Naturally, home sellers tend to go with the agent that says they can get the most for their home, more money means ‘better agent’ right? Not really. Pricing a home takes cooperation the between the seller and agent; it is not a competition between agents. You should always beware the agent who says, “How much did the other guy tell you? …I can get you more!”
Remember, all agents are not honest and fair and some use a tactic that inflates the home’s recommended list price to get you to list with them. This method is called “Buying a Listing” and it’s almost guaranteed that your home won’t sell for that price. If fact, your home will probably just sit idle on the market until your listing expires. So why do real estate agents “Buy a Listing” if they don’t plan on actually selling it?
- To build an inventory of homes. New agents and recently relocated agents are looking to get as many listings as they can in order to get started. (I’m not saying you shouldn’t trust a new agent; in fact the majority of new agents are being supervised or mentored by a trusted seasoned agent) However, if their suggested listing price for your home is much higher than expected, maybe they need to spend more time looking at the local market.
- To make it look like they are selling homes in your price range. Some agents will “buy” expensive listings to pick up other sellers in that price range or slightly below it. “I’m currently selling a house for $600K, selling your $500K should be a piece of cake”.
- To keep competing companies from selling it. Taking a listing for 3-6 months keeps it out of other broker’s inventories and prevents other agents from selling it during the peak selling season. That agent will probably try to later talk you into re-listing and dropping the price to something ‘more reasonable’.
- To add to their prestige. The claim “I’ve listed over 1000 homes this year” makes an agent seem like they are very successful. Maybe this agent lists a ton of homes, but doesn’t actually sell many homes at all.
- Free advertising for them. Their sign with their name on it goes on a sign in your yard for 3-6 months. All your neighbors see your yard sign and the multiple other signs they have around town. Perhaps your neighbors will think of how much “business” that agent was doing when it comes time to list their home.
- Pressure from homeowner who has inflated sense on home worth. Many times honest agents get talked into listing a home for more than it’s worth due to the seller’s perseverance for the higher price. The agent knows that the home will be doomed to sit and price drop, but rather than upset, or even worse, loose the client they concede to listing the home at an unreasonable price.
You have to remember that real estate agents talk to each other; other agents may not be fond of your agent’s practices. If you hire an agent who is unscrupulous and frequently “buys listings”, seller agents may intentionally or unintentionally avoid the homes he or she lists because they are always overpriced. Don’t let your listing be “bought” by a shady agent. Make sure that when hiring an agent, don’t just go with the one that gives you the highest list price. Ask how and why they came up with their figures. Make sure that you and your agent cooperate to come up with the best marketing strategy for your home.