I went on a listing appointment the other evening. I know I shouldn’t be shocked, but I was. I spent two to three hours researching and going over pricing on the property the homeowners were looking to sell. My research included a few drive by’s of home that sold in the past 6 months. Two very good comparable properties were on similar parallel streets to the house I was researching..
I went through my marketing presentation than we started talking about pricing. I was told that the home seller had received prices $50-70k higher. I had done my homework and I was confident with the price I was presenting. It was late, but I had to go back to my office and reconfirm my decision….. I was right, I had spend tons of time researching the pricing of the home and reconfirmed the comparable properties.
This sound silly, but lots of real estate agents, even in a buyers market will take overpriced listings!! In our industry we call it buying a listing. Buying a listing is where an agent gives a seller an overinflated price to get the listing. These agents play on a seller’s desire to get as much money for the house as they can, knowing full well that they can’t sell the home for that price. But once the listing contract is signed, there is not much a seller can do, they are locked in.
A seller who chooses an agent based on the highest list price is ultimately the loser.
It sounds silly but many home sellers will base their decision on what agent to hire based on the highest price given. The comparable properties will speak for themselves. At the end of the day, the market establishes the fair market value for your home.
As a potential home seller you would be far better off determining ahead of time that you will choose a real estate agent based on:
An agents marketing plan and track record
The highest list price given.
BE AWARE IT OFTEN DOESN’T MATTER TO THE REAL ESTATE AGENT IF YOUR OVERPRICED HOME SELLS or NOT
Every for sale sign and listing is free advertising for the agent…. listings get an agent more business. It creates buyers calling in on their properties. If yours is overpriced they will sell them another one that isn’t. Meanwhile, they will work on getting a price reduction out of you and if your house does sell, bonus!!
I did some quick research. In Tewksbury Massachusetts, there are currently 114 home for sale on the market. In the past 6 months 128 homes have sold. In the past 6 months there have also been 159 properties with a total of 225 price changes!! In the same time period, 68 properties expired unsold with a median /average list price about 9-10% higher than the median /average price.
Out of the houses sold, they sold for 97% of the listing price at the time of contract and for 93% of the original list price. What does this tell us? That to sell your home you need to be within 3% or so of the fair market value if you overextend your list price more than 3-5% of fair market value you will be looking at price changes in your future. If you list your home 7-10% over asking your are probably looking at an unsold home.
Ill let you in on a little secret…. A home with less marketing time usually sells for more money! Why? Peak activity is usually in the first few weeks of a listing. Your serious buyers who have been out there in the market place are usually the first buyers through the doors. They are tired, educated about the market place and are afraid to lose a good home and while you have created peak activity you have also created competition among buyers. They will usually offer the highest price.
Another little secret…. if you under price your home even 3-5%… the price will usually bid up!!. It creates a buying frenzy. Think about it, if buyers are going thru homes that are overpriced 5-10% and you under price slightly, your home will get a lot of attention, because it is a market leader and looks good compared to the other properties!!
At the end of the day, what creates fair market value of your home is the market itself. If buyers are not willing to step up and pay the price for your home, your home is not priced at or near fair market value.
Instead of selecting an agent based upon the highest list price given, you will be served far better by selecting an agent based upon their marketing plan, their communication of market data and their track record. Don’t let your next real estate agent buy your listing.
This post was provided by Kevin Vitali of EXIT Group One Real Estate In Tewksbury MA. You can contact Kevin by email at firstname.lastname@example.org or call 978-360-0422.
I pride myself in the quality of my work while helping buyers and sellers make dreams come true.
Real Estate Services in the northeast Massachusetts, around the Merrimack Valley, Southern New Hampshire including the towns of Andover, Billerica, Boxford, Chelmsford, Dracut, Georgetown, Groveland, Haverhill, Lawrence,Lowell, Merrimac, North Andover, Newbury, Newburyport, North Reading, Rowley, Tewksbury, Tyngsboro, Westford, Wilmington, West Newbury