Ostensibly, the purpose is to market the home for sale or provide you with information on what is going on in the neighborhood - just in case you are interested. But it's fairly transparent that the real intent is to highlight just how active the realtor is in the neighborhood.
As a side note, just a bit of quick math for you on direct mail pieces like the ones I just highlighted. It costs anywhere from $.50 - $1.00 to get that post card or letter to you and if 90% of you immediately throw them into the garbage then it costs the realtor somewhere between $5.00 - $10.00 to get that postcard into the hands of someone that will actually read it. And if only 10% of those people respond then it costs the realtor $50.00 - $100.00 to get a response. Why would a realtor spend so much money on finding clients? Because with the high commissions earned in the business it's worth it. More on that another time.
The Impact Of The For Sale Sign
The For Sale sign is not just to generate a buyer for a home that is for sale. In fact, it's pretty rare that a buyer comes in off a sign. The real value in the sign is for the realtor to mark their territory and reinforce the notion that they really are the neighborhood expert. Quite often people will tell you that the reason they chose a particular realtor to sell their home is because "they do a lot of business in the neighborhood" or "I see their signs everywhere". In other words, the home seller is looking for the neighborhood's top producer...
Quick Review Of The Top Producer Myth
I've written extensively about the fallacy of real estate's top producer myth but let me highlight perhaps the most significant concern when you get down to the neighborhood or building level. When you put your home on the market you are competing against every other home for sale in the neighborhood or building. Do you really want your realtor also working for your competition? Do you want your competitor to know that you are planning on reducing your price or would you rather hit them with that by surprise so that it takes them a couple of weeks to digest it and possibly respond? If a potential buyer is not that crazy about your place do you want your realtor selling your home's advantages over the other homes for sale or do you want them moving that buyer on to the other homes that might result in an easier sale? If your realtor also represents a lot of buyers in that neighborhood or building do you want to find yourself in a dual agency situation? Believe me, I see these problems all the time where one realtor dominates a neighborhood or building.
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