Tag: buyer motivation

Are “Exclusive” listings really exclusive in our current market?

This topper on a For Sale sign may indicate an Exclusive listing 

What is an “exclusive” listing anyway?
An “exclusive” listing is one which is not listed on MLS® but is being marketed by a single Realtor, who has a signed listing agreement from a seller, allowing/directing them to market the property. (by law, Realtors must have written instruction from a seller to market their property)  In balanced markets or buyers markets, it is rarely used, as one of the many strengths of the MLS® system is to generate the widest possible exposure and this it does via an MLS® listing on the realtor.ca site and affiliated real estate websites in the realtor.ca ecosystem or network.  By employing the “exclusive” listing, the listing sales person and brokerage are not posting the property on realtor.ca and instead are relying on only their own marketing efforts to find suitable buyers for the property.  It has historically meant that other Realtors are not providing buyers for the property, so in essence, that listing is proprietary or exclusive to the listing agent and brokerage.

While there are some circumstances where the exclusive listing makes sense, it is impossible for a single agent or brokerage to generate the same interest or number of buyer prospects as can be generated by the other 3,000 sales people in our Board and the ubiquitous online power of realtor.ca and its affiliates.

So why are we seeing more exclusive listings in our current market?
Our listing starved market has spawned the ever increasing use of holding back offers and bidding wars, due to the imbalance of supply and demand.  This means that properties are selling very quickly and there is also a relatively limited level of listings available for real estate professionals to represent.

This brings a couple of challenges for Realtors who typically “list to exist”: The shelf life and personal marketing/advertising value of each listing to the Realtor is greatly diminished.  It does not allow much time to be able to leverage that listing to gain ancillary prospects, who contact the listing agent and even if they don’t buy that particular property, could end up buying another or listing their current property with that Realtor. The exclusive or non MLS® listing, gives the listing agent the opportunity to leverage that property and try to gain a buyer to “double end” the sale or generate additional buyer or seller prospects.  With high demand and use of social media and other advertising/market campaigns, the listing agent can generate additional footsteps or buyer traffic to their own “store” (so to speak)

Secondly, with many properties selling in only a few days, it is important to get as many people as possible exposed to the listed property prior to the offer date.  The “exclusive” listing is most commonly used in this market, simply as a “pre-marketing” campaign and this is one sees so many of those “Coming Soon” sign toppers on For Sale signs. Listing agents publish the listing a week or two (sometimes more) ahead of the anticipated MLS®/realtor.ca launch date on their own websites and other marketing channels, including a large variety of online realtor groups that act as a portal for such properties.  Savvy buyer agents stay on top of these on a daily basis.

Why exclusive is not really exclusive these days!
this pre-marketing of the non-MLS® listing is done under the contracted agreement called an “Exclusive” (as opposed to an MLS® ) listing but will in most cases contain provision for a payment to a co-operating brokerage and salesperson who brings a buyer to the property during the pre-marketing period.  So while the type of listing falls in the “exclusive” category, it does not really preclude other Realtors from participating and bringing their buyer to the property.  This can vary by listing, however, so buyers should have their buyer representatives contact the listing agent when they see a For Sale sign that shows the words “Exclusive Listing”  &/or “Coming Soon” Note: Buyers please try to stop and get the address and name of the listing agent on these signs.  We frequently see on our Realtor groups, postings that say something like:  “my buyer saw a coming soon sign on Smyth Rd., does anyone know who is listing that property?

“The secret or off market listings” spiel:
Creative buyer representatives are often spinning their services as being unique in having access to listings “not yet on the market” and use this as a ploy to generate buyer (and seller) leads.  In a market where we have a dire shortage of listing inventory, it is understandable that some buyers will succumb to this type of mantra but most will recognize it is simply a slick sales pitch.

Buyers should always consider Exclusive listings, sellers not so much: A buyer should definitely go and see any property that meets their requirements (if allowed) but should be careful not to sign any representation agreement that binds them to that particular listing agent.  Some agents may ask you to sign a “Buyer Representation Agreement” if you want to see this special property to which “only their buyers have access”.

