But that agent told me “your home sold, guaranteed”!
When it comes to real estate, the "your home sold guarantee" is like the siren song of the industry—tempting, but potentially disastrous if you don't steer clear of the rocks. It promises peace of mind by assuring that if your home doesn’t sell, your agent will buy it themselves. But before you pop the champagne, let's dive into the fine print and see why this guarantee might not be the golden ticket it seems.
The Enticing Promise: "Your Home Sold, Guaranteed!”
The idea is simple: if your house doesn’t sell within a specified timeframe, the agent or company promises to buy it. For those in a hurry to move—perhaps due to a new job or just the thrill of a change—this sounds like a dream. But beware, this promise is often just a clever marketing tactic to get you in the door, only to hit you with the dreaded fine print.
The Catch: Selling Below Market Value
Here's the kicker: this "guarantee" usually means the agent will only offer about 75% of your home's market value. So, if your home is worth $400,000, you might only get a $300,000 offer. That's a $100,000 haircut you probably didn't plan for.
Why the Lowball Offer?
It's all about risk management. Agents aren't eager to buy homes at full market value, especially if they might sit unsold. Offering 75% ensures they can flip the home for a profit. It's a business strategy, not a charitable service.
The Real Goal: Generating Leads
The "your home sold guarantee" is less about buying homes and more about getting potential clients on the hook. The flashy promise gets you interested, and then the real sales pitch begins. The guarantee itself might never even come into play because the agent’s main goal is to secure your listing and sell your home the traditional way.
The Fine Print: What You Need to Know
Beyond the 75% buyout, there are other strings attached:
- Strict Conditions: The guarantee might only apply if you meet specific criteria, like setting the price as the agent dictates or making costly repairs.
- Extended Listing Agreements: You could be locked into a longer-than-usual listing agreement, making it tough to switch agents if you're unhappy.
- Hidden Fees: Some agreements include hidden fees that aren't immediately obvious, further reducing your net proceeds.
- Limited Marketing Effort: Knowing they can buy the home at a discounted rate, some agents might not put in full effort to sell your home at its true market value.
A Better Approach: Transparency and Fair Value
Instead of falling for flashy guarantees, seek agents who prioritize transparency and your best interests. A good agent will focus on selling your home at its true market value with effective marketing strategies and realistic pricing.
Questions to Ask Your Agent
If you're considering an agent offering a "your home sold guarantee," make sure to ask:
- What is the exact buyout price under the guarantee?
- Are there any conditions or requirements for the guarantee to apply?
- What is the length of the listing agreement?
- Are there any additional fees or costs associated with the guarantee?
- How will you market my home to ensure it sells for its full market value?
The Bottom Line: Empower Yourself with Knowledge
In real estate, knowledge is power. Understanding the true nature of the "your home sold guarantee" can prevent costly mistakes. It's easy to be swayed by a promise that seems to offer peace of mind, but it's often just another sales tactic designed to benefit the agent more than you.
Now, let's talk about the Trust in Real Estate Services Act (TRESA), which came into effect on December 1, 2023, and how this changes the entire program discussed above. TRESA is all about protecting consumers and ensuring agents act in the best interests of their clients, not themselves. If an agent wants to purchase a property from a seller client, they face a severe conflict of interest. Under TRESA, the agent cannot represent the seller in this scenario because they have confidential information about the seller, such as their motivation to sell and acceptable price. Even if the client relationship ends, the agent must protect this confidential information and not use it for personal gain[1]
Some brokerages even have policies prohibiting their agents from purchasing properties listed by the brokerage, ensuring that the agent's focus remains on serving the client's best interests. At Blue Door Realty, the client comes first; its one of our core values “Be Customer Obsessed”. So, before you dive into any agreements, make sure you're fully informed and choose an agent who values transparency and fairness over flashy promises.