It's very important that you're incredibly systematic with seller representation. Listings are fun and easy when they sell quickly, but the experience can/will turn negative incredibly quickly if it takes 30+ days to sell. The longer it sits on the market, the worse experience your client will have, if they don't have full confidence that you are in control of the situation. The easiest way to exude confidence is to always fall back on a proven system (and be able to explain why you recommend everything you do.)
The following are considered policies for company leads & best practices for personally generated leads. There are sometimes edge cases, and if those occur, please discuss these before making decisions or recommendations to your clients:
Listing Agreement Notes + Special Provisions
These must be included in any listing agreement signed with a "company lead". It is highly recommended that you include these in all listing agreements.
- Seller may terminate this agreement with 48 hours written notice & reimbursement of broker’s verifiable marketing expenses.
- If broker acts as intermediary, buyer will be assigned to agent other than {AGENT NAME}. {AGENT NAME} will earn no more than 3% for services.
- If seller procures buyer through no action of broker & buyer is not represented by a licensed Texas real estate broker/agent, then seller may terminate this agreement & no fee is due, or seller may retain broker’s services for 1% transaction fee.
It's important to include the following special provisions. These are provisions that any reasonable agent would include in their listing agreement if asked. We proactively include them to show your sellers that we are very fair & that we put their best interests first.
- Seller May Terminate: Very self explanatory. It's absolutely terrible business to try and keep a seller in an agreement they don't want to be in. We only write in the "reimbursement of expenses" language so that a seller doesn't hire us, use us for our services/money, and then fire us to use their brother/sister-in-law.
- If Broker Acts As Intermediary: This provision removes the massive conflict of interest that comes with a single agent trying to double end a transaction and earn 6% instead of 3%.
- Seller Procures Buyer: This happens a few times a year. The spirit of the agreement is that the seller negotiates a deal with a friend/acquaintance and you do not need to negotiate on their behalf. In order for you to work for 1%, you become a transparent intermediary. Since both sides have "lucked" into an agreeable transaction where both parties are saving money or hassle, you will present a fair contact to both parties and guide both parties through a fair transaction. It's worth noting that most sellers find this provision on the generous side of fair. In my experience, you will have new referral sources that absolutely gush about you and are very happy with the transaction and your services. Likewise, this provision helps sellers choose to sign the agreement sooner than later, since they don't have to first see if their neighbor/friend/etc wants to buy their house before agreeing to list with you.
Listing Coordination & CTC
For quality control purposes, it's required that you use Listing Coordination & Contract to Close services on any company lead. Courier services are optional.
List the Property on Wednesday or Thursday
This is the best way to encourage multiple offers. Most buyers can easily view properties on the weekend. If you list on a Wednesday or Thursday, the property will be sent via automatic email to interested buyers 2-3 days prior to the weekend, which allows them plenty of time to schedule showings. Highly motivated buyers will schedule showings prior to the weekend. If a highly motivated buyer brings you an offer on Thursday or Friday, it's reasonable to expect them to wait through the weekend for a response. If you were to list the property on Sunday, you are likely missing some motivated buyers who didn't have an opportunity to schedule a showing. If a highly motivated buyer brings you an offer on Monday, it wouldn't be reasonable to expect them to wait through the week & weekend for a response.
Multiple Offer Scenario Best Practices
In general, patience is a virtue when representing sellers. When you have more than one good offer, you want to set a "highest & best" date and time. This is generally on Sunday evening or Monday morning so that the property can be shown through the weekend. Notify all parties of multiple offers and that the deadline is this date/time. Email everyone any specific terms your client is looking for (lease back, close date, etc) beyond a tight contract and price. Do not communicate the price of any offer to any buyer. Do communicate the number of offers and how competitive the environment is. Stick to your highest/best deadline. When you have selected who you will work with, sign the contract, send it to the buyer's agent, and call the buyer's agent to congratulate them. After that conversation, notify all parties who did not win of the results and invite everyone to submit a backup.
Pricing Psychology
Price the property ending in 9,900 (if a 6 figure home) and 9000 (if a 7 figure home.) A $400k home becomes $399,900. A $4M home becomes $3,999,000. There is an argument that "flat pricing" is better because you'll get visibility at "the bottom of the search" and/or your home is "at the top of the search". In our own anecdotal experiments, we get no additional visibility using flat pricing. There is a small advantage to pricing psychology, so we recommend taking that small advantage over flat pricing. If your client has a strong opinion against this, it's not worth arguing, but you will find that greater than 99% of clients will agree with your recommendation.
Option Extension
Be aware of the day of the week that any option extension would fall on. If the original option expires on Monday, and the buyer asks for an extension until Wednesday, it's not hugely impactful to your seller and likely not worth negotiating (just give them the extension.) If the original option expires on Thursday, and they ask for an extension into Saturday, then you would likely lose an entire week if the deal falls apart, since you would want to re-list on Wednesday or Thursday for the reasons listed above (why we list on Wed/Thurs.)
Don't Negotiate on the Last Day of Option
Negotiating on the last day fo the option period is a terrible experience for everyone involved. Agents that bring option amendments on the last day of option generally broadcast this ahead of time. If you see red flags that the agent will do this, tell them 2 days before the option expires that you expect and appreciate any repairs amendment at least 24 hours prior to the option expiration. Tell them that the day of the option expiration is extremely busy for you and you will be unable to devote much/any time to it that day. If the BA still brings you a repairs amendment the day of the option expiration, simply reply with a 1-day option extension. This removes pressure and is also tactful. You've now shown the buyer/agent that you will not accept the pressure that they are attempting to inject into the situation.
Closing Delays
Closing delays and extensions are unfortunately a regular occurrence in real estate. Roughly 10% of closings are delayed due to lender incompetence. In general, grant a 2-3 day extension with little pushback. When you do grant this extension, notify the buyer's agent that, if another extension is requested, you will likely request additional earnest money and a per diem. If they do request another extension, it's important that the buyer deposit a reasonable amount of additional earnest money to show that they have confidence that they will close and that they are motivated to give the lender everything they need in order to close.
