I have been bitting my tongue for the last couple of days with this Coldwell Banker 10 Day Sale Event that’s happening right now and can’t hold back any longer. Rick and I are Coldwell Banker agents and we believe in Coldwell Banker because of it’s corporate style and because it’s a huge company (it fits our business ethic).
Last month, our broker announced that Coldwell Banker was doing a 10-day Sale which would be heavily advertised and would bring new movement to our listings. This sale would require that current listings reduce their asking price 10% for a limited time (5% for for listings above $750,000). They sent letters to every active listing announcing the sale and expected each agent to follow up with their respective clients.
I have to admit that I was not very pleased with the whole concept. I started analyzing each of our listings and the position of each seller. The old lady who is selling in order to pay for her assisted living facility could not afford to reduce her modest home $25,000. The father who was selling in order to pay for his son’s college education could not fathom the thought of reducing his house $55,000. $75,000 could mean a down payment to the family being relocated to another state. Was this sale intended for those homeowners that were overpriced to begin with? Or was it intended for those sellers in distress who need every single cent of the proceeds?
Rick and I take pride in doing constant market analysis for our clients. We price our listing well, based on closed sales – 10% would not work for a house that’s priced competitively.
The letter
In our continued effort to expose your home to as many potential buyers as possible and get your home sold within the shortest amount of time, we are instituting an innovative summer marketing promotion. All Coldwell Banker Residential Real Estate offices throughout the Gold Coast area will be participating in our 2008 Coldwell Banker Residential Real Estate Gold Coast 10-Day Sale, which will include e-flyers and announcements e-cards, website marketing, open houses, mortgage pre-qualifications and exciting newspaper advertisements……You will have the option to bring the price back up at the conclusion of the sale.
The Press
This is what Monica Hatcher from The Miami Herald has to say:
Coldwell Banker might seem the last sort of business to take a page from the marketing manual of the car dealer’s factory blowout or Memorial Day Mattress Sale. But for the prestigious real estate brokerage, desperate times call for creative measures.
Last week, South Florida’s largest real estate firm started hyping its own version of a door-buster sale that starts June 1. Prices on hundreds of homes, mostly in Miami-Dade and Broward counties, will be slashed by at least 10 percent. Like most sales events, the discounts are good for a limited time only, in this case 10 days, the firm says — or, presumably, while supplies last!
The unusual marketing ploy is the latest strategy of home sellers and their brokers to compete for limited buyers in a market recording some of the sharpest price declines in the country and awash in foreclosures and bank-owned homes…..
Not everyone is convinced that a sort-of-clearance sale is the best idea. Some said real estate agents should be helping their clients list properties at their true market value to begin with. A sale might lead buyers to suspect listing prices are inflated. At a time when prices may be settling, a sale also could bring about further declines.
Paul Owers of the South Florida Sun-Sentinel has this to say:
In yet another sign of the desperation in the South Florida housing market, Coldwell Banker Residential Real Estate is holding a 10-day sale, cutting prices of more than 1,000 properties at least 5 percent.
The Message
I do understand that I will not agree with every marketing idea that comes my way. I also know that I can be wrong and my opinion is not necessarily the last word. The concept bothers me for several reasons and they may be selfish reasons, and I’m hoping I get your opinion with the hopes of you bringing new light to this whole thing.
These are some of the thoughts that have been dancing around my brain: The “sale” makes it look unprofessional…..we are not selling mattresses or cars here. the sale makes it look like a marketing ploy and game. Will those that participate in that sale be regarded as the “motivated sellers”? If those sellers slash their price by 10% for a limited time, don’t you think they will accept more than a 10% reduction after the sale is completed? Is this a numbers game about selling quantity? Does this sale take into consideration the personal part of selling real estate? Am I totally off?
Benn Rosales
May 28, 2008 at 11:20 am
Strategically, it’s brilliant from an advertising/marketing perspective and could surprise some home sellers, this does not remind me of a car dealership, or mattress company, it reminds that it is our job to move this damn market and help our sellers. There are some down sides in that they spelled out a specific discount at 10% and 5% which would lead me to believe into the future even after the sale to offer you a buyer price 10% below offer. However, if the hype around such a creative strategy works, some of your sellers could actually end up in multiple offer situations so it would be up to the individual agent to work with their sellers to create a strategy that works for them and that may include withdrawing their listing on the mls for 10 days.
I see more listings in your future along with more buyers if the marketing piece is as strong as CB promises.
Toby & sadie
May 28, 2008 at 11:22 am
I hate the concept and the message it sends to buyers.
For the brokerage homes are a commodity, but to the seller it is not.
Benjamin Bach
May 28, 2008 at 11:26 am
My first instinct, whenever I see a % discount, is that profit margins are generous to start with.
An example. A good friend of mine is a distributor for high end shoes. A store he sells to marks up his good 65 points. That means if you pay 100$, the store likely bought the shoe for $45. This is why they can afford to take 10, 15 or even 25% off the list price for heavily advertised sales.
