Guaranteed Home Sale Claims – Are They a Gimmick?
A gimmick is a trick used to attract attention, publicity or business. When a real estate agent advertises they guarantee to sell your home, that is definitely a gimmick and it can generate a lot of leads for the agent. The question is whether it’s a gimmick that’s good for you or just good for the agent.
How Do Guaranteed Home Sales Work?
You may run into several different kinds of guarantees. Here is an explanation of some of them, but I’m sure people are thinking up new approaches every day!
- A Short-Timeframe Listing Agreement. This is the simplest offer. Rather than entering into a 180-day agreement, the agent offers one for 60 days. If the house isn’t sold in that timeframe, the buyer won’t need to worry about whether to renew the agreement or not.
- Low- or No-Fee Agreement. In this situation, the agent agrees to lower or eliminate their commission if the home isn’t sold within a certain timeframe. Guess they want you to feel better about not paying so much to get your home sold for too little.
- We’ll Buy It. Some agents agree to buy the seller’s home themselves if it isn’t sold within a certain timeframe.
Do Guaranteed Home Sale Offers Have Fine Print?
Yes, they do. And, it’s no surprise. If the offer didn’t protect the agent making it, they’d go out of business and no one would be making guaranteed home sale promises. Here are some of the ways an agent making this offer can be protected in the fine print:
- The Seller must agree to list the home at the agent’s recommended price.
- The Seller must agree to drop the price 10% every few weeks if no offers are being made.
- The Seller must agree to a final 10% price reduction if the house isn’t sold and the agent must buy it.
- The Seller must follow the agent’s recommendations for completing updates to the home.
- The Seller must agree to showings without notice or with very short notice.
- The Seller must work with the listing agent to buy their next home.
The only way this type of an offer can work for an agent in all cases is if the list price for the house is under market value. Sometimes an agent will identify a specific initial reduction, such as listing the home for 95% of what the market value is. Sometimes, the agent will just create a number without any clear indication of how it relates to market value.
In either event, the agent knows that homes priced under market value do usually tend to sell quickly. Home buyers can certainly spot a great deal when they see one, and someone will likely snap up an undervalued home. Is that good for you or just for the agent?
If you are desperate to sell your home quickly, and you don’t mind losing money, you can work with any agent and set the list price under market value. There’s no particular expertise required to sell a home that is underpriced. Add the listing to the MLS and that’s about all you need to do.
Another interesting fact is that according to experts such as the folks at Inman, sellers who contact an agent about a guaranteed home sale promotion don’t usually end up using the guarantee. Once they understand all the fine print, they don’t think the guarantee is worth it.
What Is the Alternative to a Guaranteed Home Sale?
Your other alternative is to work with REALTORS® who are good at what they do and who don’t need a flashy gimmick to get clients. Choose REALTORS® based on their track record and their ability to market your home effectively.
The real trick is selling a home in a timeframe that is realistic for your market, and at the highest price the market will bear. A REALTOR® who can do that will give you the best experience and the best outcome for your real estate transaction.