The Secret of What Your House is NOT Worth – Revealed

by June 24, 2009 • 9 comments

Most of us Realtors face this at one time or another so I think we need to bring it out in the light. How in the world do we price the home correctly without sending the seller running screaming down the street right into the arms of another Realtor? I already told you last week that a fellow got really mad at me when I told him what I thought his house would sell for. One minute I was the bearer of information that he wanted and the next I was an enemy to be reckoned with and I suspect I am not the only Realtor who has had this experience lately.

Last week I focused on some of the things to consider when selling your home and a very sharp Realtor pointed out in response that above all PRICE is the thing that is driving the buyers, and you know what? He’s RIGHT!!!! Not only is it the right price but the right price at the right time. You know that old expression – “you only have once to make that first impression” – well that is the reality of our market. Many times I have a seller that wants to price it high and just wait and see what happens. Then if it does not sell we’ll reduce it!! What could be wrong with that? Plenty because your best time to create enthusiasm and attention for your property is when it first appears on the market. If you get the price right in the beginning it will go a long way towards getting a contract. AFTER ALL you want to sell your house not list it.

I have lost many a listing because I tell the seller what I feel that his property would sell for and most of the time that does not make me the most popular Realtor. I have read in other Real Estate magazines about a practice called “Buying a listing”. Say you are a seller and you call 3 different Realtors and more than likely you are going to pick the one that tells you a number that you want to hear that is more in line with what you were thinking your house was worth. So you list it high only drop it several times before you hit the right price – this is bad, you never gain momentum, and by the time you get the price dropped to where the market is, you likely are forced to sell less than what you may have been able to get had you priced it right in the first place.

One of the most compelling reasons to price your home right in the first place is the valuable buyers that are walking right by your home because it is not in their price range while in reality it is they just do not know it. Okay I am going to get real personal here with the risk of getting myself in trouble. I know of a beautiful home in a gorgeous neighborhood with fabulous finishes in the home with incredible views, great amenities, big bedrooms. . . just an amazing home and it just SITS. It sits because it is so overpriced that the people that could have bought it have gone down the road to purchase homes in the very price category that this house should have been. So the seller says “tell them to bring us an offer”. Well, they never get to see that offer because it does not come up in other Realtor’s search.

If you have a house that has been sitting and sitting and sitting please have a heart to heart with your Realtor and let her guide you to the right price to sell. I know it is a rough time for sellers but keep in mind that you can sell your home quickly if it is priced correctly.

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1 Gregg June 25, 2009 at 8:26 pm

Karen, I have a question that relates to your subject. I constantly see listings taken by realtors that defy reality. In our condo complex I see listings for over $120,000+ over the most recent comps. In addition I see new “price reductions” still $50,000 to $60,000 over the most recent sales. I can sort of understand an owner not having a sense of reality but what about the agent representing those sellers? It’s one thing taking a listing when the seller is in at least striking distance of what it will take to sell the property and the realtor hoping that the owner will “see the light” but just what are these agents thinking having a listing that is so far out of sight it is ridiculous in this market. I believe buyers today are much more educated and most have a pretty good idea of what other similar properties have sold for and are basing their expectations on these facts.
To me, a realtor holding one of these “pie in the sky” listings just hurts their reputation and infers they don’t have a clue what they are doing, certainly not someone I would want to do business with!
Just what are they thinking?

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2 Jake June 25, 2009 at 9:51 pm

Karen, I am curious as to why Realtors so rarely consult the services of a certified real property appraiser. I understand that there have been many changes that directly affect how the lending industry orders appraisals/communicates with appraisers due to the HVCC. These rules, however, do not apply at all to Realtors (or their clients) seeking the services of an appraiser as a consultant. I am more than happy to speak with an agent for 10 minutes on the phone to review possible comps, provide information, and discuss the subject property – which in many cases proves to be beneficial to the agent by preventing value issues later in the transaction. I have commented many times on this topic here on PCB daily, and I am not at all going to get on a soap box, as I thought your article was very much relevant to the current market and issues agents & sellers are facing. I do, however, feel that appraisals can be a valuable tool in both pricing a property prior to listing as well as to perspective buyers that request factual data that supports the purchase price. In addition, if your seller has an appraisal, your advice in listing price is supported by documentation. Just my two cents… I am not at all attempting to diminish the ideas presented in your article as what you described is the last 3 paragraphs is becoming all too common dialogue in today’s real estate market.
-Jake

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3 karen smith June 25, 2009 at 10:17 pm

Jake, I am all over that!! Thanks so very much for your reply and I do talk to a local appraiser quite a bit to make sure I am on the right path. I am glad you brought it to every ones attention that we can do that. When I first started calling my appraiser friend for his expertise I felt like I did not want to bother him but that was not the case at all. He was glad to help and you are saying the same. I love your two cents and it was worth much more than that. Do not be surprised if I give you a call now and bend your ear!!! It is really vital in this market time that we all learn from each other. You did not take away from you added to and I so appreciate it.