If this was a builder, that’s one thing. Slashing prices on an inventory of new builds can make financial sense – i.e. I need to get my equity out so I can build the next project. Slashing prices on an inventory of resale homes, when the story behind each home is unique, is a different story.
I can’t imagine your sellers have reacted well – did this letter go out to all active CB listings, regardless of if you wanted your clients to opt in ?
Christopher Myers
May 28, 2008 at 11:28 am
Ines, I would agree with you. The way I see it…if the home doesn’t sell during the “blowout”, they’ll have a hard time raising the price back up once the sale is finished. They’ll likely need to lower the price again at that time. This does also give the impression that these homes were overpriced to begin with. The one good thing I see coming from this is a great way to get those price reductions that so many agents are afraid to ask for.
Kathy Drewien
May 28, 2008 at 11:33 am
I think this is a brilliant strategy, although it smacks of used car salesman to me. The campaign is targeted to consumers whose perception of real estate is skewed from reality. One misconception is the industry overprices property for our personal gain. In our area, properties are most often overpriced by sellers, and agreed to by hungry, inexperienced listing agents.
My question: Can the firm make the decision to lower prices without the seller’s consent?
Paula Henry
May 28, 2008 at 11:35 am
Ines – I have to agree with you! I have listings which are priced competeively and still, no buyer. A 10% reduction may bring an offer, but what happens when the seller has to bring money to the table to make it work? Will they be able to? What if they could have sold for 5% less or even 2%. They can never make that money back.
Will you feel you have represented your clients best interest by taking part in such an event? I cringe to think I could have saved my clients even $500.00 and did not. We have had issues in Indianapolis lately with property taxes and as agents who have no clue what the make-up tax may be, because the bills are not out, we are under pressure to determine how much to ask for our buyer clients and how much our sellers should give toward a future tax bill. The fact is, I will not know until maybe a few months after closing if I did, in fact, figure an appropriate amount. I don’t like to gamble with my clients money.
“A sale might lead buyers to suspect listing prices are inflated. At a time when prices may be settling, a sale also could bring about further declines.”
This one quote from your article would make me think twice about recommending such as “sale” to my clients. If buyers see a seller is willing to reduce their price 10% – the property will be always considered overpriced.
You are truly between the proverbial rock and hard place.
Faina Sechzer
May 28, 2008 at 11:38 am
Ines, all your concerns and questions are very valid. My view is that consumers are accustomed to the concept of “blowout” and could understand that after the promotional period the price is going back up. What concerns me is applying any promotion in a whole swoop to all houses. When retailers are doing it they are very selective ans pick specific merchandise for various promotions. they understand different goal and just the basic: “sell it and get it off the floor”. There has to be rationale where this idea could generate excitement and move some buyers that were on the fence. For other properties it may not work and backfire.
Benjamin Bach
May 28, 2008 at 11:47 am
@Faina
Exactly. Maybe if there was a SALE on REO, 10% off all bank owned homes, it would make sense. But to take a new listing down 10%, just because…. seems odd.
I’d cancel my listing and go over to the neighborhood Keller Williams 🙂
Mark A.
May 28, 2008 at 11:53 am
It’s the “raising the price after 10 days” part that’s mostly problematic. In most buyers’ markets nowadays, many buyers that are targeting a specific property are keeping an eye on it over a certain period while shopping around for other properties. The 10% price drop is automatically built into the offer when the buyer is ready to make the offer, no matter where the price stands today. In that regard, with the current market conditions, this pricing strategy will cause nothing but harm to the seller, imo. In a sellers’ market this strategy can work tremendously well to incite offers.
Nick Bostic
May 28, 2008 at 12:07 pm
Maybe I read this wrong or missed something, but the seller is taking a 10% reduction? If they are under contract, are they given the option to pull their listing? Like you said, some people have very specific reasons as to why they’re asking what they are and for the company to force this (if they are) seems pretty rude to me. I know as a consumer, I’d be annoyed. From a Marketing standpoint, I understand the concept of driving up some publicity, but it does leave a bad taste in my mouth.
Sabrina Anderson
May 28, 2008 at 12:13 pm
I think only the sellers who are interested in this will participate. Unfortunately, there are a lot of sellers out there who would be happy to take a 10% reduction to generate a contract/offer.
Trace
May 28, 2008 at 12:18 pm
That’s not only unprofessional, there is a strong argument to be made that such a move violates the fiduciary duty to the client. The 10% off across the board approach doesn’t take into account the homes that ARE price correctly or are already aggressively priced and does not account for many factors unique to each home such as how long they have been on the market, the seller’s timeline, the local market, etc. This also causes of loss of leverage in the future, built in fail for the future, if you will……Want to guess how I’m going to approach you to buy your that home is at $500k when I know it was previously at $450K?
This is clearly not a well thought out strategy that is based in greed. My suggestion to any homeowner that is given advice to simply drop their price 10% on an already properly priced home is to drop that agent and never look back.
Ines
May 28, 2008 at 12:31 pm
Great discussion! thanks for taking part and wouldn’t it be great if agents had a chance to brainstorm ideas like these before our brokerages just threw them out there?
