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The best agent to use is the one that tells me the highest price...

This is one that really chaps my hide. I understand it from the consumer perspective, but at the same time, it is still a giant misconception.

As a consumer, it is always a good idea to talk with a couple of agents before selecting the one to list with. But the purpose of the talk isn't to see who promises the highest price... unless they are buying it themselves. The purpose is to find out about their marketing ability and how they are going to best present your home to get it sold.

But the burning question is...

How much is my house worth?

That is the big question. But, let's think about this for a minute. If I told you that your house was worth $100,000,000, would that make it so? If you know your house is worth $425,000, does it make sense to try to market it for $750,000. What about $500,000? $450,000? Are you starting to get the idea?

Maybe you don't know what your house is really worth... maybe that is why you even contacted a real estate agent to help you out. It makes sense. How should you know if you are being fed a line to "buy your listing?"

There are some tell-tale signs.

The agent utilizes pre-scheduled price reductions
The comps aren't really comparable
The price just doesn't seem right

The agent utilizes pre-scheduled price reductions. The question is... if the price is right, why should you agree to scheduled price reductions? I know the answer, but the fact remains that most agents using this ploy are running a specific plan. Get the listing. Work the price down to something realistic. THEN start marketing the property. The property needs to be marketed right away, and it needs to be marketed right.

The comps aren't really comparable. If you have a 4 bedroom, 3 bath home with no basement and the agent is trotting out homes with 5 bedrooms and basements, obviously they need to tweak the numbers to get a value. The more adjusting that has to be done, the more room there is for interpretation... and fudging. The comps should be from your neighborhood. They should be recent, and they should be similar. That can be pretty tough to find...

The price just doesn't seem right. Obviously you have SOME idea of the value of your home. If the agent is giving you a number that just seems high, it probably is high. If it seems low, ask them about it. Find out what the comps are that they are using. Look for their logic. They might be right...

I spend a lot of time and money getting a listing to market. The purpose is to get it sold. I have no desire to buy a listing and spend my time angering a client, wasting both of our time and energies. I would rather concentrate on fewer listings that are likely to actually sell.

In my last market report, I noted that there were 4 times as many listings coming on the market each month as were selling. That means that on average, your home is 3 times as likely to expire of be withdrawn than to actuallt sell. My average is that a home is twice as likely to be sold or leased than it is to expire or be withdrawn.

from LilburnDwellings.com

I'd love to hear from you...

Posted by Lane Bailey - REALTOR & Car Guy on 01/22/2009 11:27 PM

Comments (27)

Lilburn, GA in the Regional (Localism) Channel

business of real estate, seller, honesty, marketing

Originally posted at: Looking Out From the Garage: The best agent to use is the one that tells me the highest price...

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27 Comments on The best agent to use is the one that tells me the highest price...

JAN

Lane - very valid points. I have a similar post on draft stage, concentrating more on comps and how we evaluate the value. I have noticed a few areas here where the original list price has gone up - quite a lot - compared to what the sold prices are. Hmmmm. ~Rita

I'm amazed at the number of people who fall for this... I'm also amazed at the number of agents who can't produce an accurate CMA. It's not rocket science for Pete's sake. Your comment about the pre-scheduled price reductions is right on... if you're got it priced right from the get-go, you don't need them. Of course, if you're buying the listing with an inflated price you'll need all the reductions you can get them to sign.

Lane, dead on right. It is most difficult to convince a seller that the house needs to be priced right and ready to show the moment it goes on the market. Agents who agree to list the house at an unrealistic price are not doing the seller any favor but the sellers do not understand that. They're being sold.

Hi Lane - Great points made. We often go into a listing appointment with comps that truly reflect good home values only to have the seller insist on a higher price. Unfortunately setting the price at what you "want" as opposed to what a buyer will likely pay only serves to "showcase" the home on the market. It will sit for a long time and further force its value down. People (buyers) tend to look at a home that has been on the market for a long time and ask "What is wrong with this home?"

Lane~I also agree. I would prefer to walk away from a listing rather than have a Seller believe that their home will sell for more than it actually will. If Sellers would select their agent based on their marketing plan and success rate rather than on an elevated listing price or lower commission rate, they would have greater success!

Ha! I had to click on the title because it just didn't make sense. I trust your professional opinion and wondered if i was some how off base...Glad to see it was just a title and not how you truly felt! You got it right, as usual!

Rita - Don't get me started on List Prices...

Jesse - I have had agents tell me that they knew the house was worth X, but the seller wanted to list at Y, and they wanted their sign in the yard.

