The single biggest mistake Home Sellers make.

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The greatest challenge I face as a real estate agent is the excessive appraisal values presented to home owners by other real estate agents. There, I’ve said it.

Right now the market is pretty good. There is lots of stock out there but there are plenty of sales being made as well. The ones that are priced right are selling for great prices. The ones that are overpriced are not selling. It’s that simple.

I completely understand… If there’s the possibility of selling your home for more, you’ve got to take that seriously. The problem is when an agent ( or a home owner ) comes up with those extraordinary numbers with no basis.

Last year I attended a seminar with one of Australia’s top real estate trainers.  These sessions are meant to give agents like myself an insight into how to better promote ourselves, how to get more buyers to our home opens, how to negotiate higher sale prices and so on. This particular trainer ( one of the most prominent in the country ) said that selling real estate is about 3 things; “prospecting for appraisals, turning appraisals in to listings and then getting price reductions.”  Not effective marketing,  not selling for the best price, “getting price reductions”.

So many ‘professionals’ in our industry see more value in developing their ability to get price reductions from their clients rather than getting strong offers from buyers. The theory being, list the property for months at whatever price will get you the listing, then wear the home owner down until the price meets the market. The ethical issues aside, some problems with this include;

– Scaring away all those genuine buyers who may have made offers at a fair price when the listing was fresh but who end up buying something else that was not overpriced.

– All the associated holding costs. How much is your mortgage payment each month?  Add those payments up.

– When your home has been on the market for months everyone asks themselves, “what’s wrong with it?”

– The longer you’re on the market any offers you’re likely to get will be from bargain hunters who assume you must be desperate to sell after all that time on the market with no result.

– Most importantly, all market evidence shows us that the longer your home is on the market, the lower the sale price is likely to be.

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I’m all for adjusting price and expectations in line with market feedback.  I just have a real problem with agents listing homes at prices they know they just can’t achieve.

All agents and home owners have access to the same information; How many homes are currently on the market, what the house next door sold for, what’s under offer and what’s not, what sort of growth or decline the suburb experienced and so on.  There’s just no way an agent can, in good conscience, tell an owner that they are going to achieve $X when they know based on all the facts that the home is only worth $Y.

Today, on the 1st of December I can see a number of listings in Highgate and Perth that have been on the market for weeks and in some cases months and some of which have had price reductions of as much as 25% from the original asking price!  25%… how can an agent be that wrong?  The truth is, they can’t.

Home owners, your property is worth what it is worth. A good agent will do everything they possibly can to maximise the sale price… to get every dollar they can for you. It’s that fine art of trying to achieve the best possible result from the emotional buyers who pay the highest prices while at the same time not burning bridges with the majority of market savvy buyers that will only pay a fair and reasonable price. Some agents have a particular strategy while some simply list it and then try their best but at the end of the day, if an agent tells you what you want to hear but can’t back it up with facts and evidence, think twice or your story may end up just another cautionary tale told by advocates of honest and accurate property appraisals.

Wayne Heldt.

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