Benn – I agree with you that it is a great form of advertisement, my question is at the expense of whom? Those final sales will ultimately reduce comps and will speed up the slowing market. In the words of the Regional Manager “buy today in tomorrow’s prices” – after the sale…..what will be tomorrow’s prices? As agents we are always blamed for setting the market prices…..after this…..we will be to blame.
Toby – a commodity and a numbers game – it’s all about volume
Benjamin – the letter went out to all CB listings regardless. Some of our customers had a cow and called us very upset. It was not mandatory to participate though. Not one of our clients in over 20 listings agreed to do it.
Christopher – I totally agree with you – the history of the listing stays in the MLS and after the sale, it would be easy to demand a 10% discount or even more. I also see it as a great thing for overpriced listings, for those agents that don’t know how to suggest reductions. Our clients come to us with reductions because we do monthly CMA’s.
Kathy – no prices were reduced without consent – did you read some of the comments from the Miami Herald article?
here are a couple:
Paula – there’s a market for everyone, but I am truly in shock at the whole reaction from CB
Faina – I can only see the backfiring aspect of this – but then again, it may be related to our particular listings – a developer blowout would be a genius idea.
Benjamin – very funny! 🙂
Mark – I wonder what raising the price after 10 days will achieve? Can you see a seller saying…..”nope, I’m not accepting that offer, you did not submit it within the sale period”
Nick – no forcing here – sellers are given the option to participate (none of ours did) – but the only advertising that CB will do int the next 2 weeks will be those properties on sale – the others can sit and watch.
Trace – I wonder where the thought process was behind the 10% reduction……it would have been interesting to see how CB came up with this strategy, which btw, was tested in Tampa already and they claim was a huge success. (sellers were not obligated to participate)
Barry Cunningham
May 28, 2008 at 12:44 pm
Ines , being in marketing for 20 years I think you are dead on.
The timing stunk, it seemed desperate and they did not convey a message of credibility. They will regret this “campaign”. Ill conceived, poorly executed and what are you to expect from a company that has two dead guys in paintings talking as a commercial.
This campaign is DOA and has been panned and the consumer most likely will not respond to a campaign that says you can have 10% off when on the same day the press releases stories showing the market has fallen nearly 20% here.
The association of the numbers , in my opinion, will kill this campaign. But hey, we’ll all be watching.
I do absolutely applaud the effort however unsuccessful the outcome may turn out to be.
Like one above has said…10% off of what? An already inflated and unrealistic sales price?
Will
May 28, 2008 at 12:51 pm
While i am not familiar with your market, I am somewhat familiar with who you represent yourself to be, Ines. Any truly good agent out there advises their clients on the proper valuation of their home and balances that with their need to sell. Thus, by CB “slashing prices” they are saying that you have not priced the home well and they need to reduce inventory. And after 10 days the price goes back up? I don’t think so. Likely an offer would come in even lower than that if it doesn’t sell (which is pretty likely in just 10 days).
As long as Sellers are not obligated to participate then I guess they’re free to do whatever they want… though I can see potential buyers saying to one who isn’t that they “may consider” it if it was so in a way a corporate program could be perceived as a blanket promotion rather than an optional one.
In any case this just smacks of desperation, questionable representation, and lacks appeal to me as a realtor.
Bill Lublin
May 28, 2008 at 1:06 pm
Ines;
I agree with Benn the concept is awesome because it grabs attention – not only for the reduced homes but for the brokerage and the agents. How many buyers will call and be converted through the hoopla generated by the event?
I understand your concern about the light that the agent is cast in, and like you , it makes me wince in my pride about my job, but the job is to get the homes sold, and maybe this is a way to get the consumers out and contacting agents to find those “bargains”.
Jonathan Dalton
May 28, 2008 at 1:28 pm
From a high-level marketing standpoint – brilliant.
From a low-level marketing standpoint, that of the particular seller of a particular property – stupid.
I’ve seen many agents try this out here already – price reduction, this weekend only! Sure it is. Even if you raise the price back up, I’ve already seen what you’re willing to accept. And I’m going to go below that level, too, more likely than not.
Ines
May 28, 2008 at 1:48 pm
Barry – it’s good to get the marketing viewpoint on this, since as Realtors we tent do be focused on serving our clients and could fail to see a big picture.
Did you see the Miami Herald survey?
Take a look and vote – when I last checked – 67% believed that the gimmick would not boost sales.
Will – I totally agree about the blanket promotion…..we’ll just have to wait and see.
Jonathan – offers are coming in, coming in 20 and 30% below asking price – some agents choose to overprice knowing this – some others stick to their guns. I turn listings down every day because sellers don’t have realistic expectations and then I’m supposed to push an unrealistinc clearance price?
monika
May 28, 2008 at 2:15 pm
My manager tossed around a reduce 10% weekly until it sells concept. I was like… no way! That idea left a bad feeling in my mouth and I am so glad the concept was quickly dropped.
