If you are a homeowner, you have definitely been bombarded with unsolicited correspondence from real estate brokers saying that they have a buyer interested in purchasing your house. These letters are often solicitation letters from would-be listing agents that only use a thin veil of concealment.
Even if one of these brokers does represent a client who is currently looking for a house, it is quite improbable that the buyer is interested in purchasing your particular property. It’s possible that this is one of the reasons why the general public has such a low opinion of real estate brokers. As long as the agent can find a way to justify the deception, there is a chance that the agent will not see any damage in doing so.
Even sellers who advertise their properties as “For Sale By Owner” (also known as “FSBO”) hear from real estate brokers who say they have potential purchasers for their properties. Maybe they do, maybe they don’t, but those real estate agents know that many for-sale-by-owner (FSBO) houses are hard to sell, and they want to be there when the owners realize they need to list with an agent.
Key Takeaways
- If an agent makes personal contact with you, they likely do not have a serious buyer in the wings who is anticipating the sale of your property and is waiting for it to go on the market.
- If you are selling your house “for sale by owner,” the real estate agent may only want to see you in the hopes of getting your listing.
- You may be asked to sign a listing agreement that obligates you to pay the agent a commission on the sale of the property if they are successful in finding a buyer for it.
- Some listings are “pocket listings.” The only people who are aware of their availability are the listing agent and their broker.
What’s with the lie?
How are real estate salespeople able to get away with claiming things like “I have a cash buyer for your property” when they don’t actually have such a buyer? Because nobody questions it. Many real estate agents will remark something along the lines of, “Hey, I am working with a few purchasers, and even if your home does not suit their requirements, who’s to say that they won’t change their minds about it?”
Or, they can say something along the lines of, “You never know; I might run into a buyer tomorrow who wants to buy your property.” The fact that the real estate agent does not, at that precise moment, have a buyer for your house is unaffected by any of this information.
The cost of attending sales training classes is another significant expense for agents. They are instructed by sales trainers that it is OK to tell sellers lies in order to secure a meeting with them. However, this is not how listing agents discover buyers for your house; rather, they are looking for a chance to sit down with the seller and employ sales methods in order to gain the listing. What an agent may be looking for is an opportunity to get the listing.
How Real Estate Agents Look for Potential Buyers
A listing agent is not going to spend money or time attempting to find a buyer for a house that is not one of their listings since it is not in their best interest to do so. This real estate agent is interested in listing your house, and most likely will do so via an exclusive right-to-sell listing. According to the terms of this form of listing agreement, the agent will be entitled to a commission upon the successful sale of the property regardless of who was responsible for finding the buyer.
Before you ask, “Wait a minute, what if I locate the buyer?” Let me first explain why you shouldn’t. You should know that this kind of preferred listing agreement also encourages the listing agent to spend freely and advertise widely to show your house to as many potential buyers as possible.
After the listing agent and the seller sign a listing agreement, the listing agent will use different ways to market the property, such as:
- Putting a sign in the yard that says “for sale,” unless the HOA bylaws don’t allow signage or the seller opposes having the sign there, According to the figures provided by the National Association of Realtors, around six percent of buyers are influenced to make a purchase after viewing a “for sale” or “open house” sign.
- Having open homes as an event
- Putting the home on the market through a Multiple Listing Service (MLS). The majority of sales come from the marketing done by the listing agent, and the Multiple Listing Service (MLS) plays a significant role in that. A smart real estate agent will provide images that have been taken by professionals, will upload the listing to the most popular real estate websites, and will make appropriate use of print and direct mail. Some real estate agents have separate contact databases for getting in touch with buyer’s agents in neighboring cities.
- building relationships with other industry agents and marketing the listing at office and board meetings
- Creating electronic fliers and sending mass emails to all of the agents who are members of their board
The reality is that the realtor won’t locate a buyer for your property until after you have signed a listing agreement with them.
Pocket Listings to Help Find Potential Customers
Homes that are classified as “pocket listings” are not available to the general public and are instead only known to the listing agent and the listing agent’s broker. Some real estate agents are opposed to pocket listings because they significantly limit the number of buyers who have the opportunity to view such homes. As a result, some professionals believe that pocket listing should be avoided.
It’s possible that the owners of luxury homes don’t want the public to see their properties for one of two reasons: either they place a higher value on their privacy than they do on money, or their home is so one-of-a-kind that very few buyers (except those with a lot of money who can afford to remodel it) will want it. Some sellers may have the notion that a pocket listing would entice a bidder who is patiently waiting in the shadows of the market. Every real estate agent has at least one or two buyers who have asked them to notify them if a house in a specific area becomes available. However, this does not guarantee that the buyer will pay market value for the house or that they will even be aware that it is on the market.
Many real estate agents preferred pocket listings since it meant that the listing agent would almost certainly also represent the buyer. This strategy is referred to as “double-ending” or “dual agency,” and it is a common practice in the industry. It was possible for that agent to earn a double commission as a result, given that they would likely be awarded both the listing agent’s fee and the selling agent’s fee. It made the practice hard to deal with because it gave pocket listing a whole new meaning.
As a direct result of this, the National Association of Realtors voted to establish a new policy that essentially prohibits pocket listings by requiring that the listing agent promote the property to the general public within one day of offering it for sale. The new regulation was implemented on January 1st, 2020.
However, from a practical standpoint, it makes much more sense to show your house to a million possible buyers as opposed to just one potential buyer.
