Real Estate Pros...

paulinesMay 31, 2009

I'm asking for honest opinions here, not necessarily your personal practice, but for the industry in general.

The RE market is probably tougher now than it's been in a long while. Do you feel that some agents purposefully undervalue a home, so that it sells quicker? In other words, if comps come in for a home at around $200,000- do some/many downplay the home they're assessing and recommend the HO list for 180,000-?

The difference in commission would be around 1,000, but with a quick sale that nets 9,000, it would be worth it, no?

Keep in mind that the HO has NOT asked for a quick sale, but is looking for a good starting list price.

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no. competition to get the listing tends to make agents go the other way.

    Bookmark   May 31, 2009 at 9:25AM
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I absolutely see this happening with "some" agents. There is no competition right now, listings are a dime a dozen.

    Bookmark   May 31, 2009 at 10:02AM
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If the house is truly underpriced I really do believe that market forces will bring it up to its fair market value; ie, you will receive multiple offers, and can negotiate a higher price. And yes, agents are tired of trying to market homes at prices that are too high, and may be underpricing in order to get a sale.

I have a friend that is finally able to get into the RE market because of the decrease in prices, but so far every home in her price range that she had bid on has multiple offers and she has lost out.

    Bookmark   May 31, 2009 at 10:23AM
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Thank you for the responses.

Linda, How much are you seeing these agents undervalue property? Are they suggesting going in at the lower end of the spectrum or are there substantial under evaluations going on?

How does the HO protect themselves from either under or over pricing, especially in the case where comps may be hard to find?

    Bookmark   May 31, 2009 at 10:25AM
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One of the major broker/owner/producers was advocating in the newspaper recently, that listing in this market requires listing 15-20% below comps from the get go, where in a sellers market it was ok to list above the comps by that percentage.
Owners motivation did not seem to be a consideration for the broker.
This is not the way I do business.
If recent comps are hard to find, appraisers/agents will increase the radius and/or do a % time adjustment on the value.

    Bookmark   May 31, 2009 at 12:08PM
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I'm close to listing and finding the same thing. I'm not sure how to handle it. I'm tempted to go higher than their recommendation except I think home values could still continue downward. I'm not sure we have time to wait for prices to start coming back up. Could take another 5 years.

There are so many homes on the market, I feel its better to stay competitive and price on the lower end. In my area of NY, prices are all over the place. Houses are taking a long time to sell and banks are slow to give mortages. People trying to get jumbo mortgages are required to have 30% cash on anything over 1M. My State also has a mansion tax on anything over 1M.

Very hard to figure out how to price.

    Bookmark   June 1, 2009 at 2:29AM
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Jane, in the past, I have found that going to open houses helps. If you are able to do that 6-8 months or more in advance of listing, you can get a feel for what homes have sold for and how your home compares.

I am having a hard time wrapping my mind around 'comps', I feel they can be too general (especially if you live in an area where homes tend to be a mixed bag of different styles and builds). When we listed, we were given 'comps', but I'm not convinced they were an accurate way to assess our home and unfortunately work schedules didn't permit us to check out the competition or get a good feel of the market.

Bernie, thank you. That's pretty scary, as folks are relying on their agent to get them top dollar. I do understand that it is a fine line between top dollar and selling the property in a timely manner...but still.

    Bookmark   June 1, 2009 at 4:50AM
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It is a crazy market. I am tracking a particular town in LA with top rated schools(we might move there next year)and I am very surprised to see multiple offers ... who would have thought with all the doom and gloom we hear, specially in CA. Of the 19 homes sold in that town in the last 2 month, 4 of those had multiple offers. You also have the other extreme of a foreclosure selling for $1 million less than a year ago! So even within one town you have two different makets happening at the same time. Obviously, overall the prices have come down, but only slightly. I'm hoping they go down further next year!! It might also be a good time to rent a very nice house for a fraction of what it would cost to purchase. In the meantime I'll keep busy tracking the market.

    Bookmark   June 1, 2009 at 5:38AM
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My take on this is that you need to look at the quality of the comp. So few homes are selling in my area, that comps are very difficult to determine. The strongest price will come from a non-distressed sale, of which we have none. Then you factor in current & expired listings, short-sales & foreclosures, and a really, really, REALLY honest comparison of your house to these others. I say this because many REAs are frustrated with owners who don't understand that their house is outdated, cluttered, dirty, in need of major systems replacements (water heater, HVAC, roof, etc) or that buyers are not interested in some very personal touch they may have paid a lot for 10 years ago (i.e. skylight lined in mirrored glass, built-in dark walnut bookshelves, central vac).

Toss in your desperation factor, and a good agent will help you set a good listing price. If you told your agent that you want to sell ASAP to pay off hospital bills before you have to declare bankruptcy, then he/she may suggest a lower price that will attract buyers before others in your area.

Anyway, I think what happens more often around here is that a seller interviews several agents until he finds one that will list it at the highest price, then the agent starts recommending price reductions until now you've had the place on the market for months and you're down to the price that all the other agents initially recommended. I know of two houses in my area that this basically happened to, and the houses ended up selling for significantly less and sat on the market for much, much longer (in one case, 18 months while the market collapsed and about $400K less than the 1st listing price, about $200K less than what the other agents had recommended).

    Bookmark   June 2, 2009 at 2:39PM
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