Meeting With Realtors
So... you've decided to sell your home and have a fairly good idea of what you think it is worth. Being a sensible home Seller, you schedule appointments with a couple of local agents who've been hanging stuff on your front doorknob and sending you flyers for years. Each Realtor comes prepared with a 'Competitive Market Analysis' on fancy paper and they each recommend a specific sales price.
Amazingly, one of the Realtors has come up with prices that are lower than you expected. Although he backs up his recommendations with recent sales data of similar homes, you remain convinced your house is worth more. When you interview the other agent's figures, they are much more in line with your own anticipated value, or maybe even higher. Suddenly, you are a happy and excited home Seller, already counting the money.
But Which Realtor Do You Choose?
If you're like many people, you pick Realtor number two. This is an agent who seems willing to listen to your input and work with you. This is an agent that cares about putting the most money in your pocket. This is an agent that is willing to start out at your price and if you need to drop the price later, you can do that easily, right? After all, everyone else does it!
The truth is that you may have just met an agent engaging in a questionable sales practice called "buying the listing." He "bought" the listing by suggesting you might be able to get a higher sales price than the other agent recommended. Most likely, he is quite doubtful that your home will actually sell at that price. The intention from the beginning is to eventually talk you into lowering the price.
Why do agents "buy" listings? There are basically two reasons. A well-meaning and hard working agent can feel pressure from a homeowner who has an inflated perception of his home's value. On the other hand, there are some agents who engage in this sales practice routinely.
Behind The Scenes
Whichever the case, if you start out with too high a price on your home, you may have just added to your stress level, and selling a home is stressful enough. There will be a lot of "behind the scenes" action taking place that you don't know about.
Contrary to popular opinion, the listing agent does not usually attempt to sell your home to a homebuyer. That isn't very efficient. The listing agent markets and promotes your home via the Multiple Listing Service to the rest of the local agents who do work with homebuyers, dramatically increasing your personal sales force. During the first couple of weeks your home should be a flurry of activity.
If The Price Is Right
If you and your agent have overpriced, fewer agents will promote your home to their buyers. After all, they are Realtors, and it is their job to know local market conditions and home values. If your house is dramatically above market value, why waste time? Their time is better spent previewing homes that are priced realistically.
Dropping Your Price... Too Late
Later, when you drop your price, your house is "old news". You will never be able to recapture that flurry of initial activity you would have had with a realistic price. Your house could take longer to sell.
Even if you do successfully sell at above market price, your buyer will need a mortgage. The mortgage lender requires an appraisal. If comparable sales for the last six months and current market conditions do not support your sales price, the house won't appraise. Your deal falls apart. Of course, you can always attempt to renegotiate the price, but only if the buyer is willing to listen. Your house could go "back on the market."
Realtors Talk To Each Other
Plus, remember that conscientious agent who got aced out of the listing? If your listing agent routinely engages in "buying" listings, he has probably aced out scores of other agents in the same way.
In short, you may have ended up with an agent who was good at selling you, but not good at selling your house. And you're going to pay them a commission for it.
It is human nature for you to want the highest price for your home. However, when you choose the agent who promises what you want to hear, it often leads to stress and frustration. Most of the time, it will take you longer to sell your home. Possibly, you will end up selling at a lower price instead.
Or maybe as a result of reading this article, you will choose a "good" Realtor in the first place. I believe that I am one of the "good" agents and I approach real estate from a different point of view...YOURS!
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