Tonight while reading Lane Bailey's blog "The best agent to use..." I was reminded of a conversation recently with a fellow broker about how many people are taken in with the 'buying the listing' scheme.
Last year we had a client who, in preparing to relocate out of Alaska, called us to put their home on the market. We sold the home to them and knew what improvements they had made, so giving them market value was a piece of cake.
As it turns out we were not on the same page with respect to value. When it was clear we were at an impasse they listed with a competing firm who told them what they wanted to hear rather than what they needed to hear. More than a year, seven or eight price reductions and two real estate firms later, the home remains unsold.
The truth is most homeowners don't have a clue what their home is really worth. Most know what their note is, what they owe and some even know their current property tax assessment. Unfortunately, those numbers rarely reflect current market value.
Preparing a comparative market analysis is not rocket science. As Realtors we look at predominately the same set of numbers appraisers look at to define value; recent sales of homes similar to yours. The best Realtor to sell your home may not be the one that gives you the highest price. Trust, but verify. Ok, but how?
It's pretty easy to see if a home is a comparable; it will be equal in size, age, condition, location, etc. The question becomes how it compares by price. Just like your arithmetic teacher used to say, so should you... show me the math. Look to see how the adjustments are calculated for the residential square footage, garage square footage, effective age, lot size, amenities (i.e. fireplace, Jacuzzi tub, hardwood floors), bathrooms, etc.
Ask to see not only the actual adjustments but also the source of the numbers used to make the adjustments. I take my cue on adjustment values from local appraisers and by closely reviewing appraisals. If an appraiser is using $40 to adjust the residential square footage and Agent Not-So-Genius is using $110, you're going to have a market analysis that's good for one thing... lining the birdcage.
If an agent can't or won't show you how they arrived at a price, take that as your cue that a) they might not know what they're doing or b) they're inflating the price to get you to sign a listing agreement. As Lane mentions, don't be too surprised to see this agent come armed with pre-authorized price reductions. They know in order to sell your home, it will need to be at market value.
While numbers can be made to say just about anything, asking the agent(s) sitting in front of you to 'do it long hand' should help you weed through the rhetoric and select an agent to represent you based on what they'll do rather than by the dollar amount they fill in on the listing contract.
Midamerica Referral Network - Kimberling City, MO
Oh that we could take the blinders off the seller - would be more like a miracle for some folks.
Jan 24, 2009 04:00 AM
Elizabeth Anne Weintraub, Broker - Sacramento, CA
Put 40 years of experience to work for you
I wrote an article for About.com that covered how to choose a listing agent, and the first two points were don't choose an agent based on:
- Suggested sales price
- Commission
But that's the formula the public uses, and it's so wrong, on so many counts.
If you find that piece (just google: choose listing agent), you can email it to that seller. Providing the listing has expired. :)
Jan 24, 2009 04:05 AM
Associate Broker, Momentum Realty - Reston, VA
A Great Real Estate Experience
So true! It is so much easier to tell them the truth at the beginning than to have to explain every day why no one is coming through the house.
Jan 24, 2009 08:09 AM
eXp Realty LLC - Tigard, OR
Principle Broker Oregon
As much as I hate the pre-signed price reduction if I can't get the seller to listen to me at the time of the signing I require them to sign the pre-priced reduction or I walk!
Jan 24, 2009 09:39 AM
Cary, NC
Unfortunately too many people go by what they want to hear, its an emotional response. Both when it comes to price with an agent, and rate with a lender. They don't often ask about what it takes to get that price, what service the agent will provide for that commission and what could possibly go wrong. Just as they don't ask lenders about experience, education, service and potential pitfalls.
Anyone can tell you what you want to hear. I can quote low rates all day long, you can quote high list prices... but unless you can deliver it is meaningless.
Jan 24, 2009 11:45 AM
Savvy + Company (704) 491-3310 - Charlotte, NC
The RIGHT CHARLOTTE REALTOR!
Hi Jesse! There's really nothing that I can add to this discussion that hasn't already been said! You are SO right and I've actually started using this very description of double-checking your prospective agents' comparables and NOT selecting the one that 'says' they'll get you the highest price. They seem to be listening a bit better these days! The truth will set you free from your home!!!
Hey, great post and awesome advice, as always, Jesse!
