What Are Guaranteed Home Sale Programs?
Are you wondering how a guaranteed home sale works? Every now and then, one of my clients will see an advertisement for a guaranteed home sale program and ask me what they are all about.
Guaranteed home sale programs were originally started many years ago by ERA Real Estate. Since that time, many other individual agents and companies have copied various forms of the program.
The guaranteed home sale program is, in fact, one of the biggest gimmicks in the real estate industry! It really should be named I will sell your home under value guaranteed.
Wikipedia defines a gimmick as a unique or quirky feature that makes something stand out. The special feature, however, is typically thought to be of little relevance or use. Real Estate agents who use this marketing tactic are doing just that – trying to stand out from the crowd.
Have you ever seen Real Estate advertising that says something to the effect, “if we don’t sell your home, we will buy i,t” and wondered what the heck that was all about? You are probably shaking your head up and down right now because it sounds like a pretty enticing offer.
If you look around the internet, there are plenty of sites out there that offer some kind of guaranteed sale program. Some of them even go as far as spelling out the time frame in which they will sell your home.
“We will guarantee your home is sold in 30 days, sold in 45 days, or sold in 90 days,” they proclaim loudly. The premise behind these pitches is some kind of guarantee that the Realtor will sell the home or do X for the client.
This is just another marketing gimmick that, in some respects, is no different than value range pricing. The difference is that the list price is under the current market value of the property more times than not. In some cases, WAY under!
I have to hand it to the Real Estate agents that use this gimmick as part of their marketing plan because there are quite a few home sellers that actually believe there is something special going on. It seems that some consumers believe that these guys are really not your average Real Estate agents but some kind of Realtor superhero! I can picture it now when they arrive on the scene, all dressed in a sharp suit, ready to sign up the next home seller only to head off to a local phone booth for a quick change of clothing.
Well, maybe not a phone booth anymore as they are much harder to find.
There is no doubt in my mind that plenty of homes can sell in under 30, 45, 62 days (pick a number) no matter what kind of market we are in if they are priced at or below the present market value. In fact, I know this is the case because I sell quite a few Massachusetts homes every year that go under contract in an expeditious time frame, and these are homes that are not underpriced!
Not too long ago, while selling a home in Framingham, MA, one of my clients mentioned to me they had interviewed an agent who was promoting the sold in X number of days guaranteed sale. The client understood the average time to sell a home in the Framingham real estate market.
It was clear to them the home would sell instantly because the Realtor wanted to price the home almost ten percent under the value. The client was savvy and could see right through the agent’s gamesmanship.
Needless to say, I listed the home, and it sold in a reasonable amount of time (about 40 days) and significantly over what this agent was trying to get them to list for!
How Do Guaranteed Home Sale Programs Work?
According to most of these guaranteed home sale websites, you will receive an up front guaranteed price in writing from these Realtor’s, and if they receive an offer that is higher than their guaranteed price from a Buyer, you will get the higher offer, not them. WOW… well, isn’t that SPECIAL.
They say they are not passive agents and do more than just put a sign in the yard and wait for a buyer. YIPPEE! There is nothing magical about this. In fact, you can bet your bottom dollar that the number they are going to guarantee you is nowhere near what you would expect a buyer to pay for your home.
Yet they sign up many clients this way, so I have to give them some kudos and a good old fashion pat on the back.
There are usually two sets of consumers that will respond to this type of Real Estate marketing. Those that think the Realtor may have been born on Krypton and a seller that is DESPERATE to sell their home.
If you really need to sell your home at all costs, why not go with someone that will guarantee that they will buy it?
It would be interesting to know just how many homes that they actually do end up purchasing. My guess is not many! Buyers know a value when they see it and, in most cases, will jump at the chance to buy a home under market value.
Aggressive pricing is the same reason why most bank-owned homes sell quicker than traditional homes.
Some real estate agents find desperate sellers using television ads, radio, billboard ads, or other forms of marketing to get their message across. It really is hard to believe so many people fall for this sold in X number of days crap.
It would be best to look for a Realtor in your area that knows how to market homes online really well. Not some foolish sales pitch like I will sell your home guaranteed in some amount of days!
