Agents Do Not Know What a Home is Worth
Pricing your house for sale based on the recommendation of a real estate agent may be tempting, but that may be the biggest mistake you can make. Most agents don’t have the specialized knowledge of home value appraisal to clearly understand the value of the house and price a home correctly.
Pricing a house accurately requires in-depth knowledge of the home’s market value and the significant factors influencing that value. Unless your agent has serious credentials in real estate appraisal, there’s a good chance that they have been pricing houses for sale incorrectly. Their miscalculations could cost you more than a few bucks.
Is it time to put your house on the market? Consider this warning before asking an agent to “price my house”.
Don’t trust what they tell you – best case, they are just taking a guess. Worst case, they are relying on flawed computer-generated valuation models that will price a home inaccurately. Risky business indeed…
This article is a modern tale of three real estate transactions: The Underpriced House, The Overpriced House, and then…The Perfectly Priced Property that brought big returns to its savvy seller. Find out what you need to know so you have an optimal selling experience without the costly pitfalls.
Know How Much Your Home is Worth Before You List it!
My client reached out to let me know they were ready to make a move.
I went to work completing my research and analysis of current market data and trends to arrive at a well-supported property value estimate for their townhouse.
During our listing appointment, I pleasantly surprised my client when I proposed a list price of $345,000 for their property, as there wasn’t any evidence of previous sales in that range.
For me, it was the logical conclusion. I had determined the market value of over 2,200 properties before this one, so determining the true worth of this home held no surprises!
Knowing the Value of Your Home Protects You from This…
Only two other townhomes in this complex had sold within the past year. One home sold several months prior for $270,000 and another sold more recently for $325,000.
The $345,000 price for this home was 14% above the average of these two earlier sales and 6% above the highest of these sales.
Despite these prior lower-priced sales in this complex, I was confident that my estimated home sale price was correct because I had completed a comprehensive market study.
It appears that another agent was not as confident and concluded that a list price between these two earlier sales was a good idea.
Right before the launch date of my listing, a similar unit in the complex showed up as an active listing priced at only $310,000 – ouch!
The surprise of now competing with a below-market listing was not ideal, but I was unfazed.
Pricing a House Correctly Gets Attention
My listing hit the market, and a spark was lit in this previously snoozing complex. Just 10 days later, another similar townhome showed up as an active listing – this time at an even higher price than mine.
It did not take long to realize that these were amazing comparables to show the effect that pricing a house has on the final sales price – we had ourselves a full-fledged deal story right here!
Let’s dive into what actually happened.
Pricing a House Too Low: The Underpriced House Listing
I expect the seller was excited to receive an offer so much higher than the listed price of the home.
The agent may have even promoted to the next prospective seller the story about how they sold the home 7.5% above the listed price. This is a simple message which resonates with unsophisticated sellers.
Now consider this…
When a home sells significantly above the listed price, the list price for the home was not correct. The seller listed the home for sale below the actual value of the house.
Here, we already knew that when the list price of this property was $35,000 below my perfectly priced home.
What You Don’t Know Can Hurt You?
On the surface, it may seem like this seller struck gold when their home sold for more than listed – but what if they realized how much money they actually left on the table?
A final sales price of $333,333 might appear profitable…until you uncover that the price for this home could have been as much as $12,000 higher! Knowledge is power when it comes to selling your home.
The biggest mistake a home seller can make is not learning the actual value of their house before listing it for sale.
Pricing a House Too High: The Overpriced House Listing
Today’s real estate market is a harsh one, and even the slightest miscalculation of your home’s value can cost you dearly. It showed this when another similar unit came on the market just 10 days after my listing became active. This seller originally listed their townhome for $348,000–just 1% higher than our sale price of $345,000.
This home eventually sold for only $339,900 – potentially costing this unfortunate seller five thousand dollars. The seller may have received a higher sales price if pricing the house for sale initially was done correctly.
It may have appeared reasonable to offer this home for sale 1% above the list price of my listing, but it was just a reasonable guess. It is not possible to figure out the value of a house by looking at only one other listing. Finding the actual property value of a home requires the completion of a comprehensive market study and the analysis of market data.
Ultimately, the result for this seller was a sold price that was 1% below the price of my listing. Alas–this sad story shows how sellers should know exactly what to list their home for or risk losing thousands in profit!
Pricing Your House Too High Has Consequences
Frustration can follow every price reduction when an agent lists a home above the property value of the house. An even greater disappointment happens when a seller realizes that they lost thousands of dollars because they did not list their home at the correct price initially.
Homes lingering on the market for an extended period cause buyers to wonder if something is wrong. An unfortunate consequence of this type of situation happens when potential buyers become wary about making an offer and might even think twice before viewing the home, giving rise to fear about what could have caused others to back away from such a seemingly good deal.
Because of this stigma, sellers often end up selling below the actual value of their home.
How Can I Find the Real Property Value for My Home?
Selling a home can be a tricky business, and discovering the market value of your home is a must if you want to avoid financial woes. As I’ve outlined that a correct estimate of the home sale price requires a valuation expert. Not taking this step can spell disaster for any homeowner trying to cash in on the value of a property – so take heed and know what the home is worth before setting that all-important sale price. Let me show you how to find the market value of your home; just check out my tips below!
Hire The Best Real Estate Agent
If you’re looking to maximize the return on your home, a shrewd move is to hire an agent who’s also licensed as either a Certified Residential or Certified General Appraiser.
Through their experienced valuation knowledge and data-driven acumen, they can negotiate with confidence for exactly what your home is worth – leaving no doubt that you will get the full value for the home when it comes time to list.
