Let me start by getting this out of the way.
Agents, this is a public post... on purpose.
If you are a seller, and you are doing your job right by interviewing a couple of different agents, you are going to run across agents that are bidding for your listing. What does that mean? It is simple. Some agents will aim high on the CMA (Comparative Market Analysis) in order to try have a better shot at listing your property. There are a couple of reasons... and none of them are good.
- Inexperience. An agent might simply not have a good handle on the market, so the price they might agree to list at, or suggest is out of line with reality.
- Trolling for buyers. Some properties are placed well (location, amenities, price point) to garner lots of calls from buyers. In this case, the agents are pretty sure they can't sell your home, but they are also pretty sure that they will generate a lot of business from taking and promoting the listing.
- Trolling for sellers. Some properties may provide a foot in the door to get other listings in a desirable subdivision or neighborhood. Even if the agent doesn't sell the property, they might get a bunch of other listings that they CAN sell.
- Getting a foot in the door. Some agents will take an over-priced listing in hopes that they will be able to get price reductions in the future. That isn't to say that there aren't reasons to get price reductions, but some agents know that the price is too high, but agree anyway... so another agent won't get the listing.
The problem is that sellers don't know which agents are which. Is your agent giving you a real price that they should have success selling your home for? Or are the taking the listing at a price that selling your house isn't their top priority? One way to tell is to look at how they are promoting the property. Are they spending their money to promote the property? If not, why? However, if an agent thinks that the listing is going to generate a lot of buyer leads (or seller leads), it might be worth carrying and spending marketing money on.
But, if you are a seller, and you need to actually sell your property... what matters is selling your property. And it will be rare for an agent to take the listing, knowing that the chances for sale are slim... and for the agent to tell you that selling your listing isn't a priority.
So, how do you figure out if your house should sell?
That is a tough question, and even agents that have been around for a few years are having a hard time pricing right in the current market climate. But, there are some techniques that you can use to get a better idea.
- Absorption Rate. The pricing model NEEDS to include the inventory levels for the area as well as the neighborhood.
- New Listing/Sold Ratio. This might be the most important thing to track. If you know that 20% as many properties are closing as are coming on the market, then you know that you need to beat 80% of the properties in order to be one of those solds.
- Step back and look at your home through the eyes of a buyer. How does it really compare to the house up the street? Is a buyer going to love the big flowery wallpaper in the dining room... or are they going to see it as something that needs to be corrected?
All of these things play into pricing. If there is a 30 month supply of homes, or only 10% as many homes selling as coming on to the market, or things in the house that need to be corrected... the price has to reflect that.
The bottom line is that the last think you should do is find the agent that always agrees with you, and says they'll list your house at the highest price. Just because the agent gushes about your house while they are doing the walk-through, or tells you how cute your dogs are doesn't mean that you have just found the best agent for the job. Even finding an agent that has been around forever is not a great reason to jump at hiring them.
Unless otherwise noted, all content of this blog is the property of Lane Bailey, ©2012 Lane Bailey.
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