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Put yourself in the role of a buyer. You find a house you like. You are going to do your own research based on comps and determine what you think it is worth. Would you really then walk away from a house that meets your expectations on price simply because you didn't get to haggle back and forth 5 times?
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Any old property can be a "comp." The secret is to use the best "comps" and to minimize the amount of adjustment needed to calculate a value.
It is pretty easy here in CookieCutterville, where we can often find the same floorplan from the same builder done multiple times.
When we get into older custom neighborhoods, it gets a little more difficult.
I recently had one where I pulled comps and made adjustments in the 4% to 5% range to find a value. The bank's appraiser adjusted in the 22% range on one of his comps, which seemed excessive to me.
Either you were shown "comp's" or you weren't.
If you were... then "clearly less worthy" shouldn't enter the discussion.
Maybe I wasn't clear. The word "comps" was in quotes because I don't believe they were truly comparable to our home and were simply used to try to drive down the listing price, generating a quick sale and a quick commission while we would have been left holding the bag.
Put yourself in the role of a buyer. You find a house you like. You are going to do your own research based on comps and determine what you think it is worth. Would you really then walk away from a house that meets your expectations on price simply because you didn't get to haggle back and forth 5 times?
It just isn't logical or rational.
Since we didn't deal directly with the buyers, I can't tell you about their motivations. We were told that they absolutely had to have our home above all others they had seen. However, when the two parties have different expectations on price, no deal occurs. It's that simple. And, yes, when you reach your bottom line too early in a negotiation, the other side might feel insulted -- especially when buyers and sellers are communicating through intermediaries.
For anyone to imply that the buying and selling of real estate is always logical and rational is beyond me. On the contrary, it can get pretty emotional and irrational and I'm not even in the business. Transactions can become quite bizarre and there's always testosterone to get in the way. Back and forth haggling is quite common in home sales in our region. It can feel like the rug bazaar in Baghdad.
I can remember the time we put in a bid on a house as highly qualified buyers, had it rejected and then saw the house sell soon thereafter for $15,000 less. Clearly, the listing agent didn't present our offer and wanted to hog the entire commission, unethical or illegal as that move might have been. There's one illogical transaction that comes to mind.
Maybe I wasn't clear. The word "comps" was in quotes because I don't believe they were truly comparable to our home and were simply used to try to drive down the listing price, generating a quick sale and a quick commission while we would have been left holding the bag.
Was someone holding a gun to your head when you signed the listing?
Like it or not, the real estate market itself has set the expectation that list prices are not fixed. People in it can say what they want but they have brought it upon themselves.
It gets back to being local. A house listed AT market price (not below) here will get multiple offers in the first week, at or slightly above list price because we have VERY low inventory. Properties listed above market price sit or get one or two lowball offers (because they aren't competing). If you are listed BELOW market price, you will get offers unless you are in a very slow market. We have less than 2 months inventory right now.
That's telling them to pay hundreds of dollars to an appraiser to help determine the value of their house when that is something that real estate agents get paid a commission for. So, did they pay you a full commission and pay for an appraisal? Seems wrong to me.
Sorry you feel otherwise but that is true, especially when homeowners try to overprice their home. A realtor can offer a price opinion based on comparables at no charge to the seller.
It would be the same with getting a home inspection. The Realtor doesn't pay that and is not usually qualified to do so.
Do you also feel a Realtor should pay a buyer's appraisal cost charged by a lender in a conventional mortgage or that the bank should eat the cost?
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Last edited by dontaskwhy; 08-24-2012 at 07:12 PM..
Since we didn't deal directly with the buyers, I can't tell you about their motivations. We were told that they absolutely had to have our home above all others they had seen. However, when the two parties have different expectations on price, no deal occurs. It's that simple. And, yes, when you reach your bottom line too early in a negotiation, the other side might feel insulted -- especially when buyers and sellers are communicating through intermediaries.
For anyone to imply that the buying and selling of real estate is always logical and rational is beyond me. On the contrary, it can get pretty emotional and irrational and I'm not even in the business. Transactions can become quite bizarre and there's always testosterone to get in the way. Back and forth haggling is quite common in home sales in our region. It can feel like the rug bazaar in Baghdad.
I can remember the time we put in a bid on a house as highly qualified buyers, had it rejected and then saw the house sell soon thereafter for $15,000 less. Clearly, the listing agent didn't present our offer and wanted to hog the entire commission, unethical or illegal as that move might have been. There's one illogical transaction that comes to mind.
I agree with manderly6. One can always point to an anecdote or two about irrational behavior, or behavior on the part of inexperienced and poorly guided buyers who think home buying should be like waiting for a 20% off sale at Macy's. And in the anecdote you cite, I would wonder about whether there are some additional facts that you may not know about that might have explained it, such as an all-cash buyer, someone who offered a cleaner deal (e.g., no inspection contingency) or someone who seemed (rightly or wrongly) more likely to close on the terms the seller wanted.
But in the vast majority of cases, especially today when there is SO much info available to the average buyer on the internet, most people are smart enough to know that list prices can be set arbitrarily, whereas prices of truly comparable sold homes cannot. The trick is to know enough about the properties to be able to make the adjustments and offer a better deal than other buyers who are interested.
While there is a risk that you will lose a few irrational types, there is a risk in pricing on the high side with room for "dickering" that you will lose other buyers. Not everyone thinks the way you might and certainly buyers in my area generally do not. Desirable houses priced low get bid up and sold quickly. You can always say no to an offer you think is too low, but if people stay away due to perceptions about price, there is no one with whom to negotiate.
As others have said, in today's market, unless your house is so unusual or there are so few recent sales that it is extremely difficult to find comparables (which may be true), you will find a good buyer very quickly if the price is at/near the market. I would not worry about the first "buyer" who may have been one of the dopey ones.
Re: your questions about ethics, I'm no expert and not an agent, but I think the agent's actions could simply reflect imperfect info, laziness, difference of opinions, etc., rather than unethical actions. I guess I always expect people who are trying to sell me something or get something from me to have their own best interests at heart rather than mine and that I will be tested as to whether I know what I am doing. As a savvy seller, it is easy for you to cut the conversation short.
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