Real Talk #311 Freakonomics In Real Estate

Freakonomics in Real Estate Sales

Barry: Freakonomics is a book you would really like, it’s that kind of book. You’ve got to stay awake when you read it, you better get some coffee and sit down and read it. but it’s a great book and he talks about these anomalies that happen with things that we’re all familiar with.
Freakonomics [Revised and Expanded]: A Rogue Economist Explores the Hidden Side of Everything

Here’s an anomaly, real estate agents sell their own houses many of them do right. They sell houses for other people and then they sell their own houses. What do you think happens when a real estate agent sells their own houses? Do you think they sell it super fast?
Missy: You’re about to tell us.
Barry: I’m about to tell you. I’m putting her on the spot here. You know what they actually take 10 days longer on average to sell the house if they don’t own it themselves.
Missy: Okay so why, why do you think they do that?
Barry: Well my agent buddies may not like this answer but I think.
Missy: Just be honest and be real.
Barry: I’m just going to be real with you. I think it’s because they negotiate harder. I think that they’ve got more back and forth and it takes a couple of days to get that negotiation dance back and forth and I think they negotiate harder on their own deals.
That’s probably actually in many cases I have clients tell me not to negotiate just take their answer. I had a client this week we got an offer on a property but you know what he’s ready to sell his house. I would have countered him and I told him I would counter and we would have made an extra $10,000 on the sell if we had done a counter and I think we would have got it. I’ve been doing this for 14 years, I know when we can get it you know what I mean.
I think we would have got that 10,000. He said, you know what I don’t want to do that I just want to take the offer. So I think what’s happening is there’s nobody in that conversation that’s getting them to go ahead and accept an offer that they negotiate harder on their deals.
It not only takes them a little bit longer while they wait for the right offer, but they also get 3% higher on their sales price than if they’re working for a client.

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Missy: But I think also too maybe it plays into the whole fact that they know their home. You know what I mean? They know the property, they’ve lived in it, they feel it and maybe they just.
Barry: I bet you they’ve cleaned it.
Missy: They’ve cleaned it, they probably put new flowers in the front garden, they’ve done a lot of things.
Barry: Have you ever gone on to a car lot, any car lot even the scummy used car lot on the south side of town. If you’ve ever gone to a car lot you get the car and it’s dirty no. They detail the cars, even the cheap car lots detail the cars. Matter of fact the cheap car lots that may be all they do is detail the car. They clean the car before they sell it.
Missy: That’s part of marketing too.
Barry: That’s presentation.
Missy: Exactly.