The Harriman Team
May 28, 2008 at 2:17 pm
Wow, I don’t think I’ve ever seen a real estate blow out sale before! I understand the concept, maybe even understand the reason why they’re doing it, but…did anyone ask the SELLERS if they agree to this?? As Ines pointed out, the people who need X dollars from their home sale for medical/education expenses or whatever may not be willing or financially able to go 10% or even 5% below their asking price. What is CB going to do if someone stands up and says, “No, I will NOT lower my price for your fire sale”?? I know if it were me, speaking strictly as a homeowner, I’d be pissed. I’m just sayin’…
ines
May 28, 2008 at 2:27 pm
Monika – I can understand price reductions, no one is knocking those – it’s the massive 10% that I don’t get.
The Harriman Team – sellers did have a choice, nothing was forced – TG for that!
Ines
May 28, 2008 at 4:23 pm
Sabrina – didn’t mean to skip you, I think you were being held by our filters. Many sellers may be willing, ours were not because they are priced competitively and many a bit under closed sales.
Just found out CB’s regional manager will be in Good Morning America tomorrow morning.
Benjamin Bach
May 28, 2008 at 4:25 pm
Ines, I can’t imagine other agents or your broker is happy with the program being pushed on them – what type of reaction are you seeing around the office ?
Ines
May 28, 2008 at 4:42 pm
There’s a few agents that are ecstatic about the program – some who just take listings to have listings no matter the price. Some others have not said a word and have not participated (like us). My manager’s job is to encourage the agents to get involved and she is e-mailing us and calling us about how great the media is handling the news and just got the call that the regional manager will appear in GMA. The last office meeting was a bit surreal, everyone psyched about the outcome….an outcome that IMHO cannot be good.
The only positive note I see is that in the big scheme of things, they really don’t have that many sellers participating. They are doing it in the tri-county area and even if they have 1000 sellers participating, it really is a very small portion of the inventory.
Tyler, The Wealth Creation Guy
May 28, 2008 at 6:09 pm
Ines,
I’m going to say that it is a great marketing idea.. but horrible for creating value in the product. If I were your client, I’d feel like your company is telling me that you didn’t know how to price my home to begin with. I’d just trust that the realtor that is listing my home knows how to price it within the market. If I’m priced too high, I just won’t sell… and probably can’t afford to (or have too much pride).
From a lenders point of you (and I’m SCREAMING thinking about this).. I can’t imagine the appraisal issues this would bring up in the coming months when it comes to comparable sales. I’m sure your market is already tough enough, but offering a week long sale isn’t going to help stabilize home prices at all. With that said, I also don’t think it’s your responsiblity to stabalize the housing market either. I just don’t think you want to kick it in the nuts again when it’s already down and hurting… Am I crazy here or do you see what I’m trying to say?
Great post. I forwarded it to some local agents. I’m hearing they’re extremely excited their companies haven’t tried this.. In Iowa, I wouldn’t be surprised if they moved the listing to another company to avoid the ‘discount’ image. Every advertising/marketing campaign speaks your brand.. and last time I checked Coldwell Banker isn’t a discount brokerage…..
Keep the conversation rolling…
Tyler, The Wealth Creation Guy
Ines
May 28, 2008 at 6:23 pm
Tyler – I absolutely hear what you are saying and you are right about appraisal issues in the future. Right now appraisers are not using foreclosed sales in my area and can afford to throw out a comp if it’s a distress sale – but with this sale……no excuse – the 10% will count as a comp. But as I said before, as many listings as may be participating, it’s a miniscule amount of the inventory.
Now the trust part hits me like a ton of bricks. I am an expert in my market place and a 10% reduction is an out of control number (IMO of course)
Mariana Wagner - Colorado Springs Real Estate Agent
May 28, 2008 at 6:25 pm
I am with you on this one Sistah!
What I am most entertained by is your photo: The Cheezits WERE $2.50. Now they are on sale for 2 for $5.00 … What a deal.
Ines
May 28, 2008 at 7:55 pm
@mizzle – I’m glad you caught that one, I put it there for you! 🙂
Athol Kay
May 28, 2008 at 7:57 pm
I think the overall message buyers will receive is that everything was 10% overpriced before the sale, and all CB’s marketing oomph will simply drive that message home. CB won’t likely be saying that in so many words, but that’s the message buyers want to hear, so they’ll probably hear that regardless of the advertising content.
I think this may be a serious mis-step in CB’s branding. The easy path to becoming a discount brokerage would be to… gee I dunno… start discounting. :-/
Dan Connolly
May 28, 2008 at 9:36 pm
I think this approach is unbelievable. You have a major company telling buyers that prices are arbitrary. As if any Seller is going to give up 40 or 50 thousand dollars on a whim, so that Coldwell Banker can have a nice burst of activity on their listings. And when the sale is over, the management actually believes that they could go back to their old prices and have any chance of selling for that price?…It is really nuts!…I just can’t believe that any Seller would go along with this unless they were on the verge of reducing by 10% anyway.
I predict that the media will treat this as more proof that prices are falling and the housing market is in the toilet.
