Real Estate Agents Giving Sellers False Hope On Market Value
Inventory in many areas is low – extremely low, in some locations even historically low. Real Estate agents telling sellers that they can sell their home at an unrealistic price just to win the listing is nothing new but, it becomes more prevalent when low inventory is a current market trend. Low inventory is a positive factor for sellers, it all comes down to supply and demand, but, when inventory is low some agents take the path of telling a seller whatever they want to hear just to get the listing.
In a seller’s market having more listings is something agents love. Why wouldn’t they? Homes in Alexandria that are priced correctly and located in sought after neighborhoods are seeing multiple offers. Competition for a listing from multiple buyers is a listing agents dream. The sellers are thrilled and the agent is too, contingencies waived, offers above list price … you get it. The dark side to this type of market is real estate agents not being honest about what a home’s current market value is. Market conditions change gradually and that includes rising prices. They don’t jump up by for example $50k overnight. Properly pricing a home comes from studying the comps, current market conditions, condition of the home, location of the home etc. It does not come from an agent’s opinion of what it will sell for just because there aren’t other homes to pick from. Pricing is one of the most important components of a successful sale and if you get it wrong from the start it’s not going to be pretty for the seller.
I met with a seller a couple weeks ago and they were upfront that they were interviewing multiple agents. I expect pricing recommendations to vary and am never surprised if there’s a difference of $10k - $20k. Pricing isn’t based of a set formula and when that’s the case there will always be some type of variance. In this case however, I was blown away when the seller told me that there was a difference of $100,000 if they looked at the lowest price suggested and the highest. WHAT? I always try to put myself in the seller’s shoes and if you’re looking at your bottom line thinking you could have $100k more in your pocket I can understand why that would make you want to list with the agent that suggested that price. That’s a lot of money! However, the market prices your home and buyers resist overpriced homes, I don’t care how low inventory is. If there isn't data to back up the price you're headed down a costly path.
Telling a seller what we think they want to hear just to win a listing is beyond unprofessional and against the code of ethics. That said, it happens regularly and unfortunately is more prevalent with the current market trends we’re in. For the ethical agents this is frustrating to say the least. We have a responsibility to be honest and provide a realistic market value for the home. It’s not an opportunity to toss an outrageous price against the wall just to win the listing.
As a seller going with the agent who says they can sell your home for the highest price doesn’t mean you’re making the right decision on who is representing you. Your home is only worth what a buyer is willing to pay. Review the numbers each agent provides and ask them to explain how they arrived at their suggested list price. Agents who are recommending a realistic price will be able to go over every detail to show how they arrived at the price. Think about the cost of your home sitting on the market. I always compare it to stale bread – no one pays top dollar for stale bread. The longer your home sits on the market the less you’re going to sell for. Dropping the price until buyers see the value is a sure way for a seller to leave money on the table.