This Open Mike post submitted by Evan Kane.
Seems Evan got grief from his MLS (MLSNI) for this listing. According to the MLS rules, every listing must have a listing price number to prevent “Best Offer” in the list price field. So Evan decided to put a listing price of $1 (it is a number) and explain in the listing comments that it really wasn’t a $1 but the seller wanted buyers to make an offer. (I wonder if Evan went to law school). He contacted Sellsius for help. We don’t know whether we’re helping him but we let him have the floor to make his case. Evan would like to know what you think.
Evan issued this Press Release to further promote the listing.
It is not often that you see a house in the affluent Chicago suburb of Highland Park listed for sale at $1, but that is what Evan Kane the Broker/Owner of Endeavor Realty has done to help his clients sell their home in an increasingly tough real estate market.
Most Real Estate Brokers do not think to use the science of social psychology to help sellers. The real estate market has become increasingly tough causing brokers and real estate agents to have to think of other ways to attract buyers. Endeavor Realty has come up with a different strategy to serve the best interest of its clients.
Citing a recent study by Gillian Ku of the London Business School, Adam D. Galinsky, and J. Keith Murnighan of Northwestern University Kane says, “although this is not an auction, the principles are very similar and the evidence is clear that starting low can lead to more traffic and a higher sale price.”
Not only is approaching a slow market with creative ideas and new strategies increasing traffic and sales for the clients of Endeavor Realty, but it is also attracting other traditional real estate agents that have not thought of going beyond their guiding principles to try something different.
Evan went on to explain the reaction.
Deciding to implement this strategy has caused a few adverse reactions. “They don’t like it. I am using the system in a way they didn’t contemplate” says Kane of the reaction of more traditional agents. “I have to deal with a few angry phone calls, but it’s in the best interest of my client, so I do it.”
We tell them the truth, the seller would like the buyer to make the first offer. We don’t practice dual agency so if the buyer is not represented we offer them the data we used to help the seller determine the most likely sale price (minus the final result of course) or offer to assign an agent to represent their best interest and help them with an offer or suggest they seek the guidance of an agent from another company.
Although this strategy has a marketing benefit, the primary purpose is to strengthen the sellers negotiating position. It is a basic tenant in negotiating to try and get the other side to make the first offer, that is what we are attempting to do.
Some times agents will try and accomplish this same strategy by listing a property at a price they know to be far lower than the most likely sale price but high enough that a consumer would assume that the list price is in fact a price that the owner of the property would agree to sell. The hope being that the artificially low list price will generate multiple offers and thus drive up the sale price.
We see two faults to the latter method:
1. We believe this is deceptive to the consumer because unlike our listing where it is made clear that the owner is not going to sell the property at the list price no such indication is made in the latter method.
2. The owners position is at risk of being substantially weekend if the property fails to bring multiple offers.
We asked Evan who has complained. He said,
The only people that seem to be upset and/or confused are real estate agents, the MLSNI and the North Shore Association of Realtors.
In fact, the only negative response we have personally received from other agents ( I am sure many have complained to the MLS and the Association) have been in regards to the owners decision to offer a lower than “standard” co-brokerage commission (but that is a story in itself.)
What I personally find most interesting is how Realtors fail to appreciate how this type of listing works in their favor in terms of acquiring business. Unlike a conventional listing, a consumer without a real estate agent is at a clear information disadvantage in comparison to a consumer using a buyers agent.
I would even go as far to say that the one flaw in using this “Best Offer” strategy is that it requires a knowledgeable and professional real estate agent representing the buyer to be successful. A typical consumer just doesn’t have the information or expertise to make an offer without the help of an agent.
Imagine if “Best Offer” listings became commonplace. I think agents could find the value proposition to the service they offer that seems to be harder and harder for most of them to find. The “Best Offer” practice could be the “magic bullet” that makes real estate agents relevant in the internet age. The flaw? It would require buyers’ agents to do a lot more work than driving people around and filling in contracts.
Sellsius° Comment: This raises an interesting question. If a seller/client wanted to list the home for “Best Offer”, would the Code of Ethics require you to follow the client’s instructions or would the local MLS rule requiring only numbers be placed in the listing field supercede the Code? Somebody call Russ Cofano. What’s your reaction to Best Offer listings and Evan Kane’s marketing point of view?
Do you have something on your mind but don’t have a blog? No problem. Take the Mike at Sellsius Blog and we’ll publish it. Just email us at elatedclients(at)sellsiusrealestate.com. Ranters and Ravers welcome.
