Because of emotional ties and pride, most homeowners believe their home is worth more than it actually is. Knowing this, sadly and unprofessionally, all too many real estate agents prey upon that belief.
The value of a home is what a willing and able buyer is prepared to pay for it. The best way to predict this dollar amount is to research the “comps.” That is the comparable homes that have sold over the past six months in the neighborhood. Plus and minus adjustments do have to be made for different features and conditions. This baseline creates a very good reference as far as how much to list a home for sale. This process is called a Market Analysis.
If priced correctly, a newly listed home in a town’s median home value range should sell within the first 30 days on the market. If there are no offers or just low ones in the first 30-90 days the correct strategy is often to make a price reduction.
Some realtors, on a listing appointment, will suggest that a higher price than proper market analysis will forecast. Homeowners will think that means more money in their pockets when their home sells. So they select this particular realtor with high hopes. Then, after the home doesn’t garner any interest and offers at that price point, the realtor suggests a price drop, most likely down to the correct market price. The once optimistic, unsuspecting homeowner might think that they own lost 30 plus days. In fact, they very well may have lost out to the best buyers in that crucial window of opportunity causing their home to sit much longer than expected, unsold on the market. Through the listing agreement, you will now be obligated to stay with this agent for months, losing both time and money.
A realtor that suggests you drop your home’s listing price by $30,000 may only be losing out $500 +/- in commission while you are losing thousands. But as this article suggests, an over-inflated home listing price merely gives owners hopes of extra money in their pocket. The reality is that it can cause a greater loss of time and money over and above the difference of the zealous listing amount and the correct marketing listing.
Be smart. Do your homework. Work with a professional realtor that has a proven track record that they can easily illustrate to you. Hire someone that you trust and feel comfortable with knowing they will have your family’s best interest first and foremost.