Another Realtor told me I can get more for my house...
Realtors hear this story a lot when a potential client chooses to go with a competing agent. This is exactly what a prospective owner would like to hear. It seems to happen especially often on homes that updated and well cared for, where the owners sense of pride shows. It is not a hard decision at this point; of course they are going to go with the agent that tells them that they can get more.
But why would there be such a disparity? Is the agent showing the data that supports that price? These are questions that homeowners may not even know to ask.
The data is important because if you are going to market the home with financing terms, then it will have to make it through the appraisal process. So even though a person may be willing to pay more for a house, is a lender willing to? Most homes sell using some sort of financing and lenders will only allow mortgage terms up to what a sales comparison indicates as value.
Pricing a home is a bit of an art. A good Realtor should approach the analysis the same way an appraiser does, making appropriate adjustments to try to hone in on the expected market value. Once the analysis is completed, they should look at the pricing through the eyes of how buyers search for homes. Being strategic about pricing gets the most number of buyers through the door which ultimately gets the best price for the home.
Why would an agent price it above market value? My hope is that they are just catering to what an owner wants or don't understand how to properly conduct a price comparison approach to value. My fear is that they do it intentionally, knowing that the home will not sell for that price, but are able to capitalize on the inexpensive marketing of having a sign in the ground, capturing the buyers that inquire and selling them other homes. Either way, it is the Seller that suffers.
We rarely hear back from a person after they decide to go with another agent, but we recently received a call back from a homeowner after their deal finally closed. They told the story of how they had received an offer, but then ran into an appraisal issue. They then had another appraisal, which also came in much lower than the purchase price. Both of these were "spot on" with the price where we had told them the house would be able to sell. He called to tell us that they had a "new found" respect for our analysis and honesty. He gave us a referral for a neighbor that was going to be selling their home and told us that anybody they knew who needed help in real estate would be coming our way.
In another recent situation, I followed the home after it was listed, and it stayed on the market for 227 days before getting an accepted offer, after several price reductions, and ultimately sold for nearly $7,000 less than what we felt the market value was when we ran our market analysis. The carrying cost on this vacant property for 227 days was likely over $15,000. So the hope of this Seller being able to sell $15,000 likely cost them about $37,000 in the end. If it had been priced right from the onset, they likely would have been able to get it sold much more quickly and at a higher price.
Selling a home is an important job. Be sure to ask the tough questions when interviewing potential agents and get referrals from other previous clients.