If you are interviewing Realtors, should you go with the one who tells you the highest list price?
Let’s pretend that you just met with three different Realtors and they all gave you different prices, which is highly likely. After all, even if you hired three different appraisers, you are almost certain to receive three different price opinions. While those three different opinions should all be in the same ball park, they will all still likely be different. The reason is because, when it comes to pricing a home, there is no standard “5+5=10”. It’s more like “5+5= somewhere between 9 & 11.” If a someone is telling you “5+5= somewhere between 15 & 20”, that should set off some red flags.
Of course, it is possible that your home is just worth more than you realized but before jumping and hiring someone solely based off their higher listing price, ask them some questions. How did they arrive at that price? Perhaps they can justify it to you but if it seems too good to be true, it probably is. After all, if they can’t justify their numbers to you, how are they going to justify and defend your asking price to a buyer? The answer is, they’re not.
The foundation to pricing a home starts with using the right sold comparables. For example, you wouldn’t want to compare a colonial style home to a ranch style home. They’re just too different and the numbers would be too skewed.
The next step is using the right monetary adjustments for all the differences between your home and the comps used. For example, why would your 4-bedroom, 2 full bath, 2500sqft home with a 2-car garage sell for the same amount as the 3-bedroom, 1.5 bath, 2000sqft home with no garage down the road? It doesn’t make much common sense. What needs to happen are individual price adjustments for each aspect that is different, just like appraisers do. Adjustments are the key. Otherwise, you have a higher risk of overpricing or underpricing your home.
It’s important to do your best to pinpoint your true market value from the start because it will help defer future headaches such as your home not appraising, sitting stagnant for too long and now buyers are starting to wonder what’s wrong with it, paying for more monthly carrying costs than you originally anticipated or you simply never sell.
You must also remember that the market is the market. Meaning that you, nor your Realtor, have any actual control over what your home is worth. That’s not to say that great marketing won’t bring more attention to your property, which can result in a higher offer but, the bottom line is, buyers don’t want to overpay for a house. Once in a while, sellers “hit the lottery” and get more than they should and, likewise, sometimes sellers get less than what they should but, most of the time, they get what they should.