Sellers should rarely consider accepting an offer via an exclusive listing unless it totally blows their minds.  Why?  Because until you have exposed the property to the complete market via an MLS®/realtor.ca listing, then you don’t really know what the true market value is and that seller could well be leaving “money on the table”.  Granted there could be situations that warrant an exclusive listing and sale and whatever a seller and their listing agent agree is fair ball.  However, a seller should be 100% sure they are getting full market value and not simply a quicker sale, double-ended sale or are being used to generate more clients for their listing agent.

Does a listing agent advertise their listings or vice versa?
A good way to tell if a Realtor advertises their listings or uses their listings to advertise themselves, is to look at previous or current listings and marketing materials and see whether the property or the listing agent is most prominent.  In many cases, it is clear that the listing agent accomplishments, photo, logo, tag line etc. are more enhanced than the particular property being marketed.  Does the listing agent leave out key information like address or selling price or interior photos?  This can be a key clue, as it means the ad is intended to generate enquiries not simply sell the property.

Our approach:
We like using the Exclusive listing and “Coming Soon” marketing as a pre-announcement (assuming our seller is in agreement) but only a relatively short time ahead of the MLS® launch. (perhaps a week ahead)  During that pre-announcement period we can then advertise the property via our own channels and generate interest but we typically do not provide access to the property to any buyers during this time.  Making the property available for showings with the MLS®/realtor.ca posting, is to us the most sensible way to provide equal access to all buyers and generate the maximum marketing opportunity for our sellers and thus generate the best market value possible.  While it is nice if we generate additional prospects, it is a totally secondary issue, though we would not say this is true of all Realtors and we believe too many are trying to manipulate sellers for their own ancillary purposes by leveraging the listing and the exclusive listing process in a way that is not always in the best interest of the seller.

So sellers should be a little leery of the ulterior motives of a prospective listing agent pitching the Exclusive listing and buyers should likewise be very careful about signing up to see the exclusive listing,  private listing, pocket listing or off market listing being touted by some agents.

Gord McCormick, Broker of Record
Principal Broker, Ottawa Real Estate Board
 Dawn Davey, Broker
Oasis Realty Brokerage 613-435-4692
oasisrealty@rogers.com www.oasisrealtyottawa.com 

What Realtors hate about this sellers’ market

Realtors have some beefs with this market

Most will think that Realtors must be rejoicing in this sellers’ market and that it is just a matter of fast sales and big commissions.  Must be “easy street”, right?  In reality, I think we would find that the larger % of real estate professionals would be happy to see a more “balanced” market that features a more equal number of buyers and sellers.  While it is true that listings sell quickly and for top dollar, there are many aspects to this market that cause Realtors heartburn, if not heartache.

Not a lot of listings to go around:
At the end of January 2020, there were something like 2,100 residential listings posted on the Ottawa Real Estate Board.  When you compare that to almost 3,100 members that means there are not a lot of listings to go around.  Given the real estate mantra of “you list to exist”, this means many Realtors are scrambling for fewer listings and those listings sell quickly, so the marketing reach and prospect generation value of those listings is very limited.  If fewer listings=fewer sales, then despite rising prices, there may be fewer commission dollars being earned out there by many Realtors.

Being on top of new listings and immediately available for showings:
Finding a property for qualified buyers, always has its challenges but these are magnified 10 times in this sellers’ market environment.  Buyer agents have to be really on their toes and alert to pending listings and being available to immediately get their buyers in to see new listings.  The watchword in this market is “you snooze, you lose” and if a buyer misses a property and their perception is that it is their agents’ fault, the agent could potentially lose that buyer.  This results in buyer agents doing a lot of “one-at-a-time” showings, whenever a new property of interest comes out on the market, which is pretty time consuming and may require a lengthy search period, particularly if buyers have a pretty tightly defined geographic, property or price point criteria.

Many showings and offer submissions:
The supply/demand imbalance has resulted in multiple offers in 35-50% of listings, so buyers’ agents invest a lot of time in researching listings, doing showings and preparing offers on properties, only to lose out to other more aggressive buyers/agents.  This can be very disheartening and frustrating for buyers.