Ines
May 28, 2008 at 10:03 pm
Athol, you hit a point home that I couldn’t grasp before but it has become clear. If CB expects their sellers to discount, shouldn’t they give in a little as well? It only seems fair…..everybody discount! Then it would be a true SALE!
Dan – you should have written the post…..my sentiments exactly.
Thomas Johnson
May 28, 2008 at 10:33 pm
Ines: As an ERA agent and “in the family”, so to speak, I don’t get it. This implies that CB listings are overpriced. If I were a competitor, I would be all over every expired CB listing with a correct CMA.
As an agent, I would resent my franchise or my broker, to whom I pay healthy fees, disintermediating me and my professional pricing strategy as an agent. Does CB think that we take listings to watch our signs rust? If they picked up my health insurance and half my FICA taxes and paid me on a W-2, I might feel differently. Are you salaried employees?
BTW: I will sell your house or ERA will buy it!
Frank Jewett
May 29, 2008 at 12:06 am
Buyers as a group don’t really care if sellers need the money. Sellers waiting because they need the money
may end uphave ended up following the market down in many cases. I agree that the plan is unworkable, but I don’t believe seller need is a valid issue any more than bank need or builder need is a valid issue. You’ve missed the market. If you can’t afford to wait indefinitely, you need to price to sell as quickly as possible because the seasonal peak occurs right about now.Frank Jewett
May 29, 2008 at 12:29 am
Thomas, unfortunately many listing agents “pricing strategy” is to outbid their competition based on their superior marketing and negotiating skills. I’ve heard veteran agents confess to accepting listings that were more than $100,000 over their own valuation. I’ve also heard agents who have lost listings because they refused to go along with the highest price given to the seller by an overbidding agent.
I agree the plan is unworkable because it resets the market, crushing prices for all of your competitors’ listings and all your future listings. Even worse though, it kills comps for any pending sales that require an additional appraisal before closing. Imagine all of the deals that would fall apart based on those low comps. Think any of those homeowners might file a lawsuit against a “clearance sale” gimmick?
Jennifer in Louisville
May 29, 2008 at 6:26 am
Wow – makes me glad I’m not Coldwell Banker. The incompetent real estate agent that takes over priced listings can afford to do this – they got the room to come down. The real estate professional that has their properties priced appropriately can not, and should not.
And only a fool would believe that prospective buyers are going to buy the “its only a 10 day sale”. Weeks and months after that “10 day sale”, buyers will still be looking to knock 10% off the price right off the bat. It affirms to the consumer that “listings are all over priced, so you can take 10% off right off the top”. Ultimately, if that assumption sticks in the consumers mind, it will only result in everyone over pricing their listings so they have negotiation room for when they get offers.
Don Reedy
May 29, 2008 at 6:40 am
Just yesterday I watched as an experienced agent in my office played out the root cause of what CB is trying to solve above. It made my heart sink.
Six months ago I went on a listing appointment, and the widow told me her home was worth (and she wanted to list at) $800,000. I showed her info, gave her my opinion, and told her with love that her home was going to sell for $675,000 to $700,000. Unhappy with that, she contacted another agent in my office who was happy to take the same data I had and price the home at $805,000.
Almost six months later, the price has now been “reduced” to $675,000 to $725,000 (our California value range marketing).
Look, CB and the industry should be shoving all the Realtors who can’t determine the honest selling price up front out the door. This is what happens when a good company relies on the 80% who can’t do their jobs, and leaves the remaining 20% of their quality people with a crazy ball and chain like this. I hope CB brings this to Southern California. I would love to gather the press together and provide them with enough info to help put this CB marketing campaign permanently on the shelf where it belongs.
Bill
May 29, 2008 at 6:59 am
No, you are not “totally off” on this at all. The campaign is a blue lighht special, K-Mart absurd one.
But what do you expect from a company that thinks the internet is a big black hole
and that they must put their valuable listings for free on any site that will take them
all in the name of “exposure”. This campaign, along with their internet marketing strategy, is constructed by people with false knowledge of how to drive qualified traffic to listings.
ines
May 29, 2008 at 7:19 am
Thomas,
You are absolutely right and we are not salaried employees, my $1400/month insurance would be a nice perk though. 🙂
Frank – there are many agents that buy their listings – there’s a guy in my immediate market that takes any listing at any price for volume’s sake knowing that the seller will eventually reduce, an offer may come by and it’s nothing personal.
You say buyers don’t care if sellers need the money and I agree, but CB is representing the seller and should at least consider their fiduciary duties. I see what you are saying about agents overpricing, but I can tell you that our listings are never overpriced. 3 years ago it didn’t matter what price the listing had, but now we turn down listings if the sellers have unreal expectations (even if they are in financial distress). We’re in the business of selling properties, not holding inventory.
I also thought about the lawsuit opportunity from these homeowners – but, as I said before, not enough properties are participating to really make an impact on the market (at least I hope so).
Jennifer – you got it – it may be a great marketing tactic, but every other aspect surrounding this concept is not good and the repercussions are horrifying. Funny is that those agents that achieved the “10% reduction” from their sellers, are those that overprice listings and those that have not been in the business long.
