There have traditionally been two main schools of thought when it comes to choosing a selling broker. The first is to find the broker or firm with the lowest fee, which in turn allows for a lower asking price to be set. The second is to find the broker with the best understanding of the local market, who will excel in all aspects of the selling process – from setting the asking price and staging the home, to advertising, networking, and negotiating – and utilize their expertise to achieve the highest sale price possible.
So, which of these two methods is best? It can be difficult to decide, and although each school of thought has its advantages and disadvantages, let our Data Expert break it all down for you. With this detailed reference, you’ll be confident that you’ve selected the right broker for your particular situation.
The two schools of thought – revisited:
In the first method, the seller chooses the broker or firm with the lowest fee (e.g., Redfin), so that they can afford to reduce their home’s asking price, helping to drive the sale. In the second method, the seller chooses the broker with the best understanding of the local market, who will excel in all aspects of the selling process – from setting the asking price and staging the home, to advertising, networking, and negotiating – and use their expertise to achieve the highest sale price possible.
Each of the two schools of thought have their advantages. In a sellers’ market, the first method is often the most feasible course of action – especially in the entry-level pricing market, which is where Redfin got its start. Of course, Redfin has also experienced some pushback from buying brokers, who dislike how the platform delays home viewings until late in the buying process.
However, if a home’s value exceeds $500,000 or the homeowner lacks a deep understanding of the real estate market, it becomes more important that they select a selling broker with more expertise.
How do I find the right full-service agent?
If your transaction falls into the second category, there are a few important factors that can guide you to the right selling broker:
The region’s top selling brokers will have deep roots in the local market, and be completely up-to-date with asking price strategies, marketing channels, staging techniques, buyer mindsets, and many other important factors and trends. This expertise allows their clients to achieve the fastest closings at the highest prices.
Asking price strategies are an important piece of the home-selling puzzle. Many different asking price strategies exist: for example, setting a price that is clearly lower than the market’s current reasonable asking price will attract more potential buyers and increase the number of rounds of competitive bidding. Generally, a closing price will be higher than the market’s reasonable asking price when the home undergoes more than 3 rounds of bidding. If there are fewer buyers in the market, however, this may not be the best method.
Another common strategy is to set the asking price at the high end of the fluctuating market pricing range, establishing a psychological benchmark for buyers. Then, be willing and prepared to lower the price during negotiations. This tactic will allow the buyer to feel like they’ve gotten a good deal, while the seller has still closed at or above the reasonable asking price for their home. However, the risk of this method is the potential for an extended selling period.
Each of these two strategies has its strengths and weaknesses, and if the wrong one is employed even a highly marketable home can sell poorly. Once a home’s time on market exceeds the average, potential buyers will begin wondering if something is wrong, and may lose interest. They may try to beat down the asking price before making an offer, or decide not to even waste their time with a viewing in the first place.
A selling broker with a wealth of experience in a particular region will always have his or her finger on the pulse of their local market, and will know the right asking price strategy to employ.
To become one of the top selling brokers in a particular region, it is necessary for an agent to build an extensive marketing network. A well-connected broker will be able to attract more potential buyers, increasing the chances of a sale. Selling a home can be an extremely taxing process, and will typically entail staging the home, making necessary repairs, moving out, and more. The majority of people will only sell a home a few times in their life, far fewer than the number of closings a successful broker makes in a single year. Their suggestions and guidance can save sellers an enormous amount of time and energy and help them avoid the costs of a sale by trial-and-error.
Selling a home is a complicated process, and it requires a lot of coordination between the homeowner and the selling broker. That’s why in addition to selecting a broker with knowledge and experience, it’s just as important to find a broker that you have a good gut feeling about. A broker’s experience and guidance are only useful to you if you can trust them.
The chemistry between two people is hard to quantify. No matter how clean and perfect a real estate broker’s numbers seem, if you don’t connect with them on a personal level, you shouldn’t choose to work with them. There will usually be more than one successful broker for any particular region. When deciding between the broker with good closing numbers who you trust, and the broker with the best closing numbers who you do not trust, go with your gut – trust is more important than the numbers.
Brokers you should avoid:
This is a common trick in the world of real estate. When it comes to selling your home, a higher listing price always sounds great; however, be careful with unreasonable expectations as they will ultimately be flattened by the market.
Some brokers will simply tell homeowners what they want to hear in order to gain a new client. One way they accomplish this is to suggest a high listing price for the home, despite knowing how difficult it will be to sell in any reasonable amount of time. In the end, the homeowner is often forced to settle for a price reduction, losing both time and money while the broker still gets paid.
Word travels fast among professionals working in the same real estate market, and there is no worse fate for a selling broker than to be labeled as a “discount agent.” Buying brokers will try their hardest to avoid working with “discount agents,” and will instead sway their clients toward properties represented by “full-service” brokers whenever feasible.
Why do some buying brokers avoid working with “discount agents”? Here are a few possible reasons:
From a data perspective, brokers and firms with a “discount agent” reputation have a much lower 7-year development curve than their “full-service” counterparts.
This scenario is often seen with selling brokers who make somewhere around 12 closings per year. This number of transactions is not quite to the point that it necessitates a brokerage team, but it pushes the limits of what a single agent can handle in terms of time and energy. Some brokers are also shifting their focus to renovating and flipping homes, and although they may only make 6-8 closings per year, they will still have trouble providing to the standards of a “full-service” broker.
The following screenshots show GeoHome’s data-driven broker recommendations from an actual text conversation with a client looking to sell their home. Based on the location and type of the homeowner’s property, we filtered through our database to find the three brokers with the highest number of similar closings before diving in to a more detailed analysis. The homeowner then conducted separate interviews with their top two brokers, and ultimately chose to sign with GeoHome’s top recommended broker.
GeoHome’s data-driven recommendations are by no means a guarantee that your home will sell at a price above its fair market value – for that to occur, many additional factors come into play. Namely, what you need is an extremely hot market, a property type and location that align with the greatest market demand, a seller and selling broker who dare to take a risk, and a bit of good luck.
However, what GeoHome’s data-driven selections can do is find you the broker who best understands your local real estate market. An experienced team can help you avoid costly mistakes. After all, it’s not uncommon for a property’s selling price to rise or fall by up to 3%, while a selling broker’s fee won’t exceed 2.5% of the closing price.
So, if you are planning to sell your home, please contact the GeoHome team to set up your free initial consultation, or send an email to contact@geohomeusa.com that includes your property’s address and your preferred contact method. This information will help us find you an experienced broker who is well-suited for your property’s location and type.
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