Just like the location axiom; I'm convinced that the most important thing a listing agent does for their clients is "nail" the price/pricing strategy. A buyers market reminds us of this daily.
Unfortunately, there are two big incentives that can run counter to excellence in pricing:
- Many homeowners are attracted to the realtor(s) that recommend a higher price, and it can easily result in an initial price that's too high. We all know that this typically will result in the home-owner realizing less than they would have had they priced it lower/correctly at the outset.
- A listing agent that has the listing secured has an significant incentive to get the property sold as quickly as possible. This can lead to downward pressure on pricing. Levitt and Dubner point out in Freakonomics that realtors will on average take longer to sell their own home that that of their clients.
In addition to ensuring an agent has the market knowledge to "ace" the pricing exercise, it's a good idea to to also ground the ethics involved in the pricing recommendations.
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