Maria - I think they are doing a disservice to their clients by misleading them.

Jon - First, thank you for being my 7,000th comment. Second, that is the point. By trying to push the price up, usually the result is a lower end price.

LaShawn - I have walked away from a LOT of listings lately.

Natalie - I do that sometimes.

I have to "Respectfully Disagree" with you on the scheduled price reductions. Here is why.

In our area (Michigan) the market is so unstable, a comp today is an inflated price tomorrow. Foreclosures are driving the market, not your everyday listing so the value has "tanked". A list price should be a price that sells the house "today" not a price that allows it to sit for months on end. if the prices were going up, it would be a different story,(because the market would eventually get to the list price) but with the prices in decline, you have to aggressively lower the price to eventually get to the actual selling price based on daily selling conditions. If by chance you are "lucky" and "list at the market determined selling price" the home will sell fast because it is showing "qualified buyers" "VALUE", as that is what sells, not the house per sey, but the value it shows. The new owners will turn the house into what they eventually want if the value is there.

Question for anyone, How would you comp a "manufactured home on 7 1/2 acres, set up for horses with a barn and 3 outbuildings, that sold for $215,000.00 in 2005? (nothing comparable to comp to that has sold recently) This home final appraised (for a sale) in November of 2008 for $102,000.00 THis is getting typical of our market in Michigan and it's going to get worse.

Ray - Thank you very much for disagreeing. Here is the problem with a scheduled price reduction. In order to schedule it, you need to know the rate at which the property may be going down in value. You are right that in some markets that prices are declining and after a period of time, the pricing needs to be re-thought... but I am seeing agents work in "a $20,000 reduction after 21 days, followed by a $15,000 reduction at 42 days" and similar language.

There is no dishonor in re-visiting the price after a new comp, but not a specific price at a time that has nothing to do with the market.

Lane-I am with you! Price it right from the get go...and on many occasions below current market value! I can tell you the scheduled price reduction no longer works..our market value changes very quickly! Recently one of our top listers came to me and told me that his wife is wondering how he has so much free time now..he still has listings but has turned down several this month..it's no longer about all the listings but the listings that will sell! I saw this in the newsletter..awesome post!

Lane, what you are talking about is assuming that the agent is out "buying a listing" by telling the homeowner what they want to hear. That is not always true. In our town, we just recently lost another 400 high paying jobs, what do you think that does to the value of homes currently on the market as well as the ones that are coming on because of this? The value has went down (on all homes) and the comps that were used to price them are no longer good. When I take a listing, I have tbe seller get an appraisal, and we price it to show value based on the appraised price. I'm there to sell homes, not act like I'm going to control the market price, when in actuallity the market will determine the price regardless of what I say. If I price it high and the market is in decline, I need to aggressively get the pricelowered to catch the decline before it goes down even further. By waiting, the homeowner actually loses value. If I price the home lower, it will immediately show value to the "Qualifird Buyers" I'm targeting and the price will go possibly go up based on multiple bids, thus again getting to actual market price.

When I list a home, I have the homeowner sign an agreement that if we have a period of 21 to 30 days of no activity or signed purchase agremwnt, we'll lower the price 5%. A drop in price any less than that is just a waste of time, and in our area (which really is the only one I can accurately speak for) the decline is really slipping at nearly this rate. Percentage wise, this seldom comes into play, because I've done well at getting the homes prices at or near what the market says is correct. However, if the homeowner is not willing to work with my agressive plan of action, they can list with someone else with 100 listings that are going nowhere. What do they need me for and what do I need them for? If nothing else it's a dis-service to my Broker advertising over priced listings with his or her money that haven't a chance of selling.

Like many of you my wife and I work in an area where for the past 18 months, the real estate market has not been good for sellers. The number of transactions are down approximately 40% and prices are way off also. This past year we have lost listing after listing because we refuse to buy a listing. A few back we had a listing opportunity where we suggested a list price of $430K, a price I could easily justify. Another REALTOR came in and told them $518K. Guess who they went with. The listing has now expired without a single prospective buyer going through their home.

On average we will make between $7,000 - $10,000 per closed transaction side, therefore spending $300 - $400 to get a good listing does not bother me. As a result I now tell prospective sellers when we come in with one price and another comes in with a significantly higher price that to ease their mind as to what to do, have a professional appraisal done and we will pay for it. Not a single seller has taken us up on our offer because THEY DO NOT WANT TO HEAR THE TRUTH. I hope these agents who deceive sellers and buy listings can sleep at night. I couldn't.

