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 three local
listing agents who’ve been hanging stuff on your front doorknob for
years. Each Realtor comes prepared with a "Competitive Market
Analysis" on fancy paper and they each recommend a specific sales
price.
Amazingly, a couple of the Realtors
have come up with prices that are lower than you expected. Although
they back up their recommendations with recent sales data of similar
homes, you remain convinced your house is worth more. When you
interview the third 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 three. 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
a listing." He "bought" the listing by suggesting you
might be able to get a higher sales price than the other agents
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. Listing agents market and
promote your home to the hordes of other 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 with buyer’s agents coming to preview your home so they
can sell it to their clients.
If the price is right.
If you and your agent have overpriced,
fewer agents will preview your home. 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, 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 an
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. You 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."
Once your home has fallen out of escrow
or sits on the market awhile, it is harder to get a good offer.
Potential buyers will think you might be getting desperate, so they
will make lower offers. By overpricing your home in the beginning, you
could actually end up settling for a lower price than you would have
normally received.
Realtors
Talk to Each Other
Plus, remember those two conscientious
agents 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. Being human, Realtors talk
to each other. If they don’t like your listing agent, not as many of
them will be showing your home.
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 one of the "good" Realtors in the
first place. They are out there, you know.
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