Blue Light Special Turns Red!

Red Warning Light

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).

Hate to wait?

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!

Find your Place

Check out this article next

Santa Cruz Median Home Price: $475,000 in Sept. '08

Santa Cruz Median Home Price: $475,000 in Sept. '08

My Santa Cruz sales numbers for September 2008 are in, and they are nothing less than shocking. The median home price in Santa Cruz county…

Read Article
About the Author
Seb Frey helps long-time Bay Area homeowners make their next move easily the next one yet. If you're looking for a minimum of hassle, maximum net cash on sale, and certain results, contact Seb today.