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Seller 1: Enjoyed living in a 20 year old colonial on a good lot in a desirable neighborhood for nearly 19 years. They made several improvements in that time including an addition on the back of the home expanding the living area and finishing the basement. Seller 1 made the decision to "move up" to a larger new construction home in early 2005 (the beginning of the market turn) and took out a "line of credit" second to make the deposit. The appraisal on the existing home came in high as comps were those sold in the later part of 2004.

They were on the market in the spring at an optimistic asking price (aka: greedy price). One month after the initial listing, they closed on their new home and moved out. The listed home was now empty revealing all of the ugly blemishes. Two agents and 9 months later, the home has not sold. They lowered their price several times but always too late. They were following the market down, not leading it.

Upon visiting the home, we discovered several deficiencies. Deficiencies that would perhaps be overlooked in a strong sellers market but not now. Carpeting was badly worn and stained, the hardwood floors were awful and the interior paint was OK but not fresh. Using a buyer's eye, all I saw was work that would have to be done if I otherwise would consider this home. There are too many homes on the market that do not require "freshening."

The painful "blood rush" headache came when we advised that the work required on the home to be competitive is at least $5,000, the probable list price was $20,000 less than what they owed, and selling costs would most likely be in the $25,000 range and it might take a long time to sell. The rub: neither prior listing agents did them any favors. The first agent collected the "new home" commission with a reduced listing fee on the resale. The second agent did not advise their client on "freshening" to be competitive and continued the inflated asking price in a downward market. This is not to say that this client didn't have a hand in the greed price. (See Egocentric influences on pricing a home.)

It's always hard to be the bearer of bad news. I would rather not have the business than to mislead a potential client. I even advised them to get a second opinion from a reputable agent (like consulting before major surgery).

Furthermore, the seller's mindset at this point is to try and sell in the next few months and then go to plan B: list it for rent hoping the market will turn sometime in the future. The rental market is not all that great either.

Here's where a fee for service arrangement helps this potential client while paying us for our expenses: (A) client pays up front marketing costs (all the things we do to list and market the home) and then (B) pays a success fee if we are lucky enough to get a ratified contract that goes to close. The success fee pays for the contract to closing activities we perform. The total fee is much less since we are sharing risk.

The bottom line: There are many, many more of these stories...and they are being created as we speak (or write, as the case may be). Make sure you are getting the very best advice, you have all the data to make an informed decision and DO NOT over commit!