Real estate radio ads and marketing claims: don't be fooled by the fine print
If you're a radio listener like most people (especially during your work commute), I'm sure you've heard advertisements about top agents and how they've sold XX homes above asking price in less than XX days. And, if your home doesn't sell in XX days, they claim they will buy it from you because they have a proprietary list of buyers ready to make a purchase. It sounds like a dream real estate scenario, doesn't it?
Before you think these radio ad offers are a no-brainer, I recommend that you ask to review the fine print or understand their secret selling sauce, because that's where you'll uncover the truth behind the ads. Below, we'll discuss the reality versus expectation of these real estate marketing claims.
Expectation #1: You'll be working with the award-winning Top Agent (the one from the ad).
Reality #1: You'll likely be working with Top Agent's team of associates.
Feel like you got the bait and switch? Hey, Top Agent is super busy landing high-level deals, so it only makes sense that you'll need to work with his or her associates. While a team approach can seem like you'll be getting lots of attention, it also has its drawbacks. Buying or selling a home is a complex, major life decision, so most people like having a single and trusted point of contact to help professionally guide them through the process. With real estate teams, it can often be a conveyor belt of various agents and mixed messages. Contact is initiated with one agent, then after the first meeting is scheduled, a different agent may come out to meet the clients in person and tour the home. Following that, other agents may hold the open houses and showings to potential buyers. And after that, a different agent may be negotiating with you and potential buyers through the contracts. Continuity and communication can be difficult when clients are working with multiple agents at once, who are collectively representing the Top Agent.
Expectation #2: Your home can sell in 48 hours for well over the asking price.
Reality #2: Your home can be in a perpetual state of "coming soon" and listed low to draw crowds and create bidding wars.
As a REALTOR, I've had first-hand experience with this tactic. Here's what I've seen: before a home is ever listed on the MLS (where REALTORs have access to search for homes), it's presented as "Coming Soon" on consumer-facing websites that are not connected to the actual MLS, such as Zillow, Trulia, etc. There may also be a "Coming Soon" sign in the physical yard of the home to create interest for locals walking and driving by. As for the listing price, it's typically lower than what the property is worth to create a huge buzz. It can also confuse potential buyers who are wondering if the listing price is too good to be true.
From what I witnessed, the home that was connected to Top Agent's selling approach was "Coming Soon" for over a month. I tried several times to get my clients an appointment to view the property, mentioning how perfect it was for their needs and how we'd be willing to make the right offer to open escrow before it hits the market. Despite the eager interest from our side, the listing agent was not allowing showings until it was live on the MLS. Plus, as you can guess, the price of the home was way under its value. So, when the home was officially for sale on the MLS almost a month later, there was already a large amount of interested parties, creating a scenario of multiple offers way above asking price. Plus, this method allows Top Agent's team to brag (on or off the radio) about selling the home only a few days after it was listed on the MLS, even though it was actually being marketed for several weeks with ample time to attract multiple buyers and generate a bidding war.
Expectation #3: Top Agent will buy your home if it doesn't sell.
Reality #3: Top Agent's offers to purchase your home are likely low-ball and bound by legal clauses.
It's great if business is so excellent that teams of REALTORs are able to purchase homes that don't sell. However, the question is, what is the purchase price? If a listing agent prices a home appropriately, there should be no reason (especially in San Diego) that the home would not sell. If for some reason, it doesn't sell, do you really think that Top Agent would purchase the home at the same price that many active buyers wouldn't purchase it?
For example, if an agent obtains a listing for 6 months (average length of listing agreements) to sell a home priced around $500,000 and it doesn't sell for 6 months, do you think that agent/team will purchase that home for $500,000 -- the same price that countless buyers have seen the house listed for and haven't already purchased it? Chances are, the "agreed upon" purchase price at the end of the listing is for pennies on the dollar. And if that's the case, then of course that agent would be happy to buy that home for such a great deal, as they can make any adjustments needed to sell it and make a profit.
The morale of this story? When a Top Agent advertisement claims, "We sold a home in 2 days for 120% of the asking price," what they don't mention is: 1) the home was under-priced on purpose and 2) the home was listed as "Coming Soon" before it hit the market. When you hear ads claiming, "We'll purchase your home even if it doesn't sell in XX months," what they don't mention is: 1) they won't be purchasing your home at the same price point as active buyers and 2) at the end of the day, it's about the bottom line and what's profitable for their real estate business, not what's best for your family's future.
Not into questionable sales tactics or real estate games? Michael Biondo is your trusted REALTOR in San Diego County, email or call 619-993-9559 to get started.