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Why Would A Real Estate Agent Overprice Your Home?



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By : MARK Z.    99 or more times read
I was on a listing appointment the other day in Commerce Township, Michigan and I came to part of my presentation when the homeowner wanted to know what I thought we should list the home for. In this particular situation the comparable listings were very easy to spot in the neighborhood and the obvious list price was very clear to be between $450,000-$460,000 to be competitive.

They said the Commerce Township Realtor that was here yesterday said we should list around $500,000. I was shocked. Then they asked, why would a Realtor tell us $500,000 knowing that it would never sell? He wouldn't make any money if it didn't sell, so why would he want to list our home at a price that wouldn't be competitive?

Well that is a great question. There are a number of reasons Realtors take over priced listings.

1. They think if they tell you what you want to hear that you will just love them and list your home with them, and then later week after week, after week, after week, they will beat you up on the price until they get it to a price that will cause it to sell. You are already in contract and have no choice if you want to sell your home at that point. The problem this causes for you is that by the time you get to the price that would of caused it to sell three months ago, the market has already decreased another 3% and you are caught chasing the market. By the time you adjust to that $450,000 three months later, prices have all decreased and now you should be at $425,000. You chased the market.

2. Have you heard of the Bait and Switch tactic? Discount real estate agents or companies specialize in this tactic. Buyer calls come in and some Realtors take the buyer calls and bank on the fact that they will switch the buyer to a better priced property down the street, where they will make 3% of the buyers side on a another property. Then another buyer call comes in on your over priced property , and they take that buyer to another property better priced and make another 3%. As you can see, it would be in that listing agents best interest for your property not to sell anytime soon so they can keep USING YOU and YOUR PROPERTY to make 3%-6%-9% from various buyers. They did make money from your listing, unfortunately it was at your expense.

3. It could just be inexperience or lack of knowledge on how to price a property. I call this REAL ESTATE MALPRACTICE. You don't price property based on what has sold 1 year ago. The market is changing every month. If homes sold for $500,000 a year ago or even 6 months ago, but now all the comparable homes are so competitive that they are all priced around $450,000, then you need to beat your current competition. It doesn't matter what they were selling for yesterday. Only todays competition matters. When the market is changing as fast as it is today, even lenders won't allow comps to be used older than three months because of this changing market in Northville.

Agents Find Buyers Through Listings

* Sign Calls.
If a buyer drives by a house and is curious on the price, usually you notice there is no price on the flyers and a buyer has to call the agent to get the information. Agents who are on the ball will try to recruit that buyer to work with them, providing the buyer is not already working with another agent.

* Open Houses
Moreover, agents can hold an open house and find buyers that way as well. If the buyer is not interested in the home -- and once they find out the price they won't be -- the agent is then free to show the buyer other homes.

* Newspaper Ads
An agent with an overpriced listing often won't put the address in the paper or they will leave out the price. This is no accident. That way, buyers will call to inquire. Now, all an agent has to do is suggest other homes in that particular price range that are worth what the seller is asking and she's off and running into escrow on another transaction. Not yours.
Mark Z is a Real Estate agent out of Northville Michigan who sells over 75 homes each year throughout Southeastern Michigan. He is in the top 1% of all Realtors throughout the entire world.

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