No time to decide and hasty decision making:
Buyers often get only one chance to view a property and after a 30 to 40 minute visit then make a critical decision on their largest purchase?  This alone has pushed the numbers of conditional sales that fall through to double or more the regular rate.  (easily 10% of conditional sales are falling through over the last year)

How do you figure out a price in this “crazy” market?
Buyers and sellers count on Realtor expertise to establish appropriate list prices when selling and also what offer price (and terms) is necessary to be successful in submitting an offer on a listed price for a buyer.  The listing side is somewhat easier, in that the market and collective buyers will determine the market value, so there is less pressure on the listing agent.

Realtors normally do extensive research on comparable properties sold but in this market, much of it becomes old news and even a sale a month ago, may no longer be very useful in providing guidance on what to offer for buyers on a current listing.  If buyers are not successful over a period of time they may choose to blame their Realtor or they may refocus their search in a different geographical area or property type that is not as readily serviced by the buyer agent. Ie. New construction, out of town properties.

Temptation to go “all in” with a “no condition offer”
Though highest price still generally rules, offer terms are always a critical component and a totally “clean” offer with few/nil conditions, is bound to surface in the most sought after listings.  Most sellers don’t mind waiting for a week or so if the price offer is significantly better but many are happy to know that they accept the offer and their house is sold.  This is why we see so many listings with offer dates then showing up as “sold firm”, the next day after offers are due.

We had a buyer last year, who actually offered $25K less than at least one other offer but our buyer won, since our offer had no conditions and a 30 day closing which was a critical factor for that particular seller.  This place was a total fixer upper and not including an inspection clause, was a risk our experienced reno buyer was prepared to accept.  Many buyers (and their agents) are just not able to do this and of course, the risks can be significant.

New construction sales are very strong:
Though we don’t have proper stats on this, we believe there are a larger % of sales being done in new construction than normal right now.  This is partially due to the limitations on resale listing inventory and also the fact that new construction options are plentiful and widespread.  (though delivery dates may be getting pushed out by some builders)

Buyers actually start gaining equity, the day they sign their builder sales agreement, even though their possession date may be a year away.  Those with existing homes to sell, are effectively “double dipping”, as both the new construction property “on order/to be built” is gaining in value, as is their existing property which they will only sell close to the possession date.  With prices rising 8% or 9% in 2019 and 5% or 6% forecast for this year, these homeowner/buyers are earning a nice tax free equity bump on both properties.

A surprisingly small % of new construction sales involve Realtors (perhaps as low as 15 to 20%) where resale buyers are represented by Realtors at least 80% of the time.  On top of that, builders do not offer the same level of Realtor compensation, as do MLS® listings, so Realtor paydays are much less when their buyers are buying a new construction property.

Builder compensation for Realtors tends to ebb and flow with the ups and downs of the market.  In tough times, builders are mostly happy to see buyer agents with their buyers but in this market, most builders view Realtors as a cost factor to be minimized or eliminated.

Managing showings and multiple offers:
Listings are getting a lot of attention, of course but this can put a load on a listing agent.  Lots and lots of showings, phone calls, texts and emails from prospective buyers and also buyer representatives.  There are strict rules to follow in properly and fairly managing offer processes and this takes a lot of organization and discipline on the part of the listing agent.  While it is fun to provide an over list price offer to your seller, having to make the calls to other agents whose buyers were unsuccessful is not nearly as much fun.

Buyer agents can be very aggressive in representing their clients and this can result in some not so fun moments, too.

Managing “bully” offers (those submitted prior to offer date) and multiple offers can be challenging. Any time there are many losers and only one winner, frustration and tension can be high.

Overlapping showings:
As a buyer representative, one is almost always stuck with overlapping showings with another buyer agent and their buyers in the property in the same time window.  Normally, this is not too difficult to manage but with the volume of showings on many properties right now, it can be tough to get an appropriate amount of time to have a really good look at a property in private and communication between agent and buyer is constrained when others are also in the property.

So while our challenges in this market are vastly different and more positive than the other side of spectrum in a buyers’ market, it is not all easy days and big commissions for Realtors in this sellers’ market.  Your Realtor will have adapted to these market conditions and help you navigate these oft choppy waters.

