Choosing an agent based on price can be a big mistake… Selecting the best agent can be counter-intuitive if you don’t look at this decision from all angles.
Sometimes, my assessment of the likely Sale Price is below what a Seller was hoping for. Sure, I could be being overly conservative. I also see Seller’s being gamed by agents too. So, here is the WARNING: I am setting my diplomatic filter aside on this post. If you are a potential Seller and are interviewing agents, here are 8 points to consider:
- Stretching the List Price is not necessarily a problem – as long as we can defend it and the property can appraise. We have been very effective at defending our pricing on appraisals lately. No last minute contract amendments to lower the price because the property did not appraise. On the other hand, we have statistics that show Seller’s pay a “greed penalty” when the List Price is pushed above the limit. When we agree to list someone’s home, we take on responsibility for someone else’s money. When someone else’s money is involved we have to live in the land of “probability” not “possibility”. If a seller wants to gamble with their own money, we are happy to go on that ride up with them (up to a point) as long as they understand the risks.
- The most objective and accurate predictors of the value of your property are the recent sales. Those will be what buyer use, those will be what agents use, those will be what appraisers use. Reality is in the numbers both from a timing perspective (i.e. the data shows sales for houses like this running about 1 sale every 3-4 weeks now) and value perspective (i.e. renovated homes like yours on the street are selling for $x). Frankly, I am stunned when real estate agents could come up with a drastically different assessments. But I see it. Your challenge is to keep asking questions to get at specific comparable properties to back up your price – not just an agents opinion. They will not be able to bluff you past the appraiser.
- I do not think pricing is as much of a opinion question as it is an education process on how agents work. There is a term for over-pricing listings just to get a sign in the yard – it is called “buying” the listing. All agents know this term. The agents who do this just concede the argument and assume the Seller will eventually cave in to the market reality of a lower price. In the meantime, these agents know they will get visibility and sign calls from potential buyers which they hope to convert into clients. Part of their motive is to get their sign in the Seller’s front yard as “bait” so that if the house does not sell, hopefully the agent will have at least picked up a buyer or two who will buy something else.
- We compete with agents day in and day out and our assessments of home values are sometimes higher and sometimes lower. Pricing is really an art and a strategy rather than a hard answer. Our primary motive in any listing appointment is to figure out how to best project what the house will sell for in the current market. It is not to hedge our bets and use the seller’s property to generate leads. In the end, we believe we are positioning a property within the competition with both price and condition so yours is the best value. That should be your goal.
- We always seek to gain the Seller the highest possible price in the time they need with the least hassle. ALWAYS. Once Price and Condition line up, it is time to market the heck out of the property! Make sure your agent has a detailed plan for doing just that. IF that plan includes sequenced price adjustments, make sure they are advancing your interests rather than the agent’s.
- You have access to discount brokerage models that offer lower fees. We believe you get what you pay for. So, if you are not paying very much… the agent will be covering their costs whether you sell or not. They will also probably be looking for compensation from other sources. Don’t overlook this conflict of interest. http://coachbunch.com/
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- We do very well with isolating the strengths of a property. We also have to be good at quantifying issues to be accurate on our projected sales prices. When an interviewing agent mentions the weaknesses and offers strategies for overcoming them, please do not penalize them. It is much cheaper to address issues ahead of time before you are under the microscope of being “on the market”.
- It is easy to hope in opinions about higher prices. So just remember, agents are not bidding on your house by offering competing list prices. You should however pay particular attention to how they handle themselves during a pricing discussion with you. THIS will be a great indicator as to how they would negotiate for you down the road.