Blue Light Special Turns Red!

Blue Light Special
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A month ago, I wrote a blog entry about a homeowner in Soquel who was having a blue light special on the sale of his home.

I guess it didn’t work out so well – his Soquel home is now back on the market – for $829,000, or about $79,000 more than it was on for sale about a month ago. Zoinks – swap that blue light for a red one – hold on, kids!

In a market like this, I can tell you one thing – increasing your asking price when your property hasn’t sold is not a winning strategy. The blue light special, that was a clever marketing gimmick, but it didn’t sell the house.

It should have been a good lesson, though – even at $749,997 the home is, apparently, over-priced in today’s market. The median price is now down to $475,000 in Santa Cruz county. Of course, this home is in Soquel, which is considerably more expensive, but the median there is only $610,000 (although the average is $843,000).

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This time around, rather than trying to catch the buyer’s eye with a lowered price, the seller is trying to catch the Realtor’s eye – with a juicy 4% commission to the buyer’s real estate agent. That’s a healthy $33,160 the buyer’s agent would get to share with his broker and the tax man. A strong incentive, to be sure – but of course, we Realtors are duty bound to hold our clients’ interests above our own, and persuading your client to over-pay on a real estate purchase in exchange for a healthy commission seems like a breach of fiduciary responsibility to me.

Not that a licensed Real Estate agent would ever put his own financial interests over the best interests of his client. Of course not. That 4% commission just helps to bring about a few extra showings, by Realtors who think, hmm, maybe my client won’t really like this place, but since it’s paying a bigger commission, maybe it’s worth a shot.

If we extend that logic a bit further, it means that all these sellers who are offering just 2.5% or 3% to the buyer’s agent are missing out, leaving tens of thousands, maybe hundreds of thousands, of dollars on the table – they should really be offering 5%, or 8% – or more! – to the buyer’s agent; after all, that’s a lot cheaper than lowering the asking price of the home by 12%, which is what the market is telling them they need to do.

Why has nobody thought of this yet?

Have a good weekend everyone!

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