By Chad Taylor
I recently met with a family who will be selling their home soon and they are trying to decide which Realtor to hire. Of course, I would like them to hire our team so I shared our market stats as well as our system and strategy for selling homes in today’s market at top market value. As a foot note, this particular seller is also considering selling their home FSBO.
At the end of our meeting, I knew that the potential seller was interested in hearing my thoughts about fair market value and at what price I would suggest they list their home. I want to help as many sellers as I can so I am very conflicted on what to do. Here in lies the challenge. Do I give them my thoughts on price simply to see a FSBO sign pop up in the yard next week with the price that I suggested advertised to the public? And is that fair to our current clients who have hired our team for our pricing advice and selling strategy?
This begs the question, “ Do you have to know the suggested list price in order to hire a Realtor?”
Ideally the answer should be no. And here is why. Sellers have two important decisions to make when they are selling their home- which Realtor to hire and at what price will I list my home. Both are VERY important decisions, however, they must be compartmentalized. Hiring a Realtor based on their list price recommendation can be quite dangerous. Especially if they are offering a list price that they know will be attractive to you in order to “buy your listing.” This is a tactic used by many to get the listing with the intent to simply drop the price until the home sells. Allowing this to happen puts the seller at great risk of selling for less than they should.
So what should a seller consider when hiring a Realtor and choosing a list price?
Choosing a Realtor. I am all about a proven track record when it comes to choosing a Realtor. When the market is hot, like it has been since 2013, the Realtor population in KC skyrockets. It seems that the perception is that selling a home is an easy job in a seller’s market. Yes it is true that certain aspects of the job are easier in a seller’s market, but other aspect are more difficult. It is a give and take. You want a Realtor who can demonstrate a very high level of market knowledge and who can show evidence of pricing accuracy. Evidence such as low days on market for any of their listings and a high percentage of listings that sell with out a required price adjustment. Lastly, I would ask for evidence of their original list price to sales price percentage. This is where the rubber meets the road. For example- the family that I mentioned earlier live in a part of Prairie Village where the average Realtor is selling homes for 95 percent of original list price while we are currently selling homes for 102.4 percent of original list price. Based on our systems, we are outperforming the average Realtor by 7.4 percent. On a $300,000 home that is a $22,200 difference. I would be willing to bet that most sellers would love to have an additional 22K in their pocket at closing, right?
Choosing a list price. The reason I say that ideally you should be able to hire a Realtor without hearing the proposed list price is that fair market value is fair market value. When I suggest a list price to a seller, that is not my price. That is the market’s price. My job is to have an intimate knowledge of the real estate market which will allow me to interpret fair market value based on market data. Therefore, any knowledgeable and well-versed Realtor should be able to arrive at the same price. And the goal of the pricing discussion is to arrive at the price that is not only supported by market data but will most importantly cause the home to sell. That is the ultimate goal, right?
In a nutshell, when a seller does their due diligence while interviewing Realtors to find the market expert that they need in order to have a successful sale, that same Realtor will also be able to interpret the market to arrive at a price that will cause the home to sell while at the same time yielding the seller the biggest check possible on closing day.
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