The spring selling season is picking up steam and I have already seen one of these bait and switch methods being advertised. Let’s look at the aspects you really, and I mean really need to understand about them, before you fall for it. Then you can read my position although my title likely gave it away. Advertising them and true accountability.
- How they really work.
- What is the real goal behind them.
- Advertising Home Sale Guarantees and True Accountability.
- My Thoughts on Bait and Switch Programs
Advertising Home Sale Guarantees and True Accountability.
Home sale guarantees are legal in the state of Illinois. Does that mean they are good and moral? I am going to let you decide, my opinion is at the end. Having just seen one advertised and not complying with the law, I thought you should know what to look for. Home sale guarantees can come in many forms but simply there is a guarantee to sell your home or if not, a reward. That reward could be:
- Monetary compensation
- Agreement to buy your home
- Offering to sell it for free
- Anything else that the Realtor wants to offer
If a home sale guarantee is offered or advertised the full details must be disclosed. This is where most Realtors that offer it do not comply.
We are required to be completely transparent about such bait and switch tactics. Clearly many Realtors do not know the law of their own business. Because these kinds of offerings are borderline wrong, the state of Illinois will audit them as they see fit. My guess is many Brokers would be scrambling to gather that together because they are not complying.
The internet has brought about an easy way to try these. As long as the full details are in print, the bait is legal. Of course anyone that reads the full details and really understands them, will understand they are not in the best interests of any seller. Why? Let’s give some examples so you understand them, and then a story about an experience with one of my seller clients.
Example. Guaranteed Home Sold in 59 days or Sold For Free.
The bait is to sell your home for free. Consider. If you want to have your home in the MLS and exposed to all the Realtors in our MLS, the ones like me with buyers, you have to agree to compensate them. Your “Guarantee Realtor” certainly is not going to offer 2 or 3 percent on your behalf, are they? NO! So you have to, which instantly makes your sale, NOT FREE AT ALL!
Example. Guaranteed Home Sold in 60 days or We Buy It.
The bait is to sell your home in 60 days, one way or another. Consider. What is the average marketing time for your area? If this was in Barrington it’s about 5 months. So how can this guarantee be logistically made? Simple answer-price well under market. There’s no way any Realtor wants to be on the line to buy a home at market price, because they need to re-market it almost immediately and that costs money. There may be a few Realtors that will hold the property as a rental, but very few. The Realtors that can afford to, usually do not need to make outrageous offers like this at all.
The Realtor offering this should be able to prove to you they have the financial capability to buy it. Do you really think they want to buy it? NO!
Example. Guaranteed Home Sold in 30 days or We Pay You $2,000
The bait is to sell your home in 30 days, or we give you money. Consider. Taking another look at average market times for your area and also for your price point, it might actually be quite possible anyway. So the Realtor is hedging their bets here. Or it might be so unrealistic we are back to a well below market asking price. So what happens if you don’t sell? Are you going to be released from the contract and given $2,000. NO! You’re going to be held to a contract until you do sell and then after closing you’ll get your money.
So please, look for the fine print. Check the details of the advertisement to see the full details about the offer. Understand what it truly is that you are being offered. If there is no fine print or no full published details….RUN. You also have to know that no Realtor is ever obliged to accept the marketing of your property or enroll you in such programs.
My Clients Guaranteed Home Sale Story
This actually goes back to 2007 when the market was swirling down. I listed a large Barrington townhouse letting the seller know we may need to adjust the price if it did not sell fast, because we were losing value not gaining. At that time I was having issues with my back so I shared the listing with another Realtor, to make sure the client was serviced. Little did I know that shortly after I would end up in hospital having spinal fusion surgery. Of course the client was not happy, maybe because I was the lead agent, but I agreed to release her from the contract so she could hire yet another agent in our office. (This was before I owned my own company).
She wanted to hire agent 3 as she offered a “home sold or I buy it guarantee”.
While I am busy re-covering, I was free to focus on my health. I got back to work full time within a month, but on restricted driving. I was not allowed to drive over rail tracks. Have you ever tried driving around Barrington and not going over rail tracks? Impossible! I had to deviate through Lake Zurich and go under the bridge all the time. But I managed and then my broker called. He wanted to know if I would take this client back. At first I was inclined to say no, but after a discussion with the client agreed as long as the price was cut. Time had passed and the value had declined.
Of course I first had to listen to the appalling tale of what did not happen with agent 3. She never even saw agent 3. Agent 3 sent her unlicensed assistant to get paperwork signed. The husband was never asked to sign at all. The details of the program were never given to her but she was promised……Of course the house did not sell and agent 3 canceled the client before any chance of having to honor a verbal agreement……Well you can imagine the clients reaction to all of this.
Great ending, we sold the house in less than 30 days and gave the client a small discount off our fee for her troubles and because she had done everything we asked to get a quick sale. She did not compromise on market value!
In real estate it’s all about relationships for me. While I likely will never see this client again as she moved to Florida, I did not want her leaving with a bad taste in her mouth.
What Is The Real Goal Behind Home Sale Guarantee Programs?
To get clients. We are in the job of selling real estate, it’s a business and we need to make money just like you make a salary. But this is a horrible and even desperate way to earn business. If that is the best a Realtor can offer you and you accept all that comes attached with it, don’t be surprised if the service you are provided is less than average.
You might ask why Realtors want to get your listing so desperately! The answer is certainly never to provide you with the best possible service. It’s usually to get listings so they can elicit buyers from those listings. In other words make their money on the sale of buyers who contact them about your house. They may not sell your house but may pick up a bunch of buyers from it.
In the event there buyers do buy your house, your Realtor is now acting as a dual agent. That’s another legal practice in Illinois, and practiced by most brokerages and agents. Why make one commission off a property when you can make two? Well in my book thats like having an attorney on both sides. How can you? Dual agency is something I absolutely do not agree with and never practice.
Dual Agency Reminder
Representing more than one party to a transaction presents a conflict of interest since both clients may rely on the licensees advice, and the clients respective interests may be adverse to each other.
Remember: With Dual Agency you get ZERO help with the offer price, offer pricing strategy, or counter offers. Considering that’s one of the top things buyers especially need help with, seems like a no brainer to me to hire a buyers agent.
My Thoughts on Bait and Switch Programs
It can hardly be said I love them. After reading this article I think that comes across loud and clear. The truth is I think they are horrible. I distrust any Realtor that uses them, I cringe knowing that sellers are being baited. The Realtor’s sole goal is to get in your door. If they cannot sell the program to you, they act like a chameleon and change colors and offer you the regular program. The ultimate game of bait and switch. That’s the goal. Honesty, Integrity, aren’t those the standard yet over used words that Realtors call themselves? How, tell me how that can be true! And boy how much damage of our profession is caused by these kind of programs?
For me selling clients properties is about caring, truly caring. Relationships are paramount, sales are the reward. So now you know my perspective, what’s yours? Like or hate?