Dear Zuess,
Help! I am feeling under a lot of pressure and stress. My clients are in a really bad situation. I listed their house for sale nearly two weeks ago. We thought it would sell in the first few days with multiple offers and while we had a lot of showings, we had no offers. Now, the showings have trickled off to almost nothing and my clients (and me) are going nuts with the pressure. We don’t know what to do. The market here in the east side of central Toronto has been so incredibly strong all spring and they bought a property in multiple offers 4 weeks ago. They paid a lot and the closing is at the end of July. It’s coming up soon. I wish I could just solve this – the stress is so bad I don’t even care about my commission at this point.
Do you have any tips for real estate agents in a bind like me?
Denise
Dear Denise,
Yuck! I hate that feeling. I think every experienced agent has been there at some point in their career. Consider it a rite of passage, but you can’t do that until you get your client out of this rotten situation.
My first tip for real estate agents in a bind like you is to do everything you can to get them out of this situation. Ignoring the problem or walking away is the cowardly route and won’t lead you to a successful future.
Solving any complicated problem begins with clearly identifying the problem and examining the options available. This will require leadership, focus, and the ability to understand the emotional and psychological perspective of your clients and other stakeholders.
Begin with your own mindset and beliefs. If you are distraught, scared, or stressed you won’t be able to show your client a sense of confidence. You then need to discover what options are available; determine some important information:
- What is the property really going to sell for? Perhaps the market has shifted or you overestimated the market value for the property. An accurate assessment is critical. If you feel that you cannot be objective and accurate, then get assistance from experienced agents in your trading area.
- Find out if the seller can afford to sell for that price. If yes, reduce the property as soon as possible. This may take some strong negotiation skills. If you don’t have them, bring in an agent that does. This likely is the best option for your client so you have a responsibility to help them see this perspective. It may take some high level persuasion skills.
- Your seller may have the financial capacity to keep the property and rent it. This is a great fall back option but help them understand the possible complications with renting.
- If the seller cannot afford to sell for that price or rent the property out, let them know that the remaining options are very serious and very expensive. Help them re-evaluate if they can afford to sell for that price. You may have a difficult time helping them let go of what they believed to be true. Be patient and empathetic while being committed to their best outcome.
- If they truly can’t afford to sell their current home at that price, then investigate the option of reselling the new property they just bought to the next highest bidder. This is an expensive option as you clients will have to pay 2.5% commission to the buyer’s agent and they may assign the property for less than they paid. If you feel that you were negligent in your advice regarding this transaction, then you may consider waiving your commission. (speak with your broker)
- If your client is unable or unwilling to work with any of these solutions, then you need to get their lawyer involved and your broker.
I call this situation being across the market because your clients bought in one market condition and are trying to sell in a different market condition. This can happen at any time, but is more common during the transition from the spring market to the summer market and from the fall market into the December holiday time. It can also happen if there is an unexpected event that affects the real estate market like a jump in interest rates or a terrorist attack on New York City.
Savvy agents help their clients choose between the risky options of buy first or sell first. In many markets, it is possible and even common to buy a home conditional on the sale of the existing home, but in a strong sellers’ market it’s rare that sellers would accept that condition. Watch for a blog post with tips for real estate agents on buying first or selling first.
Zuess
Columnist, The Nature of Real Estate