Should house asking prices be determined by facts? Whose facts? ....121

#homeselling #realestatebroker #fact

Deerwood Realty and Friends Podcast

This is a fascinating bit of marketing and I wanted to bring it to you

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Thoughts:

1. House in need of updating….and the home buyers of today…they care more about how a home looks than good bones, for the most part. I constantly have to council my buyers that there can be some great deals on houses that need cosmetic upgrades.

2. “After our house went up for sale, three remodeled homes in the neighborhood’s interior came on the market at or below our list price”…..that is not a practice I see in St. Louis, MO at this time. I see houses that are completely remodeled priced at much higher than what the current comparable sales would indicate for the most part.

3. “We priced our home based on facts.” That’s a tough statement. I don’t live in a world where facts are always agreed upon. Just think of it in real estate, if a house is listed for 100k, and it sells for 100k, is the house worth 100k? The house sold for 100k, that is a fact. I have been pretty surprised over the course of my career how dynamic home prices really are. If you don’t have a home that checks certain boxes, you will usually get less than one that does. The penalty seems to be magnified on both sides as well…those houses undesired get much lower prices on average, those homes that are truly desired are usually getting much higher prices than average.

4. There is a HUGE inherent bias that comes with trying to sell your home. Because you bought it, you automatically think that the house is worth a lot…after all, it was your decision and you never make mistakes. I experience this quite often when I list homes for estates. The sellers of course want to sell the house, but they tend to see the house for what it is, UNLESS it is their beloved childhood home…then they want more…and it’s based on sentimental factors.

5. “We learned properties priced strikingly low is a rare but deliberate tactic. The goal in our area is that seller’s agents can later boast that they sold a property $250,000, $350,000 or more over list price after receiving a ridiculously high number of offers.” This is something that I have seen that has been new in the past 5 years…the giant listing portal sites like realtor.com and Zillow …as well as competitors came up with a metric that basically says, “how much did this agent get over asking?” on average, then you can say to prospective clients you “get over asking!” Who doesn’t want to list with a real estate agent who is consistently getting over asking price? See, that is a game…and it says a lot about your agent that they aren’t particularly playing that one. I don’t want to play it either, I know I will lose out to listing agents that do play that game though.

6. “Is dramatically underpricing homes by 5% to 10% based on comparable sales considered acceptable behavior by your trade associations and the state real estate department?”

As listing agents, our job is to get the most amount of money possible for our seller. If this particular listing strategy is the one that does it, then that’s what we should do. I don’t like the strategy…I think that it ultimately hurts buyers. I saw this with my own eyes here in Fenton over the weekend. An agent priced a property at least 35-40k below what the house was worth. This caused a massive stampede to the home and there were over 30 offers. Here’s what I didn’t like about this particular strategy at this time.

a. There were a lot of buyers who had no chance to buy the house because what it was going to sell for was way above what they could afford. You basically wasted those people and their agents time.
b. The eventual “winner” isn’t really a winner at all. They got the house, but the demand created by the practice has someone in a situation where they will likely be in an awful position to sell anytime soon. Maybe it doesn’t matter, but life happens and sometimes a sale needs to be made.
c. You create a mania for buyers. Now every time they go to a house they think they have to bid x amount over asking just to have a chance. This happens to houses that aren’t even priced incorrectly…which further drives up the prices of those houses as well.

That being said, do you want government or professional board policies to determine the listing strategies for your home? Wouldn’t you rather run the risk of a success or failure based on your agent’s expertise than with a board or government entity telling you what you can list your house for?

Source: https://www.mercurynews.com/2021/09/17/an-underpricing-overbidding-home-problem-shouldnt-property-listings-be-based-on-facts/

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