What are your thoughts on Listing Homes for a $1, savvy marketing or see-through gimmicktry

BARBARA

Buzzer

66

6

What are your thoughts on Listing Homes for a $1, savvy marketing or see-through gimmicktry

Should real estate agents be allowed to list homes for a DOLLAR. Some might say 'savvy' marketing, others say 'see through' gimmick, what do you say?

36

Canada / New Home Q&A

JOSIE STERN

Buzzer

109

57

2 BEST REPLY

Great read about this story: http://www.getwhatyouwant.ca/time-start-respecting-buyer-k-wtf-72-offers-house

MATTHEW SLUTSKY

Senior Buzzer

2299

171

I love the idea, for a bunch of reasons.
First: Yes, it is marketing "gimmicktry", but it works! Every time someone does it, they get in all the papers. Now that is PR!
Second: What a great way to let the market define the value of the house. "Offer what you think it is worth". Fantastic! The market here in Toronto is nuts, and it seems impossible to accurately price a house.... the the market do it for you!
What is wrong with it? Why is everyone so against it?

DINA

Buzzer

17

From my experience, when you let people decide the price through means such as getting multiple bids through low initial pricing, the final purchase price is usually too high. Therefore I do not think that this marketing strategy will result in a more appropriate pricing. Also if this strategy were to become a popular one, it would also grow to be a an ineffective PR strategy very quickly.
Buzz is a great thing, it gains awareness, but doesn't always translate into increased sales numbers... Unlike with other goods such as fashion, where marketing will be more effective in driving sales, I think that when it comes to homes, consumers are more cautions and fight to filter through marketing, focusing more on the facts surrounding the property; the property features, price and location.

BARBARA

Buzzer

66

6

The consumer says if you list for $1.00 and I offer you a $1.00 - FULL PRICE then the vendor should be selling it to me for a $1.00. N'est pas? Even though, we all know the house is worth considerably more. Is there any other item, that a buyer would offer more than the asking price? Would you do that for a car or a boat?
Quite a gutsy move by realtors, not all have had a happy ending though. Innovation and creativity it does not lack.

MICHAEL

Buzzer

22

1

I think experienced Realtors know that listing for $1 is certainly more gimmicky. Even pricing a house for "multiple bids" has logic to it to achieve the desired result...which is to ensure a quick sale with all conditions of benefit to the seller. Price is only one of these conditions.

Timing is also crucial when undertaking what strategy to list the property for. I can only imagine having to explain to a seller that they are only going to receive $400,000 for their home when all their neighbours sold for $425,000-$450,000 because today that's "what the market" says its worth. I can see a lawsuit being thrown at the agent faster than I can type this sentence!!

Multiple offers don't necessarily up the sale price of a home. Being uneducated and not doing one's diligence along with being patient and sticking to a game plan will ensure in the end that you have not overpaid (unless of course going in you are okay with this).

My advice to buyers is to choose your Realtor wisely. I'm going to repeat this. Choose your Realtor wisely. Be able to trust them at the level you need to trust them. If not then your first task in due diligence you will have no one to blame but yourself. Harsh I realize but true.

MATTHEW SLUTSKY

Senior Buzzer

2299

171

Barbara said:
The consumer says if you list for $1.00 and I offer you a $1.00 - FULL PRICE then the vendor should be selling it to me for a $1.00. N'est pas? Even though, we all know the house is worth considerably more. Is there any other item, that a buyer would offer more than the asking price? Would you do that for a car or a boat?
Quite a gutsy move by realtors, not all have had a happy ending though. Innovation and creativity it does not lack.

I imagine at $1 there would not be much of an issue.
But, let's say you house is worth $800k, you list it for $1, and someone offers you $600k. IF the owner refuses the offer, couldn't the sellers agent sue someone (seller or sellers agent) for the commission they would have received on the $600k?
I'm not sure. I am not a lawyer, and I am not a Realtor!

BARBARA

Buzzer

66

6

1

Depends on the fine print. Matthew: IF the owner refuses the offer, couldn't the sellers agent sue someone (seller or sellers agent) for the commission they would have received on the $600k? But I do think that sparks would fly..and that is the risk of this game!

MICHAEL

Buzzer

22

1

I imagine at $1 there would not be much of an issue.

