So you’ve
decided to sell your home and it's time to choose your agent.
Being a savvy seller, you schedule appointments with three or
four local agents chosen from friend's referrals or from mailings
you've received.. Each agent comes prepared with a Competitive
Market Analysis and they each recommend a specific sales price.
One agent has a price in line with what you think your house
is worth, but the others have come up with sales prices lower
than you expected. Although "the others" back up their
recommendations with recent sales data of similar homes, you
remain convinced your house is worth more. You suspect they
are looking for a "quick sale.
If you
are like most people, you pick the agent who quoted you the
highest price. 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 just chose an agent who "bought" your
listing. He "bought" the listing by suggesting you
might be able to get a higher sales price than what the market
warrants. 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. And 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. And there will be a lot of "behind
the scenes" action taking place that you don’t
know about.
If you
have overpriced your home, fewer agents will preview your
home. After all, they are professionals, 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.
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. 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 and your deal falls apart.
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 over-pricing your home in the beginning, you could actually
end up settling for a lower price than you would have normally
received.
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, agents talk to each other. If
they don’t like your listing agent, not as many of them
will be showing your home.
