Gimmicks!

Today we’re pulling back the curtain on common REALTOR claims. While there are real estate rules and advertising laws to prevent misleading claims, unfortunately, we know stats can be manipulated, and small print exceptions prove too-good-to-be-true offers are just that. Normally your bullsh*t meter starts to go off and I talked about that in our article “Masterful Deception: Are real estate agents masterful at selling properties, quicker, for more money? Or are they simply masters of deceiving people into thinking that?” However, here are some more and what they really mean:

Claim #1: “Top Salesperson in the Neighbourhood in 2017!”

True? Maybe, maybe not. A lot of agents have teams and report all of the team’s sales through the team leader’s name. So while the official reporting shows that Agent John has sold 30 homes in your neighbourhood, it’s very possible that those sales were actually the result of the work of 5 agents. Also, even if this agent has sold the most homes in your area, that doesn’t mean they got their clients the most money for their homes. That is the result you want from your agent right, not just to sell fast.

Pro Tip: If a salesperson makes this claim, always ask if they completed those sales personally or with the help of another agent or team.

Claim #2: “My listings sell XX% higher than the rest”

Here’s how this marketing gimmick works: The agent takes the average selling price of the homes they’ve listed for sale and compares it to the average price of homes sold in the area. The problem? The average sale price always includes all types of homes and covers a HUGE geography with a number of sub-markets.

For example: Agent Sally primarily works in Burlington. She lists 5 homes for sale, at an average sale price of $765k. She compares it to the average price of all the homes that sold in the Hamilton/Burlington area ($570k in Oct 2018) and claims that her listings sell for 38% more. While technically true, this really is deceptive.

Also, in the example above this type of marketing gimmick also doesn’t take into account the price point the agent works in. If agent Sally is selling homes listed at $2 million dollars for $1.8 million, she might be selling at $38% more than everyone else in the area – but those are terrible stats within the market she is actually in.

True Fact: We include a similar stat in our listing presentation materials because Sellers expect it – but we compare ourselves to the average home in the areas we work vs. the whole region. Trying to keep it as apples to apples as we can.

Claim #3: “I’ll buy your home if I can’t sell it in 60 days!”

This was a marketing tactic taught to REALTORS years ago and we still regularly see it in our area. Now we are even seeing variations of the guarantee. Guaranteed to sell or we buy it. Guaranteed to sell in X time or you don’t pay commission, etc. It helps real estate agents find Sellers because it plays on the very real fear that many people have: “What if nobody wants to buy my home?”

Usually, there are a ton of terms and conditions that effectively invalidate the offer for most Sellers. The most common condition is that the Seller needs to agree to sell their house for a certain price, usually below market value.

If you’re thinking of using a REALTOR with any sort of guaranteed program, make sure to ask:

Does my house qualify? Most times, more expensive properties and luxury homes are excluded.

Do I need to buy a home from you too? It’s not uncommon for guaranteed programs to only be valid if you also buy a home with the agent.

What would my asking price have to be to take advantage of the guarantee? How many price reductions, how big would I be required to make?

How much would you guarantee to buy my home for? How much below market value is that? We’ve never seen a guaranteed program that pays promises to pay out at your starting asking price. Make sure to ask other agents without a guaranteed sales program for their opinions of the true value of your house. You need to know what you are leaving on the table.

Is there a difference in commission if I don’t want the option of the guarantee?

Claim #4: “0.5% or 1% commission!”

This one is both true and false. It’s very possible that the agent is offering a low commission for the selling portion of the commission – BUT – that percentage usually doesn’t include the amount paid to the agent who brings the Buyer. In our area, Buyer agents are usually offered around 2.5% commission. So that 0.5% commission? Might very well really be 3%. It also might be dependant on you buying a property with the same agent or restrict you to only selling it only to the agent’s own buyers.

Pro Tip: Ask lots of questions and remember that like most things in life, you get what you pay for…and if it seems too good to be true, it probably is.

Claim #5: “I’ve been in the real estate market for 15 years.”

Sounds like they’ve been a REALTOR for 15 years, right? Possibly. But more likely: they are a newer agent who has owned real estate for 15 years. I’ve personally seen brokers recommend new agents do this to disguise their lack of experience.

I’ve also seen people make a # of years experience claim because they got their license 15 years ago…but didn’t actually start selling real estate until 2 years ago.

Pro Tip: Being in real estate for a long time doesn’t mean they are good at it. Think about your own industry, how many people have been in your industry for years and they are still not good at it. Pay more attention to their results (how many homes have you sold in the last few years, etc.) not their tenure.

Claim #6: “Sold $300,000 over asking!”

Truth: It is EXTREMELY unlikely that the agent’s actions were responsible for that kind of % over-listing sold price. What likely happened: they got the price wrong or they significantly underpriced it to generate multiple offers.

I’ve seen too many examples where an agent routinely claims huge over-asking sales price, when in reality, they sold the home below the real market value.

Unfortunately, we also see where the agent sells the listing to their own Buyer before it gets exposed to the public, then inputs the sale into the MLS system at some arbitrarily low price and instantly marks it as sold at a high price so that their stats look better. I wish I was kidding, we can’t make this stuff up. These are the games that some agents play.

Claim #7: “I find the Buyers for my Sellers listings 30% of the time.”

This one makes me cringe – because it’s true. A lot of agents pride themselves on representing a Buyer and a Seller in the same transaction. It’s called double-ending and usually, the real winner is the listing agent. It happens more than you think but the worst was in a Condo building and one agent had been doing all the sales in that building for years. All double-ends. When we were brought in and asked to sell one of the units, we ended up getting over $50k more than the last sale just a month earlier. Double-ending at a lower price is worth more to the agent than the extra commission on $50k. However, that extra $50k we think is more important to you now isn’t it. You can read more about double-ending here: Should I Buy with The Listing Agent? and here: Should I List My Home for Sale Exclusively?

Claim #8: “I market my listings on the internet and on social media”

This claim might be true. But it also might just mean that their listings appear on realtor.ca (like everybody else) and are shared with the agent’s 200 friends on Facebook. If an agent is touting themselves as a digital expert, ask questions and do your homework.

We’ve seen an agent advertise that their listings are in the top few search results on Google. That sounds really great but when a buyer is looking for a home do they already know the address of the home they are going to buy so they can enter it into Google or do they search on a map and browse different neighbourhoods? It sounded good, until you realize Buyers don’t look for homes that way.

Pro Tip: Ask: How do you market on social media? How do you use Facebook ads to market listings? Do you use a dedicated social media expert and use professional copywriters to craft your message to attract buyers? Or do they just do it ‘in house’?

Looking to hire a REALTOR who won’t BS? You know who to call.

Ever wonder if a REALTOR’s sales stats are legit? Are the claims they make true? Are their seemingly amazing feats even something you should care about?