Don’t settle for just any real estate agent; go straight for the top of their field!
Skip the long directories of Zillow and Realtor.com and go for true expertise. Take your search to Google, culling out only those with appraisal credentials. Try Googling (your city) “real estate broker” + “appraiser” to find someone with serious chops who can help you.
If you are in Colorado, you can save yourself all that work and just request our FREE appraiser’s home price value report.
This is the best way to protect yourself from suffering a loss resulting from an incorrect list price and ensure that your transaction will be hassle-free.
Trust But Verify
When it comes to pricing a home, agents don’t always have your best interests at heart. If they don’t feel 100% confident about their assessment, it isn’t likely that a seller will ever hear something like “Hey I’m just taking an educated guess here!”
They might even embellish their background, experience, and knowledge regarding real estate appraisal.
Don’t take any agent’s claim of having an appraisal background at face value; dig deeper to protect yourself. After all, they may have only spent a minute or two as an apprentice and are trying to pass that off as “experience”.
Be sure to double-check any appraiser’s credentials a real estate agent may claim to have. Property valuation is not something to take lightly. It is such a serious matter that the Appraisal Subcommittee keeps a nationwide database of every appraisal credential ever issued.
Go to the ASC Directory and verify any claims of a background in real estate valuation. The database will show every appraisal credential (active or inactive) issued to an appraiser from any state.
When You Can’t Hire the Best Real Estate Agent
Although it can be tempting to rely on a friend or relative who is a real estate agent for help with one of the biggest financial decisions you’ll make, be warned: their real estate license isn’t enough. Without advanced valuation skills, this may not end well!
Don’t worry though; there is a safeguard – an appraiser completing a pre-listing property value estimate will cost around $500-$1,000 and can safeguard against costly mistakes.
Check out appraiserusa.com and search for Certified Residential or Certified General appraisers nearby.
Don’t worry about the sticker shock, ask your agent to reimburse your cost or reduce their commission rate since they lack the valuation credentials required to produce credible property value estimates.
Tech Deception: Automated Valuation Models (AVM)
Every real estate website and every agent has an automated valuation model available to tell you how much your home is worth. We even have an automated valuation model on our website.
This is like a toy. You input an address and it comes back with an answer telling you how much your home is worth. The result is never a correct answer, but it is fun to play.
What is frightening is the fact that some agents are now relying on similar toys to figure out the listing price of a home.
Selling your home for the right price and securing your financial future is not a game and does not involve toys. Knowing the actual market value of your home is critical for selling it at the right price.
We Make it Easy to Find Out the Real Value of Your Home
As we’ve seen, many agents are selling homes on whimsy rather than credentials—so don’t trust what they say. Instead, get a proper valuation through an experienced appraiser.
You are in luck if you live in Colorado since we offer a Free Appraiser’s Home Price Value Report here! No more agent guesswork or trusting flawed automated valuation toys. This is the real deal! I will meet up with you at your property for a walkthrough so that together we can assess all factors affecting the value of the home. Ensuring we know its real market value before we list it for sale.
My free home price value report has got you covered. So why waste any time? Request your Free Appraiser’s Home Price Value report today and ensure you get the best out of the sale of your home.
FREE Appraiser’s Home Price Value Report
If you are thinking about selling your home, you don’t want to make these costly mistakes. That’s why I’m offering you a FREE, no-strings-attached appraiser’s home price value report. It’s not a guess from an office or an automated result that other agents offer. This is the real deal! I will meet up with you at your property for a walkthrough so that together we can assess all factors affecting the value of the home. Ensuring we know its real market value before we list it for sale. My free home price value report has got you covered.
If you list your home with me, get ready for a hassle-free experience that will have you wondering why everyone doesn’t take advantage. Carefully crafted negotiations and years of expertise come together with my service. It’s no wonder that I can guarantee your result.
However—even if you don’t decide to use me as an agent—just filling out this no-obligation form and taking advantage of a free service is priceless…you’ll be amazed at how easy it all can be and I’m sure your friends will hear about it too! So, what are you waiting for? Let’s get started!
Knowing the Value of the House Is the Starting Point
The transactions profiled in this article illustrate how important it is to know the real value of your home. Pricing a home for sale at what the home is worth is the first step. Effective and targeted marketing must follow to achieve the highest possible price for a home.
You may be interested in learning that most of the listings presented in this article did not use the most important marketing tool in real estate. Only the earlier highest sale ($325,000) and my listing ($345,000), which was the current highest sale, used this marketing tool.
Look at my post describing this marketing tool and the results involving the same listings described in this article. I think it may surprise you to see how many other agents are not using this tool. The Most Effective Marketing Tool Other Agents Do Not Use.
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Realty Advisors Guaranteed Home Sale
Realty Advisors Guaranteed Home Sale is your boutique Colorado real estate brokerage with certified expertise in every aspect of a real estate transaction. A refreshingly different type of brokerage business, our comprehensive services are perfect for clients who want a hassle-free, successful real estate transaction. Providing full-service real estate agency in Pueblo, Colorado Springs, and Denver. Commitment to our clients’ experience means that you can always count on us to achieve your desired result. In fact, we guarantee it!
Phil McDonald, MScRE
Phil McDonald is a recognized real estate expert and an award-winning broker. He has a Master of Science Degree in Real Estate from the University of Denver. Professionally licensed as an Employing Broker and Certified General Appraiser, he holds the highest-level licensing credentials and has an extensive track record as a residential and commercial real estate expert witness. Phil is uniquely qualified in the realm of real estate and provides his clients with reliable advice and support every step of the way. When it comes to finding your dream home or selling your current property, Phil McDonald is your trusted partner.