There was a great article written in 2015 by Trulia titled “8 Reasons NOT to Test the Market with Your Asking Price“. It is a great article and I highly recommend reading it if you are thinking of selling your home. When listing your home, pricing it correctly is crucial to a fast and fair sale. As the article mentions, overpricing a home can lead to loss of credibility, the home getting stale, and most importantly, you could lose a great offer because a potential buyer didn’t even look at the home.
So why do homes fall into this trap and how can you avoid this if you are serious about selling? We have come across in our experience, that some people truly don’t want to sell their home unless the offer is too good to be true. Our recommendation to this person is to hold off on the MLS and set up a “Make Me Move” on Zillow. You would be surprised how often a serious buyer reaches out to Make Me Moves in hot markets like Seattle and Denver.
The most common scenario we come across however is one that can be easily avoided but very hard to resist as a seller. Imagine you just interviewed agent A and he/she does a great job comping your home at a very fair/correct price. Let’s call that price $350,000. Your next interview is with agent B. You tell agent B what agent A wants to list for and agent B quickly says “Well I think I can get you $375,000 for your home”. Wow, an extra 25K! You quickly sign with agent B and you are locked into a 6 month “Right to Sell Agreement“. Weeks go by and nothing. Showings are not scheduled, offers are not coming in, and worse yet, your neighbor just sold for 10K over asking.
The agent has now locked you into a contract giving him/her and ONLY him/her the exclusive right to sell your home for the next 6 months. The agent will come back to you and say hey, I think we are overpriced so let’s reduce the price by 15K and see what happens. Meanwhile the house is collecting days on market and other agents are seeing the price reduction. Buyers are questioning your home and offers are lower than what you listed. This scenario is more common than you think and it is usually a direct result of an agent over promising a high sale to get you to sign that Exclusive Right to Sell.
Here are a few tips to avoid this mistake by asking your agent some basic questions:
- Data, data, data! This is a recurring theme at BlueMatch. Where did your data come from, what story does the data tell, and how did you base your pricing recommendation off that data. Data is king! if it sounds anecdotal “I think” or “I feel”, it probably is.
- What happens if I am not happy in a week, 2 weeks, or 2 hours with your services? Can I walk away from your agreement or will you hold my feet to the coals? An agent that will enforce a contract even when the service they provide is not on par, is an agent you may want to reconsider.
- If you really want to test the agent, ask if they are willing to put skin in the game. If the offer sounds too good to be true, is the agent willing to take a drastic reduction in commission if they are completely off?
Remember, a market will yield what a market will yield. Pricing your home correctly is the only proven way to sell in a reasonable amount of time and get the best offers. A little due diligence goes a long way. If the home price sounds too good to be true, it probably is and it could cost you in the long run.