Why NOT To Ask A Real Estate Agent"s Opinion of Value When Pricing Your Home
The number one reason that sellers are unsuccessful selling "by owner" is the inability to set the right price.
In fact, according to a 2004 NAR Survey, almost one-quarter of the respondents said that this was the most difficult task of selling on their own.
There are only a few ways to determine a fair asking price for your home when selling "by owner".
Unfortunately, many would be FSBOs fall into the trap of asking agents to help price their homes.
Hit Or Miss: One way is to throw a high number up against the wall and sell the house to the first person willing to pay your price.
We don't recommend this method.
It will cost you in the long run as buyers are pretty savvy these days.
In fact, most buyers know more about the market than do sellers.
They don't want to waste their time looking at overpriced properties, and feel that the seller is not serious about selling.
DIY: The temptation to do your own research (after all, you may be a born do-it-yourself-er) is great when you're trying to save money.
Knowing where to access the right information however, can be tricky.
When we first started Picket Fence Preview in 2002 we knew there was a lot of misinformation out there about how to sell by owner successfully.
We would ask sellers how they determined their price and were often disturbed by the answers we have received.
Some used their tax assessed value as their market value.
Others looked at only homes on the market and never checked to see the final sales price.
It was not uncommon to learn that inaccurate comparisons were being done, using homes that were not similar in style, square footage, lot size, etc.
No wonder so many FSBOs (for sale by owners) were failing to sell successfully! Call An Agent: Real estate agents offer CMAs (Comparable Market Analyses) as a way to market their services to home sellers.
Best of all, they're FREE which appeals to frugally minded consumers.
The agent will spend lots of time in your home, complimenting you on your property and developing a relationship, then back to the office she goes to prepare her analysis.
Bear in mind that it takes less than 30 hours of classroom time to get a real estate license in Massachusetts.
The experience level of an agent varies greatly which can affect the outcome of a market analysis.
Also, the time spent preparing the material can make a vast difference in the outcome.
Finally, understand that the agent has a HUGE agenda in giving you the findings.
A CMA is a sales tool.
An agent who feels some competition may be prone to overvaluing a property, thereby flattering the home seller into thinking that he/she can get top dollar.
An agent can also underprice a home especially when time is money.
It is worth more to an agent to sell one house at a lower price and move onto the next, than it is to hold out for a higher price.
Recently, a landmark study was done by the University of Chicago Dept.
of Economics called "Market Distortions When Agents Are Better Informed.
" that found that agents trick their clients into selling their homes for less for a quick commission, but will wait longer and receive a significantly higher price for their own homes -- often $8,000 more! The best reason why NOT to use an agent to help price your property is this: Banks never lend money based upon an agent's opinion of value -- they hire a professional independent appraiser.
The appraiser's report will tell the lender whether you are overpriced.
If so, you may very well lose your buyer.
Hire An Appraiser:A professional appraiser is a licensed professional whose business it is to determine fair market value of a home.
Appraisers are commonly used in cases such as divorce, estates, and also hired independently by lenders who wish to protect their financial interests prior to lending money to a home buyer.
Unlike an agent's market analysis, an appraiser ONLY compares properties that have actually sold, not those that are on the market now and which may be severely overpriced.
Agents tend to shower sellers with comparable properties that are on the market through their agency in an attempt to get them to see the higher prices.
Why hire an appraiser?#1:A professional appraiser is licensed by the state to perform appraisals.
That's what they do.
#2:A professional appraiser has no agenda - in other words, the appraiser is not trying to list the property.
#3:You, as the seller, will be seeing a professional appraiser when you accept an offer, if the offer is contingent upon the buyer obtaining financing.
Should the appraiser determine that the agreed upon selling price is above the market value, you stand to LOSE YOUR BUYER, as the lender will not give them a mortgage.
A buyer who thinks they almost overpaid for a property is less likely to renegotiate with you.
The appraisal will cost around $300.
(in Massachusetts) and is money well spent.
In fact, according to a 2004 NAR Survey, almost one-quarter of the respondents said that this was the most difficult task of selling on their own.
There are only a few ways to determine a fair asking price for your home when selling "by owner".
Unfortunately, many would be FSBOs fall into the trap of asking agents to help price their homes.
Hit Or Miss: One way is to throw a high number up against the wall and sell the house to the first person willing to pay your price.
We don't recommend this method.
It will cost you in the long run as buyers are pretty savvy these days.
In fact, most buyers know more about the market than do sellers.
They don't want to waste their time looking at overpriced properties, and feel that the seller is not serious about selling.
DIY: The temptation to do your own research (after all, you may be a born do-it-yourself-er) is great when you're trying to save money.
Knowing where to access the right information however, can be tricky.
When we first started Picket Fence Preview in 2002 we knew there was a lot of misinformation out there about how to sell by owner successfully.
We would ask sellers how they determined their price and were often disturbed by the answers we have received.
Some used their tax assessed value as their market value.
Others looked at only homes on the market and never checked to see the final sales price.
It was not uncommon to learn that inaccurate comparisons were being done, using homes that were not similar in style, square footage, lot size, etc.
No wonder so many FSBOs (for sale by owners) were failing to sell successfully! Call An Agent: Real estate agents offer CMAs (Comparable Market Analyses) as a way to market their services to home sellers.
Best of all, they're FREE which appeals to frugally minded consumers.
The agent will spend lots of time in your home, complimenting you on your property and developing a relationship, then back to the office she goes to prepare her analysis.
Bear in mind that it takes less than 30 hours of classroom time to get a real estate license in Massachusetts.
The experience level of an agent varies greatly which can affect the outcome of a market analysis.
Also, the time spent preparing the material can make a vast difference in the outcome.
Finally, understand that the agent has a HUGE agenda in giving you the findings.
A CMA is a sales tool.
An agent who feels some competition may be prone to overvaluing a property, thereby flattering the home seller into thinking that he/she can get top dollar.
An agent can also underprice a home especially when time is money.
It is worth more to an agent to sell one house at a lower price and move onto the next, than it is to hold out for a higher price.
Recently, a landmark study was done by the University of Chicago Dept.
of Economics called "Market Distortions When Agents Are Better Informed.
" that found that agents trick their clients into selling their homes for less for a quick commission, but will wait longer and receive a significantly higher price for their own homes -- often $8,000 more! The best reason why NOT to use an agent to help price your property is this: Banks never lend money based upon an agent's opinion of value -- they hire a professional independent appraiser.
The appraiser's report will tell the lender whether you are overpriced.
If so, you may very well lose your buyer.
Hire An Appraiser:A professional appraiser is a licensed professional whose business it is to determine fair market value of a home.
Appraisers are commonly used in cases such as divorce, estates, and also hired independently by lenders who wish to protect their financial interests prior to lending money to a home buyer.
Unlike an agent's market analysis, an appraiser ONLY compares properties that have actually sold, not those that are on the market now and which may be severely overpriced.
Agents tend to shower sellers with comparable properties that are on the market through their agency in an attempt to get them to see the higher prices.
Why hire an appraiser?#1:A professional appraiser is licensed by the state to perform appraisals.
That's what they do.
#2:A professional appraiser has no agenda - in other words, the appraiser is not trying to list the property.
#3:You, as the seller, will be seeing a professional appraiser when you accept an offer, if the offer is contingent upon the buyer obtaining financing.
Should the appraiser determine that the agreed upon selling price is above the market value, you stand to LOSE YOUR BUYER, as the lender will not give them a mortgage.
A buyer who thinks they almost overpaid for a property is less likely to renegotiate with you.
The appraisal will cost around $300.
(in Massachusetts) and is money well spent.
