Your home is your most valuable asset! When you have decided to sell your home, it is important to know that not all Realtors are created equal when it comes to having the experience, knowledge, skills and results you deserve. Real Estate agents are not paid for their time; they are paid for results! In fact, they are only paid if and when your home is successfully sold! Agents spend time and money upfront in most cases without any consideration from the seller’s pocket, and cover all expenses associated with the marketing and management of the sales transaction.
A listing agent will provide a seller with many services including the listing process, the showing process, the lead generation and conversion process, writing and negotiating offer process and the process of following it through from contract to close of escrow, to get the desired results for the seller. In addition, to these essential steps, the real value of the right agent is the benefit of their years of experience and access to a database of buyers and other agents that work with buyers in the area. Finding the right agent with the most market knowledge and market share of the business will also be a big advantage to the seller.
Many sellers make the mistake of choosing an agent that recommends the highest listing price. Agents do not control the value of a home, the market does. A good agent will interpret the market and advise the sellers of a list price that can be supported by recent comparable (“comps”) sales in the area and have the ability to make adjustments, to allow for differences in condition, upgrades, amenities and location. All agents have access to the most current sales that are similar to the subject home, and use these sales or comps to determine the market value. These sales are evidence of market value, in other words what price a willing seller and a willing buyer agree to sell and buy a home. An appraiser will also use this approach when determining the value of a home so a buyer can secure a loan on the property.
The appraiser will determine a value as evidence to the buyer’s lending institution that the property is valued at the agreed contract price. This is standard practice to protect the bank’s risk in lending on the home. Since a majority of buyers in the market use financing it is important for the listing agent to suggest a price that can be supported with comparable sales, and that the agent is ready and able to provide the comparable sales as evidence to the appraiser. This is where the agent’s knowledge of the market is a great benefit. If the agent has viewed the homes being used as comps, they are better equipped to explain intelligently to the appraiser why one home may have sold for more or less. Once a home is sold, the appraiser has only pictures to rely on, and they do not always tell the truth. Realtors accentuate the positive and do not photograph the negative features. If the house next door is in disrepair, and has junk cars in the drive way or there are electrical powerlines in the back yard the appraiser may not know and may not consider this when making the value adjustments. The reverse is true as well, if a home has been remodeled and has upgrades beyond the norm that would be important to note as well. The situation of the seller can also impact the value, if it is a distressed situation like a death or divorce the seller may sell for less than market value. These are all situations that a good agent will be able to explain to the appraiser and will assist in getting the appraisal report to come in at value. Appraisers are aware of agents that have great market knowledge and it will give that agent credibility as to their ability to price the home correctly and are more likely to receive the agent’s comps and comments in a positive manner.
The more unique a home is the more crucial it is to have the right Realtor! I recently sold an older home on a one-acre lot that was 2,400 square feet for $425,000. I met the appraiser at the house with four comparable sales and the research detailing facts that supported the value of this home. In addition, the seller listed all of the upgrades they had done to the house over the years. The appraiser commented when we met, he has seen my signs in the area for years and knew that I was very familiar with the area. He welcomed my research and took it into consideration and the appraisal came in at value.
In the past, few years there have been a handful of Luxury properties on the market in the South Mountain and Laveen area. Many of these homes are so unique that they are very difficult to find comps for. When this is the case, it is appropriate to go outside of the area to find similar comps and then to make adjustments for the location. To be honest, sometimes it is just the best educated guess as to the list price. Once put on the market the price will be tested by how the market responds to it. The market will let you know if you are on target or not. If there is activity in the way of showings it is a good sign. If the showing activity is light, it is over market value. If there are no offers, it is a sign it is over market value. If there are offers from the market it is a good indication of market value. An agent with market knowledge will interpret the market and advice as to the market value.
In The South Mountain Village, the highest priced home sold recently is $925,000; it is located on the mountain with fabulous views in a gated community and is 5,527 square feet and has a pool. Currently, there are several similar homes on the market for over $1,000,000. There are no comparable closed sales in the million plus price range in the area and these homes have remained on the market for well over a year, this is proof that the market is rejecting them, and they are overpriced. When an agent recommends a price without having sales history to support the price they are recommending, they are not being completely candid and may be telling the seller what they want to hear. If it is difficult to find good comps then the market activity will be your guide. The agent should have a plan in place to adjust the price accordingly until the market responds positively with showings and offers. If a seller is not willing to do this, they are better off taking the home off the market so it does not become stigmatized and leave buyers wondering what is wrong with the house. Unfortunately, sometimes sellers list with the agent that suggest the price the sellers want to get in order to secure the listing and do not disclose the recent sales. If a home is not selling, it is one of four reasons: price, location, condition of the house and condition of the market. The sellers can control only two of the four reasons, the price and the condition of the house. If the house is in good condition then the list price is keeping it from selling.
The other consideration in pricing a unique or luxury home is, the availability and cost of reproducing it. Currently, in our area, there is a large inventory of well-priced lots appropriate for a luxury home. For instance, a lot in the same gated community as the home that sold for $925,000, is currently on the market for $179,000, a buyer can build a home the same size as our highest sold home to their exact needs and tastes for approximately $650,000, together the lot and home would total around $829,000. In this case, a buyer could build their dream home for almost $100,000 less than the highest sold comparable home sold. This would make better sense to some luxury buyers, however not all luxury buyers have the luxury of the time involved in building a home and may place more value on an existing home for the time and hassle factor in building a home. Sellers of these unique and luxury homes must consider replacement availability in the market when determining the value of their home as well.
Choose wisely when making the important decision on which agent to sell your home. Base your decision on qualifications and knowledge. Choose an agent that is honest with you about the market and not the one that tells you they can get you the highest price without supporting it with market facts! If you would like to receive a free video on choosing a real estate agent or how to price your home, please leave a voice mail 602-305-9033 or email [email protected]eback.com and leave your email address.