Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
That's an interesting study. Real estate agents when selling their own homes get 3.7% more and the home stays on the market 9 days longer than average. Sort of backs up my theory about underpricing.
Actually, it isn't. If you actually read the entire study and see how they created their dataset for analysis, you can see that it isn't a good dataset.
The data comes from Cook County, IL only and they looked at about 100,000 homes and about 3,000 were real estate agent owned and sold.
They statistically corrected homes by bedrooms, bathrooms, number of rooms, number of cars in a garage, age of the home, whether or not it had a master bath, a fireplace, central air, the architectural style (ranch vs. colonial, etc), the type of siding, and then they compared homes based on the descriptive terms used by agents in their comments.
There was no compensation for lot size, backing to parks or greenspace, views, granite vs. Formica counters, laminate vs. solid wood cabinets, single pane vs. dual pane windows, on and on...
Using agent descriptions is a terrible way to try and compare properties to each other in a statistical data set.
A local builder said exactly that: Realtors gain by turning over houses repeatedly, not necessarily at the best realistic price.
Bull! First the builder is assuming that all Realtors are the same. We're not. I have no doubt that there are a few out there like that. But that's a lousy business model. Ask any business whether it's more expensive to acquire new customers or to retain existing ones. The answer is that it's more expensive to acquire new customers. Realtors who understand that (and that's the overwhelming majority) want to provide the best possible deal for their clients. That may mean holding off for a week or so or even longer. We can do that. We want the best for our customers. Why, because nearly all of the time we like them personally and we want to help them meet or exceed their goals. And when we can do that, they are more likely to refer their friends and relatives to us. That's how you build a business based on 100% referrals.
Are agents houses selling for more because they know what they're doing perhaps? I can advise a client until I'm blue in the face, but as is painfully obvious from this thread everyone else knows better and so the client doesn't always listen.
Perhaps, if the clients listened more their home would sell for more as well.
They know what they're doing so their homes stay on a little longer and sell for a little more.
Quote:
Originally Posted by 2bindenver
11+ year old data is not your friend.
Has there been a substantive change in real estate agent training or ethics guidelines to suggest something should be different now? I regularly use data much older; if it's for something that hasn't changed in the last 11 years what's the issue?
I'm not sure why you are both so opposed to the idea that real estate agents act rationally. I dont think it does anyone any good to make-believe that agents are magical unicorns who help out if the kindness of their hearts and are powered by love and rainbows. They're professionals who are paid, albeit in an unusual way, to do a job. I don't need to believe that they'll act irrationally in my favor to convince me to employ their services.
This thread raises many interesting issues, one of which is whether in a hot sellers market it is better for a seller to list a single family home under what they think is fair market value to possibly generate a bidding war, or at fair market value, at the risk of potentially having fewer offers. I live the immediate SF bay area and the real estate market remains a hot sellers market for single family homes. Inventory remains below historical levels, and most homes in our neighborhood sell within a few days, some on the first day, and many sales are all cash and as-is. As one example, last month a home on our street was listed for $1.3M, and sold and closed in five days for $1.460M, all cash. One of my friends who is a real estate agent said that he hadn't seen a home close in only five days, because it was difficult to make all the escrow arrangements in that short amount of time.
So, the hypothetical: suppose a seller who has lived in the area a while and studied the real estate market and a full set of comps determines that fair market value for their home is $1M. Suppose further that the seller has no time constraints and simply wants the highest sale price. Is it better to list for $950k to possibly generate a bidding war, $1M, or some other price?
There is a new realtor in our very small area with about 1 year of experience, that is grossly overpricing houses. Probably promising people a unrealistic high price to entice them to sign and then hoping to sell the home after getting the owner to cut the price down to a reasonable level. I don't think this is going to work out well.
Also this realtor is buying junk houses in bad areas for like 10K and then spending 50K on a remodel and listing it for >100K. Its for sure the nicest home now within blocks but...no home anywhere near there has sold for almost half that. I don't think this is gonna work out well either.