SaraB
May 29, 2008 at 7:33 am
I like the idea in that Sellers get to leverage other Sellers in the effort to sell their home. Sort of like going to a mall verses a stand alone store. The concept is something you can use to create buzz. However, I agree with all the comments surrounding the percentage off.
Maybe the marketing angle could be salvaged if it didn’t center around price. What else do Buyer care about that could be offered for this limited promotion? A mortgage broker offering something, a home warranty, mover’s specials, free painting, paid for internet/cable, a new big screen tv thrown in, just ideas. Because CB is as big as it is, you could just its size to get whatever it was promoting at a good price.
I think the idea has legs, just needs to be refined.
SaraB
May 29, 2008 at 7:38 am
PS- I like the picture. The Cheez-Its were $2.50, but the price has been rolled back to 2 for $5. Now that’s marketing! 🙂
Fran MacDonald
May 29, 2008 at 8:01 am
Reducing properties by 10%? Would your family practioner or dentist do the same? I think not. If we are professionals rather than “salespeople” then we are not misleading the seller giving him/her an unrealistic CMA or suggested listing price. Everyday I see properties coming on the market for far more money than the seller can realistically realize on the sale of his property, which brings me to “why are Realtors doing that? Buying the listing? Where is the professionalism in doing this? There are times that I have to take a listing for more than I want to, sometimes, there are reasons, the seller is a bad situation and insists on trying it, and other times, I do it, but my seller knows without any doubt where I stand on what price he/she will receive for his property. I even have them sign and date that CMA suggested price so that later, they must own up to their own error.
Where are the brokers when a newer agent is taking a listing? It is ultimately the responsibility to work with every new agent they bring on board, teaching then to do a fair and honest market analysis, and teaching them overcome the objections of over pricing. In the end overpriced listings sell for less than they would have sold for had they gone on the market for the right price, the still Realtor gets a slightly less commission. Who loses in this scenario? The seller and who led the seller up this path? The Realtor? And this is professionalism? Wouldn’t Mr Webster cringe if he were here today.
My first broker, a Re/Max Office, worked with me on this, she did an excellent job and taught me good values. Kudos to my broker; Pam Young!!! But I was always there asking the questions, I had a thurst for knowledge and I wanted desparately to learn to do it right. She didn’t have to track me down to see what I was up to, I just asked too many questions for her not to know what I was up to. I left a franchise mainly because of the high cost involved and when I saw the market turning and finally settled for a small Real Estate Office with affordable fees, a knowledgeable broker, and take all the offered classes I can get under my belt. For me, I want to be a cut above the rest! If Fran says it, it must be true! That’s what I am striving for as a Realtor in my community. The reputation of being a fair and honest Realtor!
As for leaving Coldwell Banker Franchise for another large franchise, let me caution you. Life is not perfect! I left one for another and I was very disappointed. Promises,oh yes, as for delivery, I didn’t notice anything. I like where I am today. We all work together, we all get along, and it’s a very nice environment to be in. But then, I prefer fewer personalities in a business environment. Simply a preference. Fewer distractions and more time to do what I do best, work with my clients who are buyers and sellers!.
Benjamin
May 29, 2008 at 8:05 am
In all professions, downturns in the marketplace can call for new and innovative approaches. However, there are also lines that should never be crossed. This was one of them. Not only is it doing a disservice to the sellers who opted into this silliness, it is just adding more fodder for those that like to kidney punch the real estate profession every chance they get.
Ruthmarie Hicks
May 29, 2008 at 8:58 am
This is an excellent example of “how to.” The question is “How to what?” If your answer is to further drag down the prices terrible market – and make sure they STAY down, then you’ve got the right answer. This is a miserable idea for all the reasons sighted above. I’ll site a couple that really cause the most concern.
1) You are sending a message that all the homes SHOULD be lower then they are now. Implying that you regularly over price them.
2) I question whether this our violates fiduciary obiligations to clients.
3) It screams of despiration.
4) We already HAVE reputations that put us lower than a used car salesman – do we really need sales tactics that help to solidfy this image?
ines
May 29, 2008 at 9:24 am
Sara B – there’s always room for creative marketing, but the idea was thrown out there without being refined – the sale starts June 1…..it’s too late to turn back (and they are very proud of it btw)
Fran – CB’s training is fabulous for a new agent and I really recommend it – the problem arises when you have office managers that are pushing inventory to make their quota at the end of the month and not only do they not know the market, they don’t take the time to discuss pricing with those new agents. There are many flaws, but we go back to the big corporate business model where a lot of the personal and small details are lost.
Benjamin – and if you have read the comments for both the Miami Herald articles and the Sun Sentinel, you will see the low blows – I find them humorous…..but it just adds to our industry’s fire.
Ruthmarie – it’s an interesting discussion for sure – wouldn’t it be nice for this to happen BEFORE the concept is implemented?
