The Last Bid
Is the Multiple Listing Service (MLS) really the Seller's friend?
The following is a test. Please answer, true or false.
I usually cook my breakfast over an open fire. T__ F__
An open fire is more efficient than a microwave or a stove/oven. T__ F___
I usually walk to work. T___ F___
Automobile travel over distances is overrated. T___ F___
Carbon paper is more practical for copying than a copier. T__ F__
An oil portrait has more exact likeness than a digital photo. T__ F__
The oil portrait takes less time than a camera snapshot .T__F___
Are all of your answers "false"? You bet.
We consumers are an interesting lot. We do want speed and convenience in most everything.
If you were asked what "catalytic" components make the microwave faster than the stove, you might answer… technology.
If asked what makes a stove more efficient than an open fire, your answer might be ….the use of gas or electricity as a fuel, with instant availability and on ready demand.
The same thought processes are easily used on the "auto versus walking" and the "computer versus manual office equipment".
So here's the big question?
Why do sellers that are in the process of selling real estate often ignore the most basic catalytic components that could accelerate their sale? Because most sellers believe that the market must "hear" the seller's opinion of value. Boy, is that a mistake. (If a tree falls in the forest and no one hears the crash is there noise? No. If the markets hear your price and do not respond, is there value?) Think about that one.
Does any one remember the adage "he who speaks price first...loses". (Your grandfather probably knew it. All great negotiators, as most of our forefathers were because they had a keen respect of money would let the other fellow first price the property).
Unfortunately, most sellers, who have been subconsciously trained to believe in "suggested retail" of most everything will take that same approach to selling real estate.
A seller may at some time, either approach or be approached by a real estate agent that engages in a conversation regarding "listing the real estate". The agent will say "In order to be listed among the many other properties on the Multiple Listing Service, we must place a price on the property". Placing a price on real estate usually always leads to downward negotiation. If the price was accepted quickly by the market, the price guess was too low. Was money left on the table? YES!
This conversation of starting with a seller's opinion could just have eliminated the catalyst (sense of urgency) that moves markets into action.
Just like the technology that makes a microwave fast, the car to get you there in a hurry, a computer to make your job easier and the flash of a light bulb that gives you an instant picture, the "accelerating" force in any selling transaction is the market's greed and fear to react before others in the market.
Not the seller's greed and fear. The seller is not part of the market. Has any real estate agent ever told you that? Doubtful.
A savvy seller learns that by gathering the markets (ready, willing and able) in one place and at one time, after a thorough campaign of promotion, then that seller has eliminated the guesswork of pricing, (either too high or too low) and the guessing game of when the property will sell, by selecting the date the sale will occur.
All sellers are anxious for the property's market price, right?
If you will agree that the majority of land and commercial property is purchased by males, then it should be no surprise that the competitive juices that once flowed through their veins in high school sports…. now flows through their pocketbooks.
Have you ever watched females compete for what they really want? It can make the male look pale in comparison. Females competing for a property, especially a home, can have a "take no prisoner" attitude.
Both genders are wired for competition... an auction
Did the seller determine the "rules" (terms of the sale)? YES
Did the seller determine the date of the contest? YES
Did the markets (buyer) come ready, willing and able to compete? YES
Did the seller let the market compete to let "the best person(s) win"? YES
Was the energy (Money) exhausted in the contest, till there was no more left to spend? YES
Would a listing agent give "the right arm" to have this environment? YES
Does this happen to the listing agent on a routine basis? NO
Only when the market senses the seller guessed too low and therefore the market places little value on the seller's opinion or starting price does this
occur. Most real estate agents that want to brag about a bidding war that once on one of their listings took place usually will not admit that they priced the property too low. Since the market disregarded the seller's opinion
(price) and created a bidding war, you would think that the real estate agent would catch on to the dynamics at play called the "lure of the bargain" psychology. They never do.
How often is the seller's opinion of value used to purchase the property for sale? Never. Value and therefore the liquidity comes from the buying side of the table and that's called the market.
How often is the seller encouraged, by the real estate agent, to eliminate opinion of value on their listings so the above mentioned bidding war can begin?
Never… Because a listing agent must have a number or "price" in order to use the Multiple Listing Service.
So therefore, is the Multiple Listing Service a real estate seller's friend?
We think not. It has created the absence of "sense of urgency" on most properties.
Applying this MLS price tag strategy to sell any type of real estate would be the equivalent of a general practitioner physician treating every patient's sickness or injury with the same drug. As consumers we would not stand for that lack of professionalism from someone declaring them self a professional, yet we accept it blindly in real estate sales.