Why You Should Never Pick Your Agent Based On Price Alone
Why you should never pick your agent based on price alone
When the market has shown consistent gains on a year-over-year basis like it has over the last five years, it’s not uncommon for sellers to shoot for the stars when pricing their homes.
Sometimes, they get lucky and they walk away with more than they were hoping for, which isn’t a bad thing in any way, shape or form.
What’s unfortunate, however, is that home sellers will often hire their real estate agent simply because they’ve suggested the highest price to list the home; even when the price is simply not attainable in any market environment.
This is particularly troubling because it’s almost as if the agent has magical powers to sell the home for more money than the agent who recommended a more market-appropriate list price.
At the end of the day, all sellers need to realize that the list price at which the home is listed is will be the biggest influencer on who sees the home and who doesn’t.
Taking all of this into consideration, here are some strong reasons why you should never pick your agent based upon price alone.
Agent Prices Home Based on How Much a Seller Wants/Needs
Repeat after me: “It doesn’t matter how much the seller wants.”
What the seller wants to sell their home for and net has nothing to do with what the market will bear for the sale of the home. It’s like buying Disney stock, the market determines the stock price and that’s what it can be sold for to the public.
Again, the price of a home is not based upon what you the seller, or your agent, want you to get for your home. Rather, the price is predicated on what a buyer is willing to pay for the home and then how much the appraiser thinks the home is worth.
Other than that, hopes, wants and desires play no part in the selling price of a home.
Now, if you aren’t going to make enough money on the sale of your home to move to your next one, that’s different. But if you want a specific dollar amount when your home sells, please remember that has no impact on the price at which your home will sell.
Agent Prices Home Based on Your Neighbor’s Listing Price
Keeping up with the Jones’ is a very dangerous (and expensive) philosophy to maintain in life. Trying to do, and even outdo, your neighbor, is not a great choice when it comes to selling your home.
Much like what your desire for the sales price of your home, the price at which your neighbor’s home is listed has no impact on what your home will sell for.
You may live in a subdivision where home styles and square footage are very similar across the board. Despite these and other similarities, you and any agent you hire need to completely ignore your neighbor’s listing price.
Things like condition, upgrades, amenities, how it smells, etc can all impact what the home will eventually sell for, making the listing price even that more inconsequential.
Now, if your neighbor’s home has sold and it’s similar inside and out, then the price absolutely matters. Good comparables for a pricing model to list your home are homes that are similar in style, condition, square footage, location and you guessed it, they are all homes that have sold.
Other than meeting those criteria, neither the listing price your neighbors home, nor any home for that matter, have anything to do with the listing price of your home.
Agent Prices Home Based on Average Price Per Square Foot
For some folks, a single-family home is more desirable than a multi-story home. For others, the opposite is the case. And, although although the actual square footage of any of these homes could be identical, a single-level home might sell for a higher price per square foot.
In addition to that, smaller homes may have a higher per-square-foot cost than a larger home.
Now, it may be that the majority of the homes in your neighborhood are two-story homes and sell for an average price per square foot. If this is the case, then a guesstimate might be a reasonable way to identify the price range in which your home will sell. However, it doesn’t actually indicate the true value of your home and confirm the best selling price for your home.
Homes vary in square foot, even home-to-home in your neighborhood and to that point, square foot averages are generally a casual guideline and nothing more.
How Real Estate Agents Should Help You Arrive at Your Listing Price
Select your agent based on expertise, experience, knowledge, and the ability to sell your home in a time frame that works well for you.
Pricing models vary, but at the end of the day, a good agent should be able to tell you one of the following:
- The market-based price the home should be listed for so that it will sell
- The price at which a buyer would likely make an offer
- The price an appraiser would give for the home
The most important thing is to price your home that will drive up the most demand on your home to attract the largest number of the right buyers to look at your home. The listing price, while not always the same number, should be very close to each other when your home sells.
Picking the right sales price should be based on the comparable sales and what’s happening in the real estate market, the mortgage market and the economy.
It should never be based on what you want the agent to tell you.