I have been thinking about this blog post for a while. It’s about price, it’s about money and it’s about equity. Sometimes price and money is like talking about religion or politics, it can be a touchy subject. Touchy subject or not I talk about it all the time with my clients and co-workers and somebody needs to make mention of the inadequate price evaluations that appear to be going on.
Agents – you need to stop overpricing and working in areas you have no clue about and sellers you need to stop fishing for someone to tell you what you want to hear, there its out and I said it.
Now that we have the hard part out of the way let me take it a step further.
I was at a property recently and it was previously listed by an agent who works and lives approx 25 miles from the subject property. The subject property was on the market for nearly 2 years and had little to no activity although it was on the MLS, Internet, had many open houses and was placed in the area newspaper of choice several times.
This seller had called another agent who referred it to me as he felt I was more local to the subject property and could serve it better; I called the seller, made an appointment and went to his 35 acre property 2 days later to meet. This specific property was previously listed for $1.2 Million and the seller was frustrated to say the least of his action on the property.
After some discussion, viewing the property and looking at com-parables I asked, “How was the previous listing price of $1.2 Million established”? The seller said that he felt it was worth that because he built it and seen other parcels of land near by bring large sums of money, then he told me he told the previous agent that he wanted at least $1 Million before he ever came over. Guess what, the agent now knowing this and not knowing the area pulled up comparable properties of similar acreage to justify a $1 Million dollar asking price and the seller thought it all looked great.
So what was the problem, well the agent knew nothing about the area, he knew what the seller wanted to hear and that deadly combination had him pulling comps that were made up of the very same and similar 30 acre parcels alright but the ones he used were of parcels that were, or could be split into 2 1/2 acre home sites, and the subject one could not be split, I knew that because I knew the area well enough and he did not. So yes, the comps “looked” good but they were worth less than the paper he printed them on.
Long story short the true value of the previously $1.2 Million dollar property was $599,900 – yes, $599,900. That’s a difference of about $600,000 and now the seller who spent 2 years believing this agent had to accept reality. This seller has now hired 2 independent appraisers’ and their value came in at $565,000 – $585,000 and the other at $605,000 all within mine of $599,900.
That specific story may have been extreme on the price but I see homes listed all the time by agents $20,000 – $30,000 too much on a $250,000 property and in today’s market that does no-one any good except the competition. I have also seen my share of the direct opposite, under priced properties. It’s just as easy for you to overprice a property as it is to under price one. My goal and the goal of any good agent should be first and foremost to get you to your specific goals and the price should be part of that goal.
I work very hard on knowing the market we work as well as providing our sellers the best in comparable properties. I suggest you look at two main things when talking with an agent about price:
How well do they know YOUR area?
Do not tell them what you want or think your property is worth before they make a suggestion of value themselves.
Keep in mind although we as agents suggest a price it is still up to the buying public, agents and sellers do not establish price, the market does. Also its only fair to mention most agents are good at what they do and strive hard to know their area and market conditions so please do your homework, find a real estate agent who talks straight and really knows the area. I really feel passionate about service and its frustrating to see some agents treat your equity & time like it’s invaluable, we need to do better and we can if we all just ask the right questions and be honest with ourselves.
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