But, let's say you house is worth $800k, you list it for $1, and someone offers you $600k. IF the owner refuses the offer, couldn't the sellers agent sue someone (seller or sellers agent) for the commission they would have received on the $600k?

I'm not sure. I am not a lawyer, and I am not a Realtor!

If you are using the standard TREB listing agreement form then commission is only payable on an offer accepted by the seller. The seller can price their home for $700k and someone offer $800k. They don't have to accept it. But part of an agents duty is to have competency in the area of market value so I would think a claim could easily be made against a sellers agent if they come across an unsatisfied seller.

MARCO DIFOTI

Senior Buzzer

550

45

1

Why is everyone so scared of letting the market decide? Isn't that how they do it in Australia, and have proper auctions on "bid dates"?

MICHAEL

Buzzer

22

1

Marco said:
Why is everyone so scared of letting the market decide? Isn't that how they do it in Australia, and have proper auctions on "bid dates"?

# 1 The market (Buyers) do decide. No one forces them to buy or pay a certain price. They choose to if they want to. Plain and simple.

# 2 This is Canada...hearalded throughout the world for having a sound housing market. Yes certain people have been speaking of a bubble...same talk for the past 6 years BTW. But keep it in context. Overall our system is very good. Actually next month Realtors from Europe are coming to my office to learn about how we do the things we do. A pretty big compliment for our country I would say!

p.s. Marco if you are a home seller why not try the auction theory out? And please let me know if you do so. I would be interested in the outcome.

BARBARA

Buzzer

66

6

"Overall our system is very good. Actually next month Realtors from Europe are coming to my office to learn about how we do the things we do. A pretty big compliment for our country I would say!" Hmmm Michael..maybe wew should keep our success a secret! Sometimes I just don't want to share!
Whatever the consensus here about $1 list prices, the novelty will wear thin. Hard to stay ahead of the buyer for long.

MARCO DIFOTI

Senior Buzzer

550

45

Michael said:
p.s. Marco if you are a home seller why not try the auction theory out? And please let me know if you do so. I would be interested in the outcome.

I would be way too scared to!

BARBARA

Buzzer

66

6

Michael wrote:
"p.s. Marco if you are a home seller why not try the auction theory out? And please let me know if you do so. I would be interested in the outcome."

Marco answered: "I would be way too scared to!"
Ahhh honesty! Shows some doubt in the whole concept of risky of $1.00 listings and bidding war positioning/set-ups

CARY CHAPNICK

Buzzer

117

13

I wouldnt list at $1 as i think you might potentially miss your target buyers. For example say I have a $600,00-$650,000 buyer.
When i set up prospecting from them i really only look at stuff from $500,000-$700,000 and would likely miss out on the $1 listings.
The broker isnt a fan of this technique for a variety of reasons including the aforementioned one.

VANCOUVER BUZZ

Buzzer

23

2

1

As a homebuyer and investor, I wouldn't check out a $1 listing. I would always search between a certain dollar range.

BARBARA

Buzzer

66

6

Last two posts very valid points..I also search within a range, at least in the city, Rural properties I might start from zero dollars. This marketing technique might miss the mark for both realtors and self-researching buyers when utilizing an MLS style search engine. Something to think about before taking the $1.00 list plunge - both realtor and buyer beware.

LEONARD THE BEE

Buzzer

162

4

Thanks to Don Campbell of REIN, who said the following via a live online chat:
"I think it is manipulative, I think it limits the number of people who will find you when they search (search criteria are often provided asking for you to provide a range of prices) and let's be realistic, it is a transparent attempt to get noticed.
There are better ways, i.e. become better at marketing / selling the property and price it to sell.
Professionals will probably not even want to put in an offer.

This isn't the price is right TV show........ :)"
Thanks for your response Don!

AMAR PAL

Buzzer

98

8

Matthew said:
Barbara said:

But, let's say you house is worth $800k, you list it for $1, and someone offers you $600k. IF the owner refuses the offer, couldn't the sellers agent sue someone (seller or sellers agent) for the commission they would have received on the $600k?
I'm not sure. I am not a lawyer, and I am not a Realtor!

Not sure about Toronto, but in Vancouver yes. If you receive a full price offer meeting all criteria (ie, no subjects) the brokerage is legally entitled to their compensation even if the seller does not accept the offer, as they're deemed to have "done their job" in getting you a perfect offer.
I haven't personally seen this happen or be enforced, but sellers could get into trouble with this doing $1 pricing.

