<Seller speaking here...> Okay...we just listened to three Greater Cleveland real estate agents who all came up with different asking prices for our home. One recommended 300K, another 315K and the 3rd agent said 350K. What should we do? I think we should go for 350K, this extra money will allow us to pay off some debt and save for Johnny's future college tuition someday.
Okay...you may have been there...done that. If not, be forewarned...it's maddening from a seller's point of view. What do I do? Whom do I trust? The data doesn't seem clear? The agents used different comps or different methodologies...and a whole host of other questions and issues arise.
Be forewarned...there is a phrase that is coined "Buying The Listing." It is a trick that some (definitely not all or even the majority of good agents) may sometimes use to lure a seller to sign with them. They know if the market doesn't respond, the seller will wear down, lower their price, and hopefully, the home will sell. This results in a very unpleasant experience for everyone, but the agent got the listing, and eventually, the commission.
If there is a large difference in asking price, you should put the brakes on, slow down, and determine how to resolve this issue so you start competitively and not overprice your home from Day 1.
Inside Scoop: You should always select an agent to represent you based on their service offerings which should document what techniques they use to maximize your sales price, reduce your expenses, evaluate your condition with options for improvement, and setting a realistic asking price. You should not just base your decision on the agent with the highest sales price.
After all, it's the buyer who determines the price, not the listing agent.
In fact, your final pay off will be far less than if you priced it competitively from Day 1.
I have lost many listings where my price recommendation was exceed by an absolutely ridiculous amount.
One example: I thought a home's initial asking price should be 375K and another agent said close to 500K and it went on the market at 475K. As of the writing of this entry, this home is still on the market 2.4 years later and has been reduced to 399K and the seller is on his third listing agent. I have run into this on many occasions. Even if I recommend an initial list price of, say 200K for example, and another agent comes in at 215K, the seller, incorrectly so, thinks they will end up netting 15K more if they go with the listing agent who recommends 215K, regardless of what the final sales price may be. Remember, ultimately, a buyer will set the price for your home.
A thorough analysis of recent sold comparables is critical, along with a keen understanding of the current market conditions, the trend underway (either up, down or flat), and what your current competition is. This analysis is very hard to do--it is not a 5 minute printout of the MLS data, as many agents do. Since there is software built right into the MLS to help with CMAs, many agents choose a few properties, run it through the software program, and wala, you have a price recommendation! I sure bet if this agent had to have open heart surgery, they would not be so cavalier with finding the best heart surgeon.
Since these are your dollars on the line, this is one of two (the other being condition), that directly affects how successful you will be in the marketplace, plain and simple. As a former commercial real estate appraiser, who has a very in-depth understanding of the many (and oftentimes conflicting) components that goes into market value, I spend an inordinate amount of time researching, choosing appropriate instruments (such as price per square foot analysis, qualitative and quantitative adjustments, and other ways to compare and contrast a property's potential value) if direct comparables cannot be easily identified and quanitifed, documenting data and communicating with a seller so they can easily understand where they should "position" their home in the marketplace.
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