The idea is to get as many offers as possible. The more offers you get, the more competitive the bidders become, the higher the price goes. The lower the price, the more value people perceive, the more offers you get. It doesn't matter if the low offers are significantly lower. It only matters that the high offer be pushed as high as possible.
A fast sale is best for everyone. The homeowner (typically) is paying mortgage interest, taxes, insurance, etc. on a daily basis by owning the house. If I can get you the highest amount possible for your house, would you rather it take a weekend or 3 months to do it?
A seller doesn't have to accept any offer they don't want to accept. Chances are though that if you're in a strong seller's market and you only received one offer, you weren't priced low even if you thought you were.
I understand that its a good idea to get as many offers as possible, but as other posters here have pointed out, I believe that is only works in certain hot seller's markets, like SF, NYC, Wash DC, etc. As to the time it takes to sell, its a judgment call. A weekend is better than 3 months in the abstract, but not necessarily better than, for instance, a single month, depending on the carrying costs vs. the extra $ received.
Also, while I realize that the buyer's acceptance of the asking price does not alone create a binding contract between buyer and seller, seller pulling back at that point is a good way to anger and chase away a potential buyer, who in the end may be the only game in town if the effort to get bidding going turns out to be a bad judgment call. If I were that buyer, no way I'm going to raise my offer above the original asking price.
So, I'm not saying that the strategy isn't a good idea sometimes, but I do think it has very limited use.
Bull! First the builder is assuming that all Realtors are the same. We're not. I have no doubt that there are a few out there like that. But that's a lousy business model. Ask any business whether it's more expensive to acquire new customers or to retain existing ones. The answer is that it's more expensive to acquire new customers. Realtors who understand that (and that's the overwhelming majority) want to provide the best possible deal for their clients. That may mean holding off for a week or so or even longer. We can do that. We want the best for our customers. Why, because nearly all of the time we like them personally and we want to help them meet or exceed their goals. And when we can do that, they are more likely to refer their friends and relatives to us. That's how you build a business based on 100% referrals.
While I agree with what you said overall, the above bold is the issue. Most believe few realtors are into it for the long haul and like it or not, they do not get paid until the sale happens and this is the real bottom line issue. No sale, no commission.
While the pictures may demonstrate similar condition, what do you really know about the condition? That water spot in the ceiling below the master bath, the smell of cat urine, the child's art project painted onto the wall and the crown molding done in by the Labrador Retriever's last fit of teething all can shift the price. The houses may all be structurally similar and equally serviceable dwellings, but there are other factors.
The one home I referenced was someone I knew and I was in that home. Judging the pictures of other homes that sold I know that house could have sold higher had it been on the market longer than a day. But the seller was happy so it doesn't matter. I am just finding the underpricing strategy interesting.
That's not really the point, though, is it? Of course everyone wants to sell quickly. Everyone also wants to sell for as much as possible. It's when those two are at odds that the different incentives for each party come into conflict. As a seller if I were told I could list for two more weeks and make an extra 4% (e.g. $20k on a $500k house, which, if the house isn't entirely paid off is an even larger percentage of the total cash returning to the owner), it would definitely be in my interest to wait. Conversely, if I were told I would have to do two extra weeks of work for 1.5% of that extra 4% (e.g. $300 on a $500k), it would probably not be in my interest to wait.
She may be a great realtor, but your example doesn't demonstrate it. She made you get an appraiser before she let you set the price? And both you and the appraiser were closer to the actual price than she was? It seems pretty obvious that it's easier to sell something for less than it's worth than for slightly more than it's worth.
This isn't intended to be a knock on agents. It's simply looking at them as rational. Buyers should know that in most cases their interests are aligned with yours but in setting a price and selling quickly that's not always the case.
It is not an exact science... and she didn't make us get an appraisal or set our own price... Most sellers think they have gold...I'm sure in most scenarios she was correct...I strongly doubt she wanted to go around paying for every clients home appraisal...I thought her offer was a fair compromise...
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Most sellers think they have gold...I'm sure in most scenarios she was correct...I strongly doubt she wanted to go around paying for every clients home appraisal...I thought her offer was a fair compromise...
