"Hot Market" Under-Pricing Sales Technique Commission Issues
During a "hot market" there is a certain marketing technique which, though very effective, could cause trouble because of the way the contract is written. This is the practice of "under-pricing" the home. In a hot market, a home that is under-priced gets a lot of attention from other Realtors, and they all start showing your home to their clients. Often, you get into a situation where multiple offers are presented and the price starts going up because of the frenzy. You end up selling the house above your asking price and perhaps above what you could have received if you had priced it traditionally.
However, the technique does have the potential to backfire, so you should build safeguards to prevent having to pay a commission "just in case."
You see, the listing contract usually states that if an offer is received that meets the terms presented in the contract (including price), the real estate agent has earned his or her commission even if you decide not to sell. A reputable agent would never attempt to collect a commission if they were using the "under-pricing" technique and it backfired, even if they are technically entitled to one. For that reason, in the "additional terms" space on the listing contract, you should specify your true target price when the agent has really earned the commission.
The Listing Agent & Marketing Your Home
All articles © 2000 RealEstate ABC
No articles may be reprinted or displayed without permission.
Getting Your House Ready to Sell |
Want to Start Off With a High Sales Price? Beware! |
Types of Listing Contracts |
Details of a Listing Contract |
Listing Commissions and Related Issues |
The Listing Agent & Marketing Your Home |
The Listing Agent - Marketing Your House to Other Agents |
The Listing Agent - Marketing Your House to Homebuyers |
Showing Your House to Home Buyers |