Jan 25, 2009 01:38 AM
Coldwell Banker Residential Brokerage, Lancaster PA - Lancaster, PA
Lancaster County PA RealEstate Expert 717-951-5552
Jesse, an agent who tries to "buy" listings isn't doing anyone a favor. Overpriced turkeys cause stress and expense for everyone.
Jan 25, 2009 04:06 AM
The Elizabeth Nieves Realty Group - Durham, NC
Bilingual Raleigh - Durham North Carolina Real Estate Team
So absolutely true!! I have been watching a home in a very similar situation sit on the market for over a year. The owner did not like what I told them about the price the market would bear and listed with another agent. It has not sold.
I'm going to include this is my week in review. ~GBU~
Jan 25, 2009 09:54 AM
Hurd Realty - Johnson City, TN
423/948-9154
You really can't argue with recent (non short sale and non foreclosure) comps. It's amazing to me that sellers ignore these numbers. I didn't just pull them out of my hat. I spent quite a while plugging numbers into an Excel spreadsheet to come up with a realistic price BASED ON VERY SIMILAR COMPS! Thanks for the post.
Jan 25, 2009 11:11 AM
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones
Viroqua, WI
I think there are more over priced listings now than in past years, as many sellers are having to accept the reality of the real estate market. It is just like the stock market; things go up and things go down.
Jan 26, 2009 12:20 AM
Setting the Stage - Newmarket, ON
Home Staging and ReDesign Professional
It's unfortunate but most homeowners feel that their property is worth more than its actual true value. Sometimes, the truth hurts but having the house sit on the market for months and months with an unrealistic asking price hurts even more.
Jan 26, 2009 01:00 AM
Keller Williams Realty - Franklin TN - Franklin, TN
Franklin TN Real Estate
Jesse, Love your no nonsense post! I'm a numbers person. I don't hesitate to walk away from an unrealistic seller.
Jan 26, 2009 03:30 AM
NextHome Experience - Chelan, WA
A Tradition of Trust in the Pacific NW since 1990!
Yep! Not only does an agent have to know the numbers, they have to be able to interpret them an analyze them. Right now, no one has a crystal ball, but it's possible to get a better idea based on absorption rates, pending sales and market trends, where I seller should enter the market. Unfortunately, too many are either unwilling, or unable to listen.
Jan 26, 2009 11:37 AM
Equity Real Estate - Advantage - Salt Lake City, UT
Realtor - Salt Lake City, Utah Homes
Hi Jesse, Have you seen Rebecca Gaujot's blog about you today. She tells the story of you making a banner for her blog. Very impressive! What a great story about a random act of kindess, good for you!
Jan 26, 2009 02:48 PM
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices
I do not even expect the sellers to know the value of their property, especially in fast changing market.
I had a problem in a falling market, when I called a few of my clients and told them that if they were thingking about selling, they needed to go right away, as they could sell for xyz money. They all said "no". I warned them not to call me 2-3 months later and say that they want it now, as the price would be different.
I guess, you know that 2-3 months later I got those calles, when they said "Fine, list it at the price you gave us". Well, that price was history by that time
Jan 27, 2009 03:50 PM
SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) - Tucson, AZ
Mike Jones NMLS 223495
Jesse,
I stopped by because they're talking about a volcanic eruption in AK. I'll be looking for your blog post on the subject!
Mike in Tucson
Jan 30, 2009 01:28 AM
And the United States of America - Mesa, AZ
It's not a game, it's your life.
Jesse, this is a great example of what sellers need to review prior to listing their home with an agent. Great point about having a listing agent explain where their list price came from. If they did it more often and asked intelligent questions they would have less of a chance of their unrealistically happy emotions turning to stressful unhappy feelings when the home doesn't sell.
Jan 30, 2009 03:07 AM
Hughes Residential - Newton, MA
Services Newton, Brookline, Lexington, Waltham & W
Greetings,
Great points! I think that "we" will always loose listings to those that choose to overprice and buy the listing. The good news, it will help us sell properly price properties easier AND I can't see the "overpricers" surviving very long in a difficult market. I do think that the public will eventually take notice.
Best regards,
Mike
Jan 31, 2009 02:47 AM
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation
I'm a late-comer to this post, but oh my... So true! And doesn't it suck when your own client goes with another agent rather than trusting you?
May 25, 2009 12:55 AM
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