To add to the topic of homes being overpriced in today’s Twin Cities housing market, an additional challenge occurs when real estate agents “buy” the listing.
They say they can sell it at a higher price but then work on getting successive price reductions. In a rising market, this strategy generally didn’t damage the seller too much. However, in a decelerating or flattening market like the one we’re in, that tactic is highly problematic for the seller. It will likely mean netting less on your home than had you listed it at fair market value in the first place. Often this strategy is incorporated with providing services at a discounted commission rate. As with most things in this world, you get what you pay for.
Let’s say two agents are in competition for a listing. One comes in with a market price of x. The other agent says he can sell the home for 5-10% more than x. The seller likes the idea of making 5-10% more on the sale of their home – so they think.
What ends up happening is the seller’s expectations are now too high – higher than what the market will pay. The seller has to constantly keep the house clean and leave for all the showings, but at the end of the day they don’t get any offers. Eventually the agent has to ask for a price reduction. This is a strategy is unfortunately used by far too many in the business. It helps to keep their listing inventory high, but it’s of no service to their client, the seller, or to the seller’s buyer.
A good example of this is I recently lost a listing on a property in the Western Suburbs in the highly sought after Wayzata School District. My CMA (competitive market analysis) came in at $870,000. My recommendation was to list it at $870,000 if they wanted to sell the property. I even had agreement from Mr. seller that it sould be listed under $900,000 especially given the softer market conditions.
The home ended up with an agent who initially marketed the home at $950,000. Within days, the price came down to $925,000 and then after 60 days moved to $899,900. After 3 months, the home is now no longer on the market. It did not sell. Unfortunately for the sellers, it’s unlikely they will see even $870,000 for their home. Had they initially marketed it at the more appropriate price of $870,000 they would have had a much better chance of getting their price while not having to put up with 25 showings over 3 months only to have no offers.
Getting the price right is the most important part of marketing your home in today’s buyer’s market. Chosing the right agent that you can trust to help set the price is critical. Be leery of the agent who says he can sell the home for 10% more than the others. While your mind might drift off on what you will be able to do with that extra 10%, listen to your gut if you have a sense that he’s too optimistic.
