There is a known trick that many Real Estate Agents will use in order to get more listing agreements signed. It often ends up with a difficult journey in selling and leaves homeowners frustrated. We thought you should know, and hopefully help prevent this from happening to you.
How did you arrive at your list price?
By simply asking your prospective realtor this question, you can expose this sneaky tactic.
Here’s the deal. Many realtors will tell you what you want to hear in order to get you to sign that listing agreement. Most popular on that list of things you likely want to hear is a higher than expected list price. There is nothing wrong with an aggressive list price, however, you need to know how they are reconciling that price point.
Setting the right asking price is key to maximizing your offer price and selling quickly.
Your home is worth what someone is willing to pay for it, but the list price sets the initial tone.
The purpose of asking a realtor this question is to ensure they are not suggesting an inflated price to secure your business. Unfortunately, this tactic is not uncommon.
Here’s the thought process for the realtors who do this. Their plan is to:
- Get you excited about a higher price
- Sign the listing agreement with you
- Let the home sit on the market (they know this will happen)
- Tell you to reduce the price
- Sell the home at a lower price, but they still get a commission
Want to avoid this happening to you?
Then ask them how they arrived at the price they’re suggesting.
You’re looking for an answer backed by data.
For example, during your initial meeting, the realtor should be presenting you with a Comparative Market Analysis (also called “comps”)
Realtors who cannot justify their suggested price will usually keep their analysis very vague.
They might show you a few recently sold homes, but they won’t back up their reasoning with how they arrived at the price.
What you want to see is a breakdown of how your house compares to each recently sold home. You want to see a comparison of the features and characteristics of your home to the features and characteristics of each recently sold home nearby.
Seeing a breakdown of how they arrived at their recommended asking price will increase the chances that they’re not overpromising.
If the answer you get is vague and doesn’t include an in-depth explanation, consider this a red flag.
Asking a real estate agent about how they arrived at their suggested list price (and getting the right answer) will give you a sense if you’re working with someone who has the experience, expertise, and integrity you’ll need.