Matt Thomson
May 29, 2008 at 11:10 am
I can’t imagine a company requiring this! I know several Keller Williams offices nation wide had done this same thing last year, and with a fairly high level of success, but it was optional. I personally hate the idea and would never take it to my sellers. I feel I’ve put too much time and effort into pricing their homes correctly, and for the most part my sales reflect that.
That being said, there’s no doubt that the interest generated drew more buyers into the KW offices that tried this…but at the expense of the sellers? I’m not sure.
ines
May 29, 2008 at 11:16 am
Matt – the letter was sent out to every CB listing, but participation was not mandatory. I can also tell you that my office has already had walk-ins from the advertised sale and it won’t even start until June 1st.
ines
May 29, 2008 at 11:33 am
Here’s a video done of the sale in Tampa – although it was 5% not 10%
https://www.youtube.com/watch?v=7bMz5muotwY
Vicki Moore
May 29, 2008 at 4:11 pm
I would be concerned about the perspective it would give my seller clients. I work hard to create trust. I’d be horrified if my company went around me and sent a boilerplate letter telling them that unless they lower the price of their house by 10% they’re not going to receive the marketing I had already told them they were going to; that I don’t know what I’m doing because I obviously priced their property too high; and that one size fits all.
Melina Tomson
May 29, 2008 at 6:39 pm
Ines,
You are right on. I think it tells sellers that CB agents have no clue how to price a home and don’t know how to sell without a gimmick.
Ann
May 29, 2008 at 7:42 pm
I agree that it adds to the perception that we are not professionals but “salespersons”!
Doctors and lawyers (professionals) are not even allowed to advertise!
An “early summer” Special Feature of “Best Values” would have been more appealing to me!
I left CB and the whole “corporate” atmosphere and am happier in a small office where I can focus on my business and not be subjected to this type of “hype”!
ines
May 29, 2008 at 8:38 pm
Vicki, I did some numbers this afternoon and I realize that there’s too much hype about this whole sale – Miami Dade has 268 participating properties 42,000+ listings (the effect will me minor).
In my immediate market of Miami Shores, there’s only 1 property participating in the sale and it’s not even a local CB agent that knows our market.
Melina – I do wonder how many will think it’s a gimmick. I also wonder if CB did this to raise the morale of their agents who have fallen into a slump…..everything is possible.
Ann – we agree that there could have been better ways to handle it – of course this is my opinion
Fran MacDonald
June 1, 2008 at 7:59 am
A property that is in good condition, and reasonably priced doesn’t need a sale. It needs a Realtor who has a buyer for it.
Todays buyers are savvy and know a good value when they see one. They have been searching for months before reaching this decision.
My Partners Realty office recently listed such a property and it went pending in 5 days. I rest my case.
ines
June 1, 2008 at 8:46 am
Fran – “it needs a Realtor who has a buyer for it” …..I think that’s the bottom line, a willing and able buyer. The concept is supposed to jump-start the will of those buyers waiting for the bottom…..but the repercussions are massive IMO.
Nadia
June 1, 2008 at 7:19 pm
Ines,
Thank you for this article. Unfortunately I am just seeing it now and reading some of the comments. I have to admit that I was one of the few sellers who bit the bait and have had to reduce my property price.
I agree with most of what you have said, and some of the comments that I have read. I have to admit that when I was first approached about this idea, I was pretty upset, and my first thought was that CB would also reduce some of their fees to compensate or motivate me to want to reduce my property price. And when I heard not, I thought it unfair and no intention of participating. I think that my property was priced at its value, based on CMA’s done at the time of its initial listing 1 month ago, and I have already reduced the price once since then.
The reason why I decided to go with the sale idea, even though I didn’t agree with it, was because I feared that if I didn’t, my property wouldn’t get the same press that others who are participating would be getting – and that my property would get left behind. My thoughts on that were, why couldn’t CB have done the same press that they are giving them now that they are on sale, from the get go. And yes, why 10% ?? I asked my agent that numerous times. While I would have been more able to do a smaller reduction, a 10% reduction will put me in the whole…and I’m still yet to figure out how to work that out.
However, I am hoping that since there is in fact so much inventory, that the press will attract some attention to those properties that are in the sale (mine included) even though I do think that my property was fairly priced to begin with, it is now grossly under valued.
But what’s a seller to do? I applaud CB for trying something, anything!
However, I do agree with this point though, if it does generate an offer, won’t this make the slump worse?
But what would you suggest as the solution?
Nadia
June 1, 2008 at 7:26 pm
sorry, I realise a few typos in my last post, so hope you figured out what i was trying to say as i typed in haste.
But another comment I wanted to make, when you (and other agents) say that you have priced properties “correctly” to start with – in these market conditions how do you know what is the “correct” price? For my property, the range at this point is so wide, I don’t really know what the correct value is.
Frank Jewett
June 1, 2008 at 8:52 pm
But another comment I wanted to make, when you (and other agents) say that you have priced properties “correctly” to start with – in these market conditions how do you know what is the “correct” price?