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4 karen smith June 25, 2009 at 10:23 pm

oh Gregg, that is a tough one and I suffer from that sometimes. As a Realtor we can lead our customers to the water sometime but…. I have a few customers that are very unrealistic and I tell them so but they will not budge on their home price but for the most part they are taking notice now. I wish I could argue with what your saying but I can not. This is a soar spot for many of us Realtors and we struggles with it all the time. I have lost so many listings because I tell the truth about values and they would rather go elsewhere. Your point is so well taken and maybe I too need to have another little pow wow with a couple of my customers. Maybe they will read your comment. I love all this interchange so keep it coming.

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5 Gregg June 26, 2009 at 6:26 am

Jake and Karen I certainly can appreciate what you are saying and on many residential properties I think consulting an appraiser would provide a valuable insight into the proper pricing, however………..
This did not answer my question. In many properties an appraisal is not required such as some housing developments and especially condos complexes. In my specific example in a particular condo why would an agent represent properties priced anywhere from $100,000 to $120,000 over comps (the last 4 sales since April ranged from 158K to 170K, same exact floor plan). Not trying to pick on this particular location but you can find these extreme examples all over.
On this practice I’m not sure what the owners that are priced unrealistically are thinking, the agent that holds the listing looks like they do not have a clue, the the agent’s broker is wasting money on any advertizing or listing space.
We see this same thing at home, not just in PCB, personally I would avoid any agent that had listings like this as I would be concerned about their professional ability, surely I can’t be alone on this feeling. What are they thinking……or not!

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6 karen smith June 26, 2009 at 8:37 am

Gregg first off I am so glad that you are driving this point home because it is HUGE on the minds of most of us Realtors. It is great when someone outside is looking in and can point it out.I will try to better answer your question because of personally dealing with sellers who are in denial. First I am really conservative in my listings and am honest with my sellers and tell them their values and second there are massive emotions involved here. I hear it all the time well… my property is prettier, has more upgrades, is in the best spot in the building,it was my inheritance, it only takes one buyer… and the list goes on. Another one is but…. I paid this so I can not loose more than X well as you know that is not a factor at all in the price that a property will garner.
As a Realtor I can not answer for other Realtors but for myself it is my personal policy USUALLY not to take listings that are not priced correctly because it is a waste of dollars and time and it floods the market with unsellable properties. And you are right it is humiliating to have something so grossly overpriced that you know people are saying, “what in the world are they thinking or not” There are occasions where I tell the customer that I will list it at this price but if I have no calls in a few weeks then we put it at the price I know that it should be. Most of us show the sellers the comps and it is in black and white but as most denial works many times they can not see.
Your comments are so timely as I look at some of my properties that have not sold. I have been fortunate to have sold many of my listings but in every case they have been priced right without exception!!!! So Gregg thanks to you I will be having a POW WOW with some of my sellers today. YOU ARE NOT ALONE IN YOUR FEELINGS AND I THANK YOU FOR PUTTING IT OUT THERE In PLAIN ENGLISH MAYBE IT WILL STRIKE A CHORD.

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7 Gregg June 26, 2009 at 9:36 am

Thank you Karen for your honest response. I personally think if ALL realtors and their brokers refused to take a listing unless it was at least within striking distance of an appraisal or recent comps, a good percentage of the glut on the market would disappear. Many of the sellers would be forced to make the decision of taking their property off the market in “hopes of better days”. This would have the effect of bringing the average days down and possibly help a market recovery.
In our complex there is a total of 14 units listed on the MLS, only two are within 10% of the recent comps. If 12 of those listings disappeared potential buyers would be forced to look at the remaining listings in a completely new light. If this was repeated through out PCB what would our picture be?

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8 Patricia June 30, 2009 at 10:47 am

I agree with the fact that a appraisal is an important tool in pricing and selling….but no one is mentioning the price of an appraisal…and just how long the appraisal is good for…I have been told in selling a house that “OH THE BUYER WILL PAY FOR IT, SO YOU THE SELLER PAY FOR IT NOW AND THEN AT CLOSING YOU WILL GET IT BACK” and NO WAY does that ever happen…..I have lost money each time I have been talked into doing that…..So what is one to do???? And an appraisal is not cheap by any means…
Also, as a buyer you are told ‘OH LOOK AT ALL OF THIS PROPERTY YOU WILL GET” but then when you try to sell the same property, you say I have all this property, and then you are told “OH THAT DON’T COUNT IN THE SELLING” So I feel that realitors has two sets of standards here…So how do you know just which is the right thing to do? Without it costing a lot of money…..
Patricia

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9 James July 4, 2009 at 5:34 pm

I think you would have a completely different picture Gregg. Well said. Way too many people (realtors and owners) living in “La La Land”. Ever get postcards from realtors bragging about having the largest volume of listings in an area? Whooopee!!

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