Real estate listing without a price - is this a thing?
July 12, 2023 12:48 PM Subscribe
We listed our house for sale today. When the listing agreement was presented, the listing price for the house was left blank. As we didn't want to sign a contract without a price, we pushed back and got an amount added. The broker was extremely insistent though. I've never seen a listing agreement without a price. Is it a thing now? If not, what's his angle?
The broker is a top seller in our area, has been in the business for years, has many glowing reviews online.
He claims his routine practice is to get the contract signed without a price and then hone in on a final price, and add it later. When I asked about the mechanics of "adding it later", he looked very confused and a bit put off. It sounds as if he just adds a price to the form - no mention of sending a new contract for approval. I didn't think this was even possible with DocuSign, and also as a matter of legal practice. When I pushed further, he explained that as a house gets closer to being ready for showing, his assessment of the value may go up. As for us, we're about a week away from showing and the condition really isn't going to change. He said a few things about not trusting him, which set off alarm bells. He was adamant that this is how he works best.
Anyway, we have a contract that states a very good price. (Another red flag?). I am intensely curious about what his game and motivation are. Should we run like hell?
The broker is a top seller in our area, has been in the business for years, has many glowing reviews online.
He claims his routine practice is to get the contract signed without a price and then hone in on a final price, and add it later. When I asked about the mechanics of "adding it later", he looked very confused and a bit put off. It sounds as if he just adds a price to the form - no mention of sending a new contract for approval. I didn't think this was even possible with DocuSign, and also as a matter of legal practice. When I pushed further, he explained that as a house gets closer to being ready for showing, his assessment of the value may go up. As for us, we're about a week away from showing and the condition really isn't going to change. He said a few things about not trusting him, which set off alarm bells. He was adamant that this is how he works best.
Anyway, we have a contract that states a very good price. (Another red flag?). I am intensely curious about what his game and motivation are. Should we run like hell?
Him talking about you not trusting him is a big red flag to me. This is a tactic domestic abusers use, and I would drop him faster than an avocado goes from perfectly ripe to too far gone to eat. No bueno.
posted by MexicanYenta at 1:07 PM on July 12, 2023 [28 favorites]
posted by MexicanYenta at 1:07 PM on July 12, 2023 [28 favorites]
Best answer: The listing price is a very strategic marketing tool and is only loosely related to the actual sale price. In some markets, you want to aim a little low, get more people interested and set up a bidding war. In other markets, you want to make the price high enough to make the house seem attractive. In slow markets, you might list at one price and then have to drop it to get it to move.
I sold one house where the agent paid an appraiser to evaluate the house right before putting it on the market. In that case, the market was taking off and the house appraised for significantly more than it the agent had estimated six weeks earlier. (And that one sold for significantly more than even the higher listing price). My brother put a house for sale in a slow market and it took many months to get an offer that was quite a bit lower than they had hoped.
Bottom line, I don't think it matters that much what is in the contract as the listing price although the agent absolutely needs to get your approval for the actual initial listing price and any changes.
posted by metahawk at 1:08 PM on July 12, 2023
I sold one house where the agent paid an appraiser to evaluate the house right before putting it on the market. In that case, the market was taking off and the house appraised for significantly more than it the agent had estimated six weeks earlier. (And that one sold for significantly more than even the higher listing price). My brother put a house for sale in a slow market and it took many months to get an offer that was quite a bit lower than they had hoped.
Bottom line, I don't think it matters that much what is in the contract as the listing price although the agent absolutely needs to get your approval for the actual initial listing price and any changes.
posted by metahawk at 1:08 PM on July 12, 2023
Most listing contracts use criteria based on listing price for offers that you have to accept, or as a basis for a commission in some cases. I agree that this is a red flag.
posted by Dashy at 1:14 PM on July 12, 2023 [2 favorites]
posted by Dashy at 1:14 PM on July 12, 2023 [2 favorites]
If you don’t trust him about something so basic, why are working with him? I have no idea about whether it is appropriate to leave the listing price blank, but I do know it is not a good idea to entrust what is probably the largest transaction of your life to someone who you appear to feel is untrustworthy. Just why? Does this have to be done yesterday, or can you take a deep breath and go into this process at a more considered pace?
posted by Winnie the Proust at 7:06 PM on July 12, 2023
posted by Winnie the Proust at 7:06 PM on July 12, 2023
One way to be a top-selling agent is to be knowledgeable about the local real estate market, personable with clients, adept at networking, and tireless in pursuit of a sale.
Frankly that sounds like a lot of work. Another way to sell a lot of houses, assuming you can get people to list with you, would be to underprice the listings to get a quick sale.
I'm not saying that that's what's happening here but given that the compensation structure of real estate deals is inherently going to create perverse incentives for agents and there is very little enforcement of whatever ethical codes exist I don't think it's unreasonable for you to be concerned.
Your seller's agent gets paid based on the sale price so on first glance their incentives would seem to be aligned with yours - if the house sells for more money they make more money in commission. However, if pricing the house 20% lower than the max it could sell for means they can sell it with half or less the work then some agents, at least, are going to conclude that they'll sell more houses if they optimize for number of sales, rather than maximum sale price.
posted by Nerd of the North at 10:11 PM on July 12, 2023 [1 favorite]
Frankly that sounds like a lot of work. Another way to sell a lot of houses, assuming you can get people to list with you, would be to underprice the listings to get a quick sale.
I'm not saying that that's what's happening here but given that the compensation structure of real estate deals is inherently going to create perverse incentives for agents and there is very little enforcement of whatever ethical codes exist I don't think it's unreasonable for you to be concerned.
Your seller's agent gets paid based on the sale price so on first glance their incentives would seem to be aligned with yours - if the house sells for more money they make more money in commission. However, if pricing the house 20% lower than the max it could sell for means they can sell it with half or less the work then some agents, at least, are going to conclude that they'll sell more houses if they optimize for number of sales, rather than maximum sale price.
posted by Nerd of the North at 10:11 PM on July 12, 2023 [1 favorite]
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posted by mmf at 1:02 PM on July 12, 2023