 

Gord McCormick, Broker of Record
Dawn Davey, Broker Oasis Realty Brokerage
613-435-4692 or mobile 613-371-9691
oasisrealty@rogers.com www.oasisrealtyottawa.com
https://www.facebook.com/oasisrealtyottawa
@OasisrealtyOTT
https://blog.oasisrealtyottawa.com/  

Why dual open houses is a great strategy for our sellers

We are big fans of open houses, unlike many agents who tend to pooh-pooh their use.  (That’s a topic for another day!)
We have found tremendous success for our sellers by using a dual open house strategy during the first week our listings launch.  Here are some of many reasons this strategy works:

Facilitates access for buyers:
Buyers like open houses.  It is an easy way to have a look at a property with a low commitment level, regardless of where a buyer may be in their purchasing cycle.  Many buyers fall in to the “I’ll-know-it-when-I-see-it” category and may watch or browse the market for an extended period, before finding one that ticks all their boxes.
These buyers often “don’t want to bother their agent” and would probably not otherwise book a showing to see the property, without open house availability.  Many buyers don’t wish to engage their agent until they are really ready to buy.  Many an agent will get a phone call on Sunday evening or Monday morning, from a client who has seen a property at an Open House on the weekend.

We get to “sell” our client’s property!
The MLS® network is remarkably effective at putting buyers and listed properties together.  One drawback is that as a listing broker, we rarely get to speak directly to a prospective buyer of the property, since that buyer contact is normally managed by another agent in the buyer representative role.  So, while we can sell to the buyer rep, we rarely have the same opportunity to speak directly to the buyers.  Open Houses give us that opportunity and who better to speak to our own listing than us?

Many open house visitors are quite cautious and reserved (wonder why that is?…we’ll have a post on that in a week or two) but generally speaking, the most interested buyers are very engaged and detailed in checking out the house.  Many ask excellent questions too and it is a great time to field those questions and address any objections or possible misconceptions.

The better informed a buyer is and the more chance they have to investigate a property, the less the chance of a conditional sale falling through which is happening with almost frightening frequency in this hot sellers’ market.

We can get a read on potential buyers:
We can gauge interest levels by the amount of time a buyer or couple spend in the house.  Usually, the longer the stay, the greater the interest.  We can also often tell if one half a buyer couple is more interested than another.  We can often get a feel for the buyer’s level of interest and key features that may come in handy at offer/negotiation time.

Buyers can get multiple chances to see the property:
Too often in our hot sellers’ market, a buyer gets to see a property once and then has to make up their minds about submitting an offer.  This is leading to an unprecedented number of conditional sales falling through.  By providing two additional chances to visit the property via our open houses, buyers may get a better feel for whether the property is the right one for them.

We even see some buyers twice when the visit both open houses, which is also a good sign that they are activity considering the property.

Buyers see level of interest from other buyers:
While we don’t intend to create a boiler room high pressure sales environment, (and we are not high pressure!) we think it is very much in the sellers favour for all buyers to see a house full of prospective buyers at an open house.  This shows everyone that the house is getting strong demand and may help motivate them to make an offer and make a strong offer.  The fear of loss and need to compete motivation of some buyers is tweaked when a busy open house is experienced.

Open Houses are very democratic:
We think open houses allow a wider cross section of buyers to consider the property and in generating more face-to-face visits to the property, we are engaging a larger cross section of the buyer pool.  This is both fair to all buyers (not just the early-bird-gets-the-worm buyers and their agents)  Many properties are publicized in advance of MLS® publication which often skews the playing field in favour of just a few buyers.  While this may be good for those buyers and their agents, it is not necessarily best for our sellers.  More exposure-more buyers should equal better and true market value in our opinion.

Best when holding offers:
Dual open houses are a great strategy when holding back offers, too.  It gives Realtors and buyers ample access to see the property 2 or even 3 times and determine their level of interest and how they plan an offer strategy.  Some may even choose to do a pre offer inspection which would help strengthen their offer.

There are a ton of other intangible benefits to dual open houses too but we’ll leave some of those for another post.  Right now, it’s late Saturday morning and we have to get ready for our first Open House this weekend!

 

Gord McCormick, Broker of Record
Principal Broker, Ottawa Real Estate Board
Dawn Davey, Broker
Oasis Realty  613-435-4692 oasisrealty@rogers.com