When homeowners interview more than one realtor for the job of selling their home, how do they select a winner?
In almost every case, they pick the agent who quotes them the highest price.
It’s irresistible for those who aren’t that comfortable, and want to make a quick decision. Heck, you’d want more money if you can get it, right?
I’m convinced that it doesn’t even occur to people that they should investigate thoroughly – everything else is just a click away, let’s have money be the deciding factor! Greed is good!
But we’re into the stage of the cycle where if you over-shoot, the market may not catch up with you as fast – or at all. With fewer comps these days, it’s not easy for buyers to decide if that new listing is worth it, and don’t be surprised if we phase into a more-cautious marketplace. You’ll know because average market times start extending, and unsold listings begin to pile up.
How can sellers know if they are being high-balled on price?
- The listing agent wants a long listing period – more than three months. We are in the prime selling season, and there are plenty of qualified buyers – especially in the under-$1,500,000 market. Any good listing agent should have enough confidence in their abilities – and pricing – that they can procure a sale within three months. Besides, you don’t want it to drag on – buyers will lowball the lingering listings.
- When it comes to explaining their price, there isn’t a direct relationship to the comps. The conversation gets vague, or they make jokes about it. Pricing is not funny.
- Their price is higher than your price. Sellers think highly of their house, and already have an opinion of value based on realtor postcards and internet evaluations. But it’s a value goosed with optimism, and if the realtor quote is even higher, something is wrong.
- The listing agent has some special formula or new-fangled technology that delivers higher prices. Buyers have never heard of them, however, and will rely on the old-fashioned ways.
- The listing agent wants you to rush your decision.
- The listing agent doesn’t have bidding-war strategies, or gets vague.
You can’t tell if you are being highballed by the agent’s length of time in the business. Inexperienced agents can do it by accident, and experienced agents do it on purpose. I have had long-time experienced agents tell me that they deliberately go high on price and then take long listings as regular business – in spite of it being a violation of our ‘strict’ Code of Ethics.
How can buyers tell if the price is too optimistic?
- There’s not a supporting comp for miles.
- The listing agent has a recent history of listings taking longer to sell – and virtually no listings that sold quickly.
- It doesn’t appear that anyone else is looking at it.
- The condition of the house isn’t great, and no effort was made to stage it or make it presentable.
- You felt the price seemed high from the beginning.
If you’ve been seeing a lot of homes in person lately, then your brain is a natural computer full of relevant data that gives you ‘gut instinct’ on pricing. It’s as good as anything else!
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