ADDY SAEED

Buzzer

66

2

Amar said:
Matthew said:
Barbara said:

But, let's say you house is worth $800k, you list it for $1, and someone offers you $600k. IF the owner refuses the offer, couldn't the sellers agent sue someone (seller or sellers agent) for the commission they would have received on the $600k?
I'm not sure. I am not a lawyer, and I am not a Realtor!

Not sure about Toronto, but in Vancouver yes. If you receive a full price offer meeting all criteria (ie, no subjects) the brokerage is legally entitled to their compensation even if the seller does not accept the offer, as they're deemed to have "done their job" in getting you a perfect offer.
I haven't personally seen this happen or be enforced, but sellers could get into trouble with this doing $1 pricing.

In Ontario, brokerages are entitled to their fee at the closing table unless it doesn't close due to Seller negligence.
I don't like the idea of listing a property for $1 and marketing it. Here are couple of my reasons:
The seller has a price in their mind that they would like to hit. What if the price isn't hit? I stand chance to leave a bad impression with that customer.
When I am setting up alerts for my buyers or discussing their home range, I usually have a minimum that the buyers are looking to spend and I'm pretty sure a lot of the REALTORS in the market do as well hence my $1 listing won't even make it's way to a lot of the buyers in the market.
If I was listing a property for $1, I'd like to have the property exposed for at least 2 weeks before reviewing any of the offers. This can back fire as a lot of the buyers aren't willing to wait.
The quality of offers you will be getting? I have 2 dollars in my pocket, can I send in an offer with 50 cent deposit?
Sellers aren't prepared for a mob of showings and will easily get frustrated when they have to keep cleaning the place for at least two weeks.
I'd rather be smart with the price and get better qualified buyers looking at the place and go over my clients expectations... If my client so chooses, I would price it lower by as little as $10,000 which would generate more than enough interest to get the property sold.

MATTHEW SLUTSKY

Senior Buzzer

2299

171

Do you see a difference between listing your house low to get a bidding war, and listing it for $1? Seems to be the same, but you rarely hear people complaining about listing low... Seems like a common and accepted tactic.

CARL MINICUCCI

NewBee

3

Matthew said:
Do you see a difference between listing your house low to get a bidding war, and listing it for $1? Seems to be the same, but you rarely hear people complaining about listing low... Seems like a common and accepted tactic.

Everytime I see a $1 and/or seriously underpriced Listing, I'm reminded of this great moment in motion pictures....
http://youtu.be/HktV2yGtLv8
...about as creatively innovative as a Michael Bolton ballad anthology

ANONYMOUS

If you really want attention and create buzz to your listing I can list your place for $1000000000.00
Or we can add the phrase "interesting trades will be considered".

BARBARA

Buzzer

66

6

Brian sorry that won't work listing for that price $1000000000000.00 would never fit into the average price range searched by realtors haha

MATTHEW SLUTSKY

Senior Buzzer

2299

171

^^I still don't see the difference between listing low for a building war and listing for $1!

ANONYMOUS

Absosmurfley no difference. Except with the low price the Realtor and the Seller can sleep better at night by convincing themselves they honestly thought the property was worth that little. Then they can go tell all their friends and family how "surprised" and "shocked" they were to get so much over asking. Oh and the Realtor gets to advertise that their incredible "marketing tactics" and "negotiation skills" is what brought such a high price. This advertising helps them land the next client who afterwards wonders wait did I just pay thousands of dollars to that agent for? Round and round we go.

BARBARA

Buzzer

66

6

Most agents and vendors and BUYERS recognize when a property is listed low...
Regards to the $1.00 listing I think the vendor's agent might end up working for nothing ...when offers do not come in where they really think the house is worth. ..after all why wouldn't you try a low offer to match that low price!

AMAR PAL

Buzzer

98

8

Matthew said:
^^I still don't see the difference between listing low for a building war and listing for $1!

I think the main differences have already been covered:
-Listing for a bidding war should still be in the appropriate range to get exposure to the right target buyers and search ranges
-Listing for a bidding war will only get you bids from actual interested buyers, while a $1 price will get you tons of viewing and potentially $2 offers from people who have no real interest in the property.

