Many agents offer to perform a free market analysis for any prospective seller, or in fact any homeowner who requests one. If you have time to spare and are willing to make such an offer you will find some analysis recipients who will hire you to be their listing agent. This "get your foot in the door" approach can work.
If you are a busy agent or do not have a lot of time to spare, you might defer performing the market analysis until after you have listed the property. Deferring the analysis can set you apart from other agents, can save you from being "used," and can provide ironclad assurance that you are not guilty of "buying the listing" by giving the seller an inflated market value figure. After all, the analysis is merely informational and the seller ultimately sets the price anyway. Give the analysis later and it will never become a bone of contention, it merely will be additional data to utilize as warranted.
Of course, you do not get the sellers final opinion until you give the analysis. There will be that unusual occasion when the seller can not believe the analysis and is unwilling to adjust the offering price to a reasonable amount. In these rare cases you will either:
- Agree on an initial asking price and pre-agreed reductions at specific times, or...
- Terminate the listing (or the listing appointment) before you have spent too much time and money on an unrealistic seller.
In the latter case you will always explain your decision with sympathy, understanding, and an offer to help at some future time. Many an unrealistic seller finally will become a realistic seller, and might call you to take over the marketing effort.
If you have serious questions about the market value, or if a home is particularly difficult to analyze, consider paying for a professional appraisal to help establish a figure. Some agents cleverly side-step the market analysis issue by telling the seller to hire an appraiser and that they will refund the cost at closing. This approach can have the following benefits:
- The price opinion comes from a disinterested third party. When there is bad news about the home’s value, it is not the agent’s fault.
- A degree of seller loyalty is purchased by the promise to pay at closing.
- The appraisal can be used later to beat a bottom-fishing buyer into submission.
- The agent scores points in the listing presentation for a novel approach.
- Time spent preparing a market analysis is saved.
- Marketing costs are saved if time on the market is decreased as a result of proper pricing.
Keep in mind that neither analysis of market value nor appraising are exact sciences. They do, however, represent the best information available.
In addition to all of the above, review the asking prices of similar properties now on the market. Where will the seller’s home have to be priced in order to sell? Prices of homes now on the market can be used only to determine an upper limit for an asking price. For example, if the analysis based on sold properties predicts a market value of $500,000 and three neighbors currently are marketing their similar homes for $465,000, your seller’s price will have to be competitive in order to sell. Do not infer anything other than a downward adjustment in an estimated contract price from other homes' asking prices. Analyze your approach to market value analysis now, and tune it in to your personal style.
This article is excerpted from David Rathgeber's
AGENT'S GUIDE to REAL ESTATE
which is free online at http://www.davidr.net/AgentsGuide.html
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