Dear Monty: How do I convince an agent my home is worth $292,000?
Reader Question: You have answered questions for me in the past and I found you reassuring in the complex world we live in, so here I go again. I need to sell my home for $276,000.00 net to me after commissions. So how do I present my case that my asking price is sound and convince agents that want the listing they have to work for anything above that? Susan C.
Monty’s Answer: The best way to present your case is to be able to demonstrate your home falls into a range of value that includes $292,000.00, whether to a potential buyer or a real estate agent. This exercise requires the same components that an appraiser would employ to render an opinion of value on your property. “Market value” is defined as the price a willing seller and a willing buyer, both fully informed and neither acting under duress, agree to in a negotiation. The primary considerations for real estate appraisers are:
- The sale price of comparable properties that have sold recently
- The list price of similar properties that are currently on the market
- Your home’s relative condition, quality, age, location and other features
- The replication cost of your home on another lot
- The general real estate conditions in the applicable neighborhood
Points to consider toward your objective
- It will be time-consuming for you to gather all of the information required above.
- Depending on your education and experiences, it will take some time to learn to quantify the comparables and calculate realistic price adjustments between the differences in features from the comparables to your property. For most professional appraisers, it takes practice and guidance or apprenticeships. Here is an article at https://dearmonty.com/challenge-home-appraisers/that discusses adjustments.
- Even seasoned appraisers and real estate agents will derive conflicting opinions of value on any given property, so there is no exact price for any home. There is only a range of value. This variance in opinions is one of the primary reasons that it is important to interview at least three agents.
- Many property owners are emotionally tied to the home and cannot be objective.
It is for these and other reasons Dear Monty recommends a particular process to pick a good real estate agent. This article at https://dearmonty.com/finding-the-right-real-estate-agent/explains how.
An option to reach your objective
Look instead for an agent that is competent, honest and efficient. It is not hard to find an agent that will take your property for sale at any price, but if you want to sell your home, think instead about selling it at the top end of the range of value.
Your job is to identify quality candidates, conduct structured interviews and observe their actions throughout the process. Which agent does the best job of demonstrating the home’s “range of value,” and offers the most logical game plan to help you achieve your goals? Experience consistently shows that a quality real estate agent can add value to both the outcome and the experience.
While you may have a reason that you want to net $276,000 for your home, the marketplace itself does not care what you want. For example, a seller may calculate an absolute price needed to pay off mortgages or other debt. They may have over invested in the home or paid too much for it. The market only reacts to supply and demand; what similar properties sell for, the cost to build a new one, and the offering price of competing properties.
Further, your desire to pay your agent any amount over and above $276,000 may not be possible, as it may be against the law. This arrangement is commonly called a “net listing.” It is illegal in my home state. Many states have banned net listings as past misunderstandings and litigation involving the arrangement drew unfavorable attention.
Hire the agent that does the best job of listening and has taken the time to understand your situation, research your property, establish a range of value that is justifiable, and communicates it to you effectively. Dear Monty believes they should share the highest price you can expect and the lowest price you should expect. Sometimes, the myths that exist in real estate, often perpetuated by the industry, confuses the playing field and a consumer’s ability to make a sound decision.
“Richard Montgomery gives no nonsense real estate advice to readers most pressing questions. He is a real estate industry veteran who has championed industry reform for over a quarter century. Send him questions at DearMonty.com.”