The Real Deal / Why agents can give conflicting advice
Published 2:40 pm, Thursday, August 11, 2011
One of the most perplexing experiences you may have when you interview prospective listing agents is when they report back to you after evaluating your home -- and they all tell you a different story.
I had this experience recently when I met with a couple whose house had been on the market before but had not sold. They talked with two other agents, both of whom told them their previous asking price was just fine -- despite not having a single showing at that price in a much stronger market. The fact that I told them something different was only the beginning of their frustration. The rest was that the other two agents supported their price opinions with two completely different sets of recently-sold comparable properties, or "comps."
The owners couldn't understand how this could happen. All three agents have good reputations, and we all have access to the same market information. The owners expected us to tell them a similar story, and then they would choose among us based on some other factors. When this wasn't the case, they were more than a bit confused.
So they asked me three key questions:
1. "How could three agents come back with two different opinions and three totally different sets of comps?"
2. "Assuming you're right about our house's value, why would two other agents be willing to take our listing at a much higher price if that means it won't sell?"
3. "Why would (fill in name of brokerage company) spend the money to advertise an overpriced property?"
I was really glad they asked, because it allowed me to explain some things that many sellers don't know.
1. The reason three agents could present three different sets of comps is that there is no simple formula for estimating property value. Pricing is more of an art than a science. And some of us are better at it than others. Also, some agents know the inventory cold; others rarely go on tour and rely instead on statistics from their computers or what other agents tell them when selecting your comps.
Some agents are skilled in netting out differences in location versus square footage versus condition and amenities -- and they can explain how these relate to your property. Others may bring you comps that in no way resemble your house.
2. Agents take overpriced listings for several reasons. First -- believe it or not -- they may not realize it's overpriced, which is a problem for you because you've hired them for their expertise and judgment. Second, some agents' goal is to have a lot of listings -- not necessarily to get them sold -- because having many listings is the surest way for them to generate a steady stream of leads on new buyers and sellers. Third, many agents fear they won't get your listing if they disagree with you on price.
3. Brokerage companies advertise overpriced listings all the time. Agents are not required to substantiate the prices at which they take listings. More importantly, the purpose of broker advertising is to communicate market presence and generate calls to the office -- not to sell your house. Industry statistics show that the odds of your ultimate buyer being sourced through print advertising is less than five percent.
In light of all this, and now feeling even more uncertain than before, the property owners asked what I thought they should do next. Which is the most important question of all.
I told them what I would tell any seller. You should choose an agent not based on the highest estimate of value, but on the highest level of market knowledge and overall smarts. If you're not sure, you should make a list of questions and invite agents back to answer them. If you're still not sure, you should talk to more agents. Visit their web sites. Check their references. Ask people you trust who've recently bought or sold about their experiences with the agents they used.
Most importantly, never settle for less than you deserve. All agents are not the same. In this market, especially, your choice of listing agent may be the difference between being able to move on and being forced to stay put.
Evi Coghlan's "The Real Deal" appears every other Friday. She is a licensed real estate agent with the Riverside Avenue office of Coldwell Banker and a former marketing consultant to Fortune 100 companies. She may be reached at 203-247-6691, by emailing her at email@example.com or visiting www.evicoghlan.com.