How it works is this. The agent will estimate a reasonable value for the home (which by the way SHOULD be your listing price!), then they will subtract 10% to 20% off of that price which will be the price they offer to you for them to purchase the home. The 10% minimum off has two purposes. If the agent does have to purchase the home, they certainly don't want to take a loss on it, they too will have a cost of sale. The other purpose is to use as leverage to get you to lower your price to the market. If the home doesn't sell quickly and your deadline approaches, they will come to you for a price reduction in the market, as long as the price the recommend to you is above the price they have agreed to on your house, you will do it. Here's something to think about. If a company or agent offers a guaranteed sale and they hardly ever have to make good on their purchase, you didn't need the guaranteed sale in the first place and if they have to buy a lot of houses, maybe they aren't very good at marketing homes for sale!
The reasons STL Realco doesn't offer guaranteed sales are first, we won't take a listing that is overpriced by more than 5% or 6%, it wastes our time and is a disservice to you. Second, we don't want to buy your house, we want to sell it for you and the way to do that is to deliver the best possible advice on pricing and condition, using professional photography which we pay for in order to make sure everyone who might be interested in buying your house know it is available and finds it attractive for the price, condition and location.
Have you ever heard a radio ad for a real estate company offering a "guaranteed sale"?
Here's why that's a gimmick. When a good Listing Agent takes a listing, they give you an honest evaluation of the price/condition that will result in a successful sale. They might be off a little, but usually not more than 5% or so though. But, sometimes a Seller doesn't believe or trust that agent, and sometimes an agent doesn't have the confidence to tell the Seller the truth about the price or the agent's ability to sell their home. Sometimes a Seller needs to sell by a certain date because a new home is under construction or a move out of town is scheduled. That's when an agent might offer a guaranteed sale.
Automated Blog Update from Mr Phil's Real Estate Page on Facebook.