Are you being Setup? Overpriced "Setup" Homes
When I have downtime during the day, I like to search the MLS. I am always amazed to find how many homes are overpriced in the market place. Whether agents don't know, or know and don't care, when they overprice a listing it not only can affect the sale of the home they are trying to sell, but the sale of other homes as well. In June 2012, The LA Times wrote an article on "Setup" homes. What they found was that the overpriced homes in certain neighborhooods were being used by other agents to sell homes in the same area.
As a homewner who is thinking about or in the process of selling their home, this step is critical. You know the saying to catch a crook you must think like one? Well Real Estate is no different. When selling a home one must think like the person they will be trying to sell to not just simply as "the seller."
In real estate there is a law known as "substitution" which states that a buyer in the marketplace will not buy a home that is overpriced if there is a more affordable comparison within close vicinity. What this means is that a home that is within walking distance to a beach or downtown area is almost always going to be worth more than one that is not. But if the owner of that home close to downtown or the beach is asking too much for this privilege then a buyer will simply expand their search and look for homes that are still close to the beach but maybe instead of walking distance they'll settle for a 5 or 10 minute car or cab ride. This becomes especailly true if the home a little further from the beach is similiar to the one in walking distance. Real estate agents will use this to their advantage to sell those other homes in the area while you act as a living testament as to what not to do to FOR them.
One of the agents being interviewed for this particular piece described it this way:
"It's like a pinball machine," said Debbie Cook, an agent with Long & Foster Real Estate in Silver Spring, Md. "The "setup" is the foil — the house that agents show clients to make other, more realistically priced listings look better. Maybe the sellers — encouraged by reports of rising sales and low mortgage rates — insisted on the aggressive asking price and wouldn't list for anything less. Or maybe the sellers' agent, not wanting to lose the listing, didn't fully brief them about what the house could command in today's conditions."
From my expieriences (for the most part) selling a home is a two way street. As real estate agents it is our job to give clients information about their neighborhoods that they couldn't acesss themselves. We need to use that info to educate them on the current market and how they can get the most for their property when they list. The technique I use to sell homes is the exact opposite of what most real esate agents are taught and maybe your agents is too but you have to be willing to trust that they can do what you hired them to do.
As a seller or potential seller it's important to be open to your real estate agent's plan, information, and knowledge of your area especially if they are proven. I mean, that is part of the reason you would hire them right? Although what you want for your home may not be what the market is reflecting right now, and your agent isn't exactly telling you what want to hear, keep an open mind. A good agent knows what they're doing and wouldn't put you in a situation where you would have to accept substantially less than what your home is worth. That is a more likely to happen when you take your home on and off the market or overprice your home allowing it to sit on the market and get weary. As other homes sell at a certain price range and your home doesn't it changes what you couldve' gotten for your home because the houses that sold now have set a standard for what homes are selling for in your area.
If you are thinking of selling your home or tried but didn't quite get the result you were hoping and want answers or an idea of what you home is worth feel free to contact me. I'd be happy to clear the air for you as to why your home may not have sold and things you should be aware of should you decide to sell again, whether by yourself or with an agent.