BARBARA

Buzzer

66

6

AMAR you have hit the nail on the studwall...perfect and concise !.
-Listing for a bidding war should still be in the appropriate range to get exposure to the right target buyers and search ranges
-Listing for a bidding war will only get you bids from actual interested buyers, while a $1 price will get you tons of viewing and potentially $2 offers from people who have no real interest in the property.

ANONYMOUS

The $1 listing attracts the bargain hunter not the serious buyers. The bidding war listing is just annoying.

BARBARA

Buzzer

66

6

Brian said "The $1 listing attracts the bargain hunter not the serious buyers. The bidding war listing is just annoying."
Another bullseye shot...
I am a bottom feeder buyer and would go for those $1.00 listings but would offer $4.00, joking aside.. I would try to buy cheap but reasonable.
The bidding war style listings I stay away from altogether ...we were caught in 8 bidding wars ...said that was enough, when we finally bought a house there was no bid war and we landed it at a good price! Of course this is the buyer's point of view.
As soon as we hear "another offer is coming in" we just walk..bad taste in our mouths, too much emotional upheaval...and higher purchase price to boot..sorry.

MATTHEW SLUTSKY

Senior Buzzer

2299

171

Whats the difference between listing a house for $1 to get a bidding war vs. listing a house low to get a bidding war?

I see no difference.

This house in Lawrence Park is getting a lot of action for selling 195% of asking with 72 offers:

http://www.thestar.com/business/2014/04/28/lawrence_park_fixer_upper_gets_72_offers_goes_for_195_per_cent_of_asking.html

The listing agent says:“We expected in the $1.1 million range, but the market pushed it,”

BARBARA

Buzzer

66

6

This is not Lawrence Park!! I lived right around the corner from there. Trickery again? Having said that...even the most green of R.E. agent would know this price was ridiculously low. I saw the listing when it first came out and thought wow..what a ride to come. 72 offers is crazy. The value of the house would be well documented. What a waste of time really for all parties including some very disappointed buyers! False hopes! My son is in the middle of searching for a house. When we see offer dates, we shy away..we know what games are being played. Yes the offer date takes the pressure off of missing a chance to put in an offer, but as a buyer we hate it ...as a vendor...well we may love it.. But it is backfiring in many instances as well..Consumers are aware and yes, many are panicing! Sad state, today, to be in the market as a buyer...and that's my soap box lecture for today

JOSIE STERN

Buzzer

109

57

What is wrong with the strategy to under price a property (when the listing agent suggests it) is that it puts the seller under tremendous risk and that is irresponsible.

There have been times when the market takes a pause and the number of offers do not materialize. We all know that has happened.

Secondly you start the process by breaking the rules that govern us as realtors. REBBA dictates that agents make recommendations based on research and experience in the market place.

If it were to backfire and a seller, executors, beneficiaries etc. were to sue it would not be difficult for a litigator to prove negligence and unprofessional-like conduct especially when the property is so obviously underpriced.

It's an abuse of the system which would come to a quick end if a lawsuit were successful if this strategy were to fail.

ALLEN

Buzzer

192

54

Everything went wrong with this sale which is why it sould for almost double and gotway too many offers.
1. The selling agent intensionally listed the house for $400,000 less than it should be, that's already being unethical.
2. The potential buyers got suckered by the skeptical low selling price and got sucked in. They should have walked away to begin with.
3. The people who made offers got caught up in the excitement and as expected abidding war ensued -- their agents should have advised them about not bidding more than they should and warned them about the as is condition of the house.
4. The selling agent also represented the winning buyer who paid $400,000 more than it should. He definitely did not represent them in their best interest and got his seller an obscene amount of money while earning an even more obscene commission. There may be even a conflict of interest as out of the 72 offers his buying clients just happed to wind the bidding war -- sounds too crazy to be true.

The buyer will probably feel a lot of buyer's remorse as they will be facing a ton of improvements on top of an already overpaid property. I don't know if I should be feeling sorry for them or not.

MOO STASH

BabbleBee

301

21

I am curious to know if the agent told his buyer (not the seller) that he thought it was only worth $1.1??

Double ending these bidding wars is absurd.

MARCEL MAKLOUF

NewBee

1

It would be totally illegal to do that in Australia. It's even illegal to underquote a price range guide for an upcoming auction. Property is relatively inexpensive it seems in USA, but the property taxes are insanely high. I thought US was a low taxing country. I was thinking of investing there, but I'm afraid of increases in taxes if the property is revalued.

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