Meeting With Realtors
So you’ve decided to sell your home
and have a fairly good idea of what
you think it is worth. Being a
sensible home seller, you schedule
appointments with three local
listing agents who’ve been hanging
stuff on your front doorknob for
years. Each Realtor comes prepared
with a "Competitive Market Analysis"
on fancy paper and they each
recommend a specific sales price.
Amazingly, a couple of the Realtors
have come up with prices that are
lower than you expected.
Although
they back up their recommendations
with recent sales data of similar
homes, you remain convinced your
house is worth more. When you
interview the third agent’s figures,
they are much more in line with your
own anticipated value, or maybe even
higher. Suddenly, you are a happy
and excited home seller, already
counting the money.
Which Realtor do you choose?
If you’re like many people, you pick
Realtor number three. This is an
agent who seems willing to listen to
your input and work with you. This
is an agent that cares about putting
the most money in your pocket. This
is an agent that is willing to start
out at your price and if you need to
drop the price later, you can do
that easily, right? After all,
everyone else does it!
The truth is that you may have just
met an agent engaging in a
questionable sales practice called
"buying a listing." He "bought" the
listing by suggesting you might be
able to get a higher sales price
than the other agents recommended.
Most likely, he is quite doubtful
that your home will actually sell at
that price. The intention from the
beginning is to eventually talk you
into lowering the price.
Why do agents "buy" listings? There
are basically two reasons. A
well-meaning and hard working agent
can feel pressure from a homeowner
who has an inflated perception of
his home’s value. On the other hand,
there are some agents who engage in
this sales practice routinely.
What Happens Behind the Scenes
Whichever the case, if you start out
with too high a price on your home,
you may have just added to your
stress level, and selling a home is
stressful enough. There will be a
lot of "behind the scenes" action
taking place that you don’t know
about.
Contrary to popular opinion, the
listing agent does not usually
attempt to sell your home to a
homebuyer. That isn’t very
efficient. Listing agents market and
promote your home to the hordes of
other local agents who do work with
homebuyers, dramatically increasing
your personal sales force. During
the first couple of weeks your home
should be a flurry of activity with
buyer’s agents coming to preview
your home so they can sell it to
their clients.
If the price is right.
If you and your agent have
overpriced, fewer agents will
preview your home. After all, they
are Realtors, and it is their job to
know local market conditions and
home values. If your house is
dramatically above market, why waste
time? Their time is better spent
previewing homes that are priced
realistically.
Dropping Your Price...Too Late
Later, when you drop your price,
your house is "old news." You will
never be able to recapture that
flurry of initial activity you would
have had with a realistic price.
Your house could take longer to
sell.
Even if you do successfully sell at
an above market price, your buyer
will need a mortgage. The mortgage
lender requires an appraisal. If
comparable sales for the last six
months and current market conditions
do not support your sales price, the
house won’t appraise. Your deal
falls apart. Of course, you can
always attempt to renegotiate the
price, but only if the buyer is
willing to listen. Your house could
go "back on the market."
Once your home has fallen out of
escrow or sits on the market awhile,
it is harder to get a good offer.
Potential buyers will think you
might be getting desperate, so they
will make lower offers. By
overpricing your home in the
beginning, you could actually end up
settling for a lower price than you
would have normally received.
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