We recently placed a property under contract in Alpharetta that clearly demonstrates the power of proper pricing.
In my CMA (Competitive Market Analysis), I wrote the following in the comments: List price to sale price ratios are generally between 93% and 103% for this subdivision for 3 bed 2.5 bath homes. In proper condition, I believe this house will sell for approximately $227,000, seller will contribute between $3,000 and $5,000 toward buyer closing costs, and the days on market will be around 45 - 60 days.
The only thing we got wrong was the marketing time. In fact, we recieved our first offer within 5 days of the listing going active. In 20 days we were under contract at EXACTLY the numbers I predicted in the CMA.
So what happened? How did we do that? There were two factors:
First - Proper Pricing
The importance of proper pricing can not be over stated. Here's some advice for the newer agents out there. I know it's really tempting to go on a listing presentation and let the sellers dictate the sale price. After all, they're the client, and the clients are always right, right? Not at all. Sellers usually don't have access to the comparable sales data that we have. They usually base their ideas about what their house should sell for based on things like, what they paid, how much they owe, what upgrades they've made, what their neighbor says it's worth, and other information that probably has little, if any, bearing on the actual selling price. You'll be doing yourself and your clients no favors by letting them talk you into listing their property for an unrealistic price. Here's the thing. There's a HUGE likelyhood that any prospective buyers are going to be represented by an agent. The FIRST thing that agent is going to do is pull the comps to see what's a fair price for the house. Comps don't lie. They are what they are, and no agent is going to recommed to their clients that they pay more for a similar house than what the comps say the house is worth. if your asking price is so out of whack that it appears you'll never be able to negotiate to a point that everyone will feel like they're getting a deal, they won't waste time making an offer. If you don't believe there's a good likelyhood that you'll end up under contract, why bother making an offer and wasting time negotiating the deal?
If you're an agent, stand up for what you know is right. If you're a good agent, you've looked at the comps, you've studied the activity in the neighborhood, and you've probably even previewed the current active competition in the neighborhood. You're the expert. It's your job to guide the sellers down a path that will lead to eventual success. Sellers are not real estate experts. They don't have access to the same data you do. If they could sell their house without you, you wouldn't be sitting in their kitchen. If the sellers are inflexible or not receptive to your suggested list price, listen to them and hear them out. Make sure they don't have legitimate information that you don't have or that's not readily available or obvious in the MLS or tax records. It's not likely that they'll be able to tell you anything that should significantly effect the price, but you never know. If they still won't budge, and you don't think the house will sell at that price or close to it (I'd say within 90% at the most) then I would not take the listing. I usually like to say something like "I'm not in the business of taking listings, I'm in the business of selling houses. At this list price, I don't think I can be successful for you or for me."
If you're a seller, listen to your agent. If you have a good agent whose goal is cearly focused on results, then they've done their homework, and they are pretty certain about what your house will sell for. Be cautious of the agent that will let you blindly decide what the list price is. If they're not willing and able to negotiate with you on something as basic as the list price, I would say there's little hope of them successfully negotiating with other agents on the details of contracts from prospective buyers.
Chris Hackett
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