It’s one of the most reprehensible practices in real estate, causing husband-wife fights, stress, delay and lost opportunity. It also costs homeowners millions in lost value each year. What is it? It’s a selfish practice some Realtors commonly use, telling you that your home is worth more than it is to win the listing. Think of it as the bidding war nobody wins.
Why would Realtors do this? Because sellers often hope their homes are worth more than they really are. This makes them inclined to sign-up with the agent who says he/she can sell it for more. Agents know this, so some (not all) “puff up” the price (lie to you) on listing appointments so you’ll choose them. They figure you’ll eventually reduce the price after months with no offers.
This bidding war strategy is one of the most destructive practices in real estate because time on the market is acid to the price of a home. When buyers see your home has been unsold on the market for some time, they presume other buyers have rejected it, wonder if something is wrong, and figure it must be grossly overpriced, even if you’ve reduced your price to a fair one.
When a buyer likes your home and wants to make an offer, they view lengthy days on the market as a discount opportunity. Shorter time on the market will almost always result in a higher sale price.
So what is the solution? I call it a “Maximum Price Appraisal.” This is one of the most powerful strategies I teach Realtors nationwide in my luxury home sales course (www.luxuryhomecourse.com).
How does it work? I teach Realtors to recommend an appraiser to their sellers who will appraise the home at the highest possible price it would sell for given optimal market conditions and presuming a buyer who loves it. Since most buyers (even for luxury homes) obtain financing, this is also the highest price a buyers’ lender’s appraiser could justify appraising the home.
The Maximum Price Appraisal has several advantages. It gives you a realistic expectation of the highest price you can expect for your home. It gives your agent a tangible tool to convince buyers to pay that price (remember, this isn’t an ordinary appraisal, this is a top dollar appraisal). And it can be used to influence the buyer’s lender’s appraiser to appraise your home at the sale price. I believe so strongly in this strategy, I reimburse my sellers for the cost of the appraisal.
The takeaway? When the time comes to sell, choose your Realtor based on knowledge, experience, success, and their strategy for selling your home. Don’t choose an agent because they have lots of signs sitting on unsold, overpriced homes. And definitely don’t get hoodwinked into choosing an agent who simply says what you want to hear.