Hi Lane...There's nothing like working with a seller that is willing to price their property appropriately. It makes all the difference in the world. I have been fortunate to have a few with their eyes wide open during this downward spiral. Their homes sold without any reductions and within a very reasonable time. It can be done.

For those sellers that will not accept the truth about their properties "current" value, they need to work with an agent that is looking for listings and not sales. Unfortunately that will not get their property sold.

It is essential that all of us be as realistic as possible. Of course, that's the right idea in any market.

Kate

I didn't realize how common this was in the marketplace. I seem to read about it a lot. Are people having this happen a lot or do they just get very irritated by it?

Hi Lane, Agents who buy listings are know in my marketplace. These agents then proceed to chase the price down. Their shenanigans give agentsa bad name.

Lane, if only every Seller would read this post and take it to heart. We also have walked away from listings.

JAN

I will take a listing that is some higher than the market but counsel my sellers to expect an offer to be in the range of the CMA I provided. Once they see that buyers are knowledgeable about the market, they will get real. Of course if the price they want to start at is ridiculous, I will walk away too.

Great post and something I'm dealing with a lot, just as most that posted here. Mike Henderson, all the listings I have walked away from this past year (and there are many) are listed by other agents at the prices the sellers wanted. From my last check, not one of those listings has sold, and some have been on market for quite some time.

So it's the agents that took the overpriced listings that have to deal with irate sellers, not me!

Lane, good points. Basically the question is 'Do you want to list your home or do you want to sell it?' Most of us do not need to 'practice price' a listing. Wonder if the sellers will ever realize that a red flat should also be: Let's try this price!

Don't agree with Betty above, there are so many houses in my area that buyers aren't going to bother with someone that is over priced. They'll just find a house that presents 'better value' from the get go.

Amen! I live in a crazy resort market in Blowing Rock, NC and the prices are so puffed up. The value of a view or intown listing is extremely subjective.

I won't take overpriced listings anymore either. If the market drops too fast and the sellers won't reduce, then I will not renew my listing agreements.

It doesn't matter how you price it or how much the seller thinks it's worth. What matters, especially in todays market, is what the buyer is willing to pay for it. Being a Buyers only agent, my clients will pay full market price if the seller offers great terms. If your not offering great terms it doesn't matter where you price the home, I will always advise my clients to offer less. In todays market that usually means 10-20% under what your listing it for. That might seem low ball to some but I know for a fact listing agents are notorious for selling listings. I don't have time to wait for you to go back in a month or two and convience the seller to lower their price. For me and my clients it always either Price or terms period.

Great post, so many people go by emotion and hearing what they want to be told... not by reality. In this market its about pricing rate and then getting solid marketing to get buyers in the home. Any time wasted is time where the economy could get softer, lending programs change, etc.

Some agents do it as a bait and switch approach as you said. But I have also met enough that just do not know how to do a proper CMA and do not care enough to learn. It always amazes me that sellers still hire them because they throw out pretty numbers pulled out of thin air.

Pricing it right from the beginning is key....anything other than that hurts you in the long run...

Midori - And there isn't a way I can tell someone I am going to get their home sold if I don't believe I can.

Ray - Only you know if you are hitting the listings too high to start. Look at your expiring rate, and your LP/SP ratio... I see common threads, and that is in the tapestry.

Bob - Hope is a keyword these days...

Kate - sometimes we have to deliver some tough love.

Mike - In a lot of markets there are agents that are well known for this... they have lots of signs.

Marian - It is unethical in opinion to knowingly over-price a listing.

Sharon - Meet the choir...

Betty - Here they won't get an offer near the CMA... they won't get an offer... they won't get traffic, either.

Judy - I like making people happy... not dodging calls.

Lyn - Word.

Meris - Are they selling for that?

Amy - I have a goal to not have to renew listing agreements... of course I am not perfect, so I might not fully meet that goal.

Matt - So, you are saying that all sellers should just jack their prices 10-20% to make the buyer feel good about getting a deal. Here, we are seeing some properties selling OVER list because the price is agressive to start. List price... and a percentage under list price has NO relation to value. Some properties are a steal above where they are listed. Some properties are a rip at 40% off.

Roland - Incompetence isn't much better than purposely buying listings...

Sonja - Yep.

JAN

Great topic, Lane, and so true. I do detailed CMAs and I have even asked a Realtor friend to do one for a potential listing so I knew I was on target. I was!

JAN

Kelsey - That is what we do.

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