Protecting Your Equity
Good Listing Agents vs. Bad Listing Agents
Here is a scenario that we see all to often. Please read this and understand how important it is that you hire the right agent.
Your House: You have a beautifully renovated home that is in the most prestigious area of the neighborhood. Every buyer out there looking in this neighborhood would love to buy this home but not every buyer can afford the location of the home. There is a premium to buy a home in this section. This premium ranges from $100-150,000. With the increased value there is a smaller pool of buyers that can afford it. There are also some buyers that can afford it but don't see the value in it so they aren't willing to pay for it.
Agent A: There haven't been many sales in your part of the neighborhood in the past year. Agent A, being unfamiliar with the area and/or in search of a quick sale uses the the comparable sales in the other part of the neighborhood to try and justify as low a sales price as possible. After much discussion you finally agree to list at $500,000. The first week the home is on the market, you get an offer for $450,000. In this case the buyers agent is using even lower comps from the other part of the neighborhood to justify their offer. Agent A tells you that "the first offer is always the best offer". You agree to the offer leaving a lot of money on the table. Agent A gets a quick paycheck and also markets themselves as being able to get their clients homes sold very quickly.
The Ziemers: We understand that there is substantial value in your location in the neighborhood and regardless of whether there have been sales in the past year to help us gauge the value, we know the value is there and it is important to preserve that value for you and your neighbors. We also understand that this house is not for everyone. This is the perfect home for a buyer that is willing to pay the premium to live in the best area of the neighborhood. We price the home at $550,000 and market it as a luxury listing, emphasizing why it is worth more than other parts of the neighborhood. We have a number of showings in the first 30 days and no offers. We look at the market data and we see that the sales time for homes priced between 500 and 600,000 are around 60 days. We advise you to stay strong on the price because the value is there for the right buyer. At 40 days we receive an offer for 500,000. We explain the value of the property to the buyers agent and we find out that the buyers really can only afford 500,000. We advise you that this is selling the home at a significant discount and that they would be better off waiting for a qualified buyer. At 50 days we receive an offer of 530,000. The buyers are well qualified and love the home. We are able to negotiate up to 540,000 and close on the property 30 days later.
So which agent would you hire?
Which agent had your best interest in mind throughout the entire transaction?
Agent A: Took 7 days to get the home under contract with a sales price of $450,000
The Ziemers: Took 50 days to get the home under contract with a sales price of $540,000
Is 43 days worth $90,000 to you?
Believe it or not, we see these types of agents all the time. Agents that only care about a quick sale or who are too ignorant of the nuances in a neighborhood to price a home accurately. When we are selling our clients home, we take that job very seriously. We aren't out for a quick sale. We hope that it does sell quickly for our sellers sake, but that doesn't necessarily equate to a successful sale.
At the end of all of this, we just want homeowners out there to know that it matters who you hire. Not everyone cares as much as we do. We hope you will give us a call to help you when you are ready to sell your home.