San Diego Trustee
Don’t Let an Agent Overprice the Home
It may sound silly, but it happens. Many San Diego home sellers will interview more than one agent. The first agent in the door is told by the seller that they intend to speak with two other agents before choosing who will be helping them. Hearing that they will have competition, the first agent names a high list price. Then the second agent, learning the first agent’s price, increases it and then the third agent quotes an even higher number.
The problem is that a seller who chooses the San Diego real estate agent based on the highest quoted list price, is the ultimate looser. It’s natural to be dazzled by a big price and a good deal of sellers will fall for this misinformation, list with the highest quoted price agent and be very disappointed later. It’s a shame because this could be completely avoided. How? Simply be reviewing the comparable property information. This includes homes that are similar, within ½ mile and have been listed, pending a sale or sold within the past six months.
San Diego seller’s just need to be properly and thoroughly educated by the real estate agents that are invited into their home. It’s a shame because many agents don’t take the time to educate sellers with the facts because when you have the facts, you can make good decisions. Agents don’t set the price of San Diego homes, the “comps”, current marketplace establishes value. A confident and competent real estate advisor will not allow the seller to be disappointed later because they will come to the meeting prepared to go over the recent property activity.
Why would a real estate agent be willing to take an overpriced listing?
- Free advertising-Every “for sale” sign advertises the agent and their company. Many signs contain the agent’s web site and their phone number. Some even have a large photo of the real estate agent. It’s like a giant billboard for the agent and when the home is on a well-traveled street, all the better (for the agent).
- Agents can find buyers through their listings-Sign calls, open houses, on-line ads can generate leads that the agent can then help the agent to obtain more business.
- Agents that hope the seller will reduce the price-This happens all the time. Experience shows that one an agent has the overpriced listing, thirty days into it, the seller will reduce the price. This is detrimental to the seller because interest in a home typically wanes after a few weeks and now there are fewer buyers for that home when the price drops. Buyers think there is something wrong with the home that doesn’t sell quickly and are concerned that the seller dropped the price because a major defect was discovered.
Of course, the goal when selling San Diego real estate is to get as much money as possible. That doesn’t mean the best strategy is to test the market with a h
igh list price. Experience shows that fair market pricing is your best strategy. Here are some reasons why you don’t want to overprice:
- You’ll be disappointed when you don’t receive any offers, but your neighbors do-When pricing too high you are technically helping to sell the other homes in the neighborhood that have listed their home for less. Buyers may view your home, and they may even like it, but will be eager to get the better-value of the nearby home.
- Negotiation is an art-San Diego home sellers have shared with me that they want to leave room for negotiation. Having a skilled negotiator, like me, has proved to be profitable for sellers. Having an overpriced home may cause buyers to never even consider the home because it out of their budget. If buyers overlook the home because they can’t afford the price, there will not be anyone to negotiate with. Educated San Diego homebuyers appreciate and respect a well-priced home.
- Not taking advantage of the early days on market-Within the first thirty days is when the home is still new and attracting buyer attention. The best scenario is when the home comes on the market, receives and negotiates offers and is pending-a-sale within two weeks.
- Buyers won’t even view your home-Qualified San Diego home buyers have been pre-approved by a lender and have price parameters. The buyers and their agent use these parameters to set up alerts of homes within the price parameters. For instance, if a home is worth $575,000, but the list price is $605,000 and the buyers set parameters up to $600,000, they will never be aware of your home. Then when you reduce your price to $575,000, the buyers may have already entered into a contract on another home…you’ve just lost your buyer.
- And finally, the home won’t appraise-You have a unicorn buyer that viewed your home, offered list price and you happily entered into a contract. Two weeks later, the buyer’s appraiser comes to your home, completes his appraised valuation for fair market price. Everyone is back to negotiating and the options aren’t great, for you. There are three choices:
- The transaction falls apart and is canceled.
- The buyer pays the difference between the agreed upon price and the appraised price (if the lender will allow this option).
- You, the seller, accept the appraised value; you are disappointed and this is typically the only option.
Save yourself from the stress and disappointment of overpricing your home. Choose your real estate advisor based on their presentation of the facts, plus their experience, ethics and honesty.