You may have heard of the term “listing” in your real estate career. You definitely should have as this is one of the most important agreements in your path to building strong revenue.
To be clear, let’s first go to the definition.
A listing is an agreement that represents the right of a real estate agent or agency to handle the sale of real property and to receive a fee or commission for these services.
There are different types of real estate listings.
A general or open listing (Adhoc listing) is a right to sell that may be given to more than one agent or agent simultaneously.
An exclusive agency listing is the right of one real estate agency to be the sole party, with the exception of the owner, who is permitted to sell the property during a particular period. Through an exclusive authorization to sell listing, one agency is given the sole authority to sell the property during a certain period of time. The agency will receive a commission even if the owner finds the buyer during the time period.
A multiple listing takes place when an agent with an exclusive listing provides a number of members of a real estate association with information about the property and shares the commission with the agent who is able to find a buyer.
So let’s get one thing straight, a listing is just an agreement. That’s it! So here is the first truth about real estate listing:
1.No agreement, No listing
Unfortunately, I have seen real estate professionals make this mistake over and over again. They just take any property and start marketing this, without getting proper consent from the owner or developer.
In this case, you will always get a problem the moment you actually find a buyer. There are multiple cases an owner refuses to pay a commission to an agent because there was simply no real agreement.
So before you put hard work into a listing and start spending hard marketing money on the property, please make sure you have a proper agreement to sell the listing. And with the agreement I mean, something signed with an expiration date and nicely written terms.
Let’s go to another simple truth of real estate listing.
2.You don’t need to have a real estate listing to sell real estate
This may seem obvious, but I do see a lot of real estate agents focussing a lot on building listing after listing, without really focussing on their buyers’ list.
I once had a mentor who told me the following, ‘’Everything is for sale, so look for the buyer first’’.
And his advise was the best ever. While I let other agents in the market look for listing, I was already looking for the buyers. I would build a good relationship with the buyer and make sure I understood everything this person needed in a property. Next step I would just simply start looking online, call other agents and find the perfect match.
Yes, I know what you’re thinking. That means I must split the commission. Not always true, however, in many cases yes. But think about the time you save. You didn’t spend any time looking for the property, marketing for the property, and all the other time you invest in it.
You focussed your 100% of your time on the buyers, so it’s fair to say you saved 100% of your time from the sellers. That means it’s fair enough you get a 50% cut on the commission. Think about how many more deals you can make working this way.
Okay, that brings me to the last and third truth about real estate listing
3.Most of the listing is overpriced
Unfortunately, this is the hard fact, as agents still find it difficult to advise owners/sellers on the real market value of a property.
In our training and workshop, we always refer to 4 types of prices a real estate listing will have:
The seller price: A price the seller wants for the property
Bank/ Valuers price: The price the bank evaluates the property
Market price: What the market thinks the property is worth
Property price: the actual price the property will be transacted
This is why real estate can get very complicated because we technically have 4 prices. And depending who you are (the seller, bank or buyer), the property price has a variety in everyone’s opinion.
And this is the main reason why we need professional agents like you. People that can advise, research, analyze and even decide on the right pricing. This way all parties are agreeable on the “right” price.
Pay attention to C. Market price. What is the market price? Who decides this one? Have you ever thought about it? Eventually, it can be a well-analyzed pricing point or just sucked out of the thumb number to justify the position of the property on the market.
Fact is that most properties are overpriced because agents just follow what the seller wants. But remember, the seller will never go down to a low price. This is the seller price:
The Purchase Price + The Renovation Price + The Emotional Value + Profit Margin + Negotiation Space + Security = Sellers’ Price
So if you count all of this together with something that is way higher than any buyer would pay. That’s the reason we need good real estate professionals like yourself that can reason with the seller to bring a reasonable price
Good luck with all the listing you have, make sure you have good agreement with the owner, focus a bit more time on the buyers and always be strategic about the pricing.