When the home is priced under market value, this is not that important because all you need is the multiple listing service (MLS) to get the job done.
A seller that is willing to price their home under market value is the kind of client any Realtor would love to have because it is pretty much a sale in the bank.
When you are looking to sell your home for the market value, this is obviously not the route you want to take.
Sold in X number of days, guaranteed sale programs are a marketing gimmick designed to get the phone to ring and get the Realtor more business. It is just a form of emotional selling. When selecting a Real Estate agent, make sure you do your homework!
Conflict of Interest
When you hire a real estate agent to sell your home, more than likely, you will be paying a pretty hefty amount of money to do so. It only makes sense that you should get your money’s worth.
A seller’s agent should have one particular goal in mind when representing you – get the most money for your home! The agent should be putting the seller’s interest first and negotiating for their client’s best price and terms. The agent owes the seller undivided loyalty, reasonable care, disclosure, and obedience to lawful instruction.
There is an inherent conflict of interest when an agent is buying the home under the property’s value. You should ask yourself how you will feel if the real estate agent puts your home back on the market after purchasing it from you and sells it at a profit.
Keep in mind just about anybody can sell a home if it is listed way undervalue. You would be better off finding out your home’s market value and then selling it for sale by the owner.
Take the 5 or 6 percent commission you would be paying the Realtor and discount the price by that amount. Guess what will happen if your home is priced five to six percent undervalue? There will be people pounding down your door to purchase it.
Pick a Top Producing Real Estate Agent Instead
Some excellent considerations for picking a top Realtor include:
- Their track record of success in both strong and weak home selling markets. You want someone who knows how to get the job done regardless of what is going on in the world around them.
- The agent’s ability to market well. Does the agent provide exceptional photography on the homes they are marketing? Make sure you do your due diligence and check! This is one of the most important considerations in real estate sales. What does their marketing material look like? Some agents will try to get away with as little as possible. A good agent will provide a nice color brochure that shows off your home’s best attributes, not a black and white multiple listing sheet. That is called zero effort. An exceptional agent will go above and beyond by providing outside the box real estate marketing to help sell a home.
- How is their real estate add copy? Does the Realtor take the time and effort to write exceptional descriptions of the properties they have been hired to sell, or are they clearly just slapped together? You don’t need a wordsmith but should have someone who has at least invested some time into describing your home’s best features.
- How are the agent’s communications skills? Do they respond promptly to emails, texts, or phone calls? This is something you should pay careful attention to BEFORE you hire them. If they aren’t doing an exceptional job beforehand, I guarantee they won’t after you hire them!
- What are the Realtor’s statistics? Some of the things you should check on are how many properties they list actually end up selling. Two other very important considerations are the average days on the market and the list price to sale price ratio. Keep in mind, however, if the real estate agent finds enough suckers to list their homes undervalue, these numbers are going to be off the charts.
By now, I hope you understand that guaranteed home sale programs are not the way to get the most money for your home. You should be extra careful when choosing an agent that has this kind of marketing plan in place to lure home sellers into signing up with them.
Are all agents who have some kind of guaranteed sale program terrible Realtors? No, probably not, but as a consumer, you really need to decide if you want to work with someone who is like a pitchman on some late-night infomercial!
Don’t be surprised either if the agent has set up their business to work on a volume basis. After all, the whole purpose of setting up the guaranteed home sale program is to get you to call to find out what it’s all about. With enough people calling, the first thing they will try to do is spin you off to one of their minions. There are better choices!
Hopefully, you now have a better handle on guaranteed home sale programs.
Additional Real Estate Gimmicks to Avoid
- Avoid pocket listings – when you want to sell your home for the most money possible, avoid a real estate agent who wants your home to become a pocket listing. The only person who benefits from this situation is the real estate agent.
- Ways real estate agents deceive their clients – see more marketing gimmicks besides a guaranteed home sale programs to avoid.
- Do open houses sell homes, or are they a complete waste of time for an owner? Massachusetts Real Estate Exposure explains why open houses are not necessary to sell a house.
Use these additional resources to become more informed about guarantee programs and other gimmicks like them.
About the Author: The above Real Estate information on guaranteed home sale programs are gimmicks was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at [email protected] or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 34+ Years.
Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!
I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.