“Priced correctly” is one of those industry cliches that is more claim than fact, especially when part of the rationale for that correct pricing is what the seller needed to hear to sign the listing agreement.
ines
June 2, 2008 at 7:50 am
Nadia,
First, let me thank you for commenting here and hopefully I will answer some of your questions.
Pricing, when done by an appraiser is considered an “art form”, so I can understand yours and many other sellers’ frustrations when trying to come up with the right price for your home.
Pricing a home for sale in today’s market should take into consideration only closed sales (since there are plenty of overpriced homes still in Miami). The agent you hired should be proficient in your area and know the inventory well to be able to give you the correct assessment on price. Rick and I use 3 pricing models and put them together with our sellers when they are ready to price. One takes into consideration all the closed sales in the immediate area in the last 6 months, the other an average price per square foot in the last 6 months and the last a radius search within a mile in the last 6 months. Then you have to look at each property and compare location, condition and appeal – (example, we have a listing in a great location but needs a lot of work and doesn’t show well because owners refuse to declutter and stage). By being proficient in the area, your agent would know the condition of other closed sales to be able to compare to your home.
There are plenty of well-priced homes in Miami that are not selling and you and your agent will have to decide on a strategy from the beginning. Will you reduce (as you said you have) or do you wait? That’s when you become a team and strategize together knowing your agent will give you expert advice.
Honestly, I hope you get results from the sale but I urge you to have a plan if it doesn’t work out, for all the factors we discussed above. Feel free to keep asking questions and I am sure others will jump in as well.
Buzz Factory
June 5, 2008 at 9:35 am
Wow, judging by the fact that this topic has generated 57 posts tells me that it is a hot topic in South Florida. Given the amount of free publicity that this sale generated, I’d say the promotion from a tactical marketing perspective has achieved its goals. The goal is to get buyers off the fence and inject some energy into a stagnant market, not to devalue the services of professional Realtors. Outstanding concept and unbelievable execution. If I were working as a Realtor in the area I would be asking my broker “What are you doing to help me sell homes?”
Ines
June 5, 2008 at 10:51 am
Buzz – I have to agree with you that from a “tactical marketing perspective has achieved its goals”. Every agent should be looking for out of the box thinking from their brokerages – for that alone, the concept gets an “A” in my book, but you also have to agree that the healthy discussion generated from this post has pointed out some important pros and cons regarding the sale.
Kim
September 26, 2008 at 1:22 am
Ines –
Noted that you have not commented after the 10 Day Sales Event was completed. Do you have any personal opinions, along with any stats to update us on regarding the success/failure of the promotion? Thanks.
ines
September 27, 2008 at 10:29 am
Hi Kim, I actually left Coldwell Banker and don’t have “inside information” anymore – but will come back and comment on a few facts I observed. Thanks for the reminder.
ines
September 29, 2008 at 9:44 pm
Hi again Kim,
I found this article from the Miami Herald written after the sale – out of those 66 contracts, I don’t know how many actually sold. I know for a fact of one property that participated in that sale in The Miami Shores that went under contract and the sale fell through and the house is still on the market today.
June 19, 2008 Thursday
Door-buster home sales event draws buyers
BYLINE: MONICA HATCHER, mhatcher@MiamiHerald.com
They slashed prices and the buyers came.
Coldwell Banker’s 10-day presummer sales event that ended June 10 netted 66 sales contracts on 597 properties. Not too shabby for a market in the doldrums, according to Gus Rubio, Coldwell’s senior vice president for the Southeast region. He said contracts were dribbling in by the day.
Whether future prices drop, jump or stabilize, people know “they bought at a price that was lower than anything on the market and they got the most value for their money.”
The sale, which was widely publicized with newspaper, radio and Internet ads, was an attempt to draw those buyers waiting for further price declines into the market sooner.
To participate, sellers agreed to drop asking prices at least 10 percent for homes valued at $750,000 or less. Those with homes worth more could drop prices by 5 percent.
The event itself implied further price declines, which some in the real estate profession criticized. Rubio even described it as opportunity to buy property “today at tomorrow’s prices.”
But the results may indeed suggest, as some real estate professionals have claimed, demand has been pent-up over the years as values soared beyond the reach of most buyers, and that price declines will breathe new life into a stagnant market.
Coldwell Banker, the largest real estate brokerage in South Florida, was responsible for one of every three sales in the region last year, according to data from the Florida Association of Realtors and the Real Trends 500 report, making their unusual sales-event noteworthy.
Rubio said the homes under contract span the price range from the mid-$200s to more than $1 million. Open houses were scheduled at each participating home and buyers were offered a range of discounted services and products with their purchase. The average traffic per open house ranged between five and seven people.
A Palmetto Bay home listed for about $450,000 drew 42 people to its open house.”Not even in the heyday, when we were in the real estate boom and things were selling in minutes, do I remember having 42 people at an open house,” Rubio said.
”With the 10 percent reduction — and it was already at a low price — it was 26 percent below anything within four or five blocks,” Rubio said.
Some real estate experts have predicted prices will fall another 15 to 20 percent before they bottom out.
None of the homes in the sale were bank-owned properties or foreclosures.