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.
There was one flaw to this property which was high tension wires ran thru the property. My comps also had properties with the same high tension wires running thru them.
I went through my marketing presentation then we started talking about pricing. I was told that the home seller had received a sale price of $50-70k higher.
They wanted to use me because of the strength of my marketing plan. But I refused to list the house for that much money. I owe my clients honesty. My homework had been done and I was confident with the price I was presenting to the home sellers.
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.
What is Buying a Listing?
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 over inflated 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. They are experts at badgering you to lower the price and will immediately start to do so when there are no showings on your home.
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
instead of
the highest list price given.
BE AWARE IT OFTEN DOESN’T MATTER TO THE REAL ESTATE AGENT IF YOUR OVERPRICED HOME SELLS or NOT
For some agents it doesn’t even matter if your house sells. They are using your house for their personal exposure. 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!!
Your house is being used to sell homes that are properly priced!
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…. It is almost impossible to underprice your home, especially it a hot seller’s market. Pricing your home right at or just slightly under market will create a buying frenzy. Think about it, if buyers are going thru homes that are overpriced 3 or 5 or 10% or more 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!!
Don’t Let An Agent Buy Your Listing
At the end of the day this home finally sold after 3 agents and 4 major price changes. It sold for $10,000 under the price I gave. It was on the market for 198 days. If they had put it on for the right price they would have saved a several months of carrying costs (the house was vacant and the owners had already moved), plus it might have sold for more if it sold quickly!
I mean, I get it. You want to capture as much money out of the sale of your home as possible. Look at the comparables your agent is showing you. Do they make sense?
Ultimately, what creates fair market value of your home is the home itself and what the market is willing to pay. 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, use common sense.
Other Real Estate Resources:
- Wendy Weir How An Appraiser Comes Up With Your Homes Value
- Chicago Tribune Beware of An Agent That Over Inflates Your List Price
- Kyle Hiscock What is a CMA?
- David O’Doherty What Sellers Should Know Before They Price Their Homes
__________________________________________________________________
This post was provided by Kevin Vitali of EXIT Group One Real Estate In Tewksbury MA. You can contact Kevin by email at kevin@kevinvitali.com 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
