The Misguided Non-cents of Real Estate Experts
Below is a MRR and PLR article in category Finance -> subcategory Real Estate.
The Misguided Myths About Real Estate 'Experts'
Summary:
How do Realtors really price your home, and should you trust their advice?Article:
There's a lot of chatter about self-proclaimed experts on Realtors and home pricing, especially from those who aren't actually Realtors or haven't delved into the data. From my readings, I find two conflicting 'expert' opinions on how Realtors price homes. Both can't be right, and as a Realtor, I can tell you they're both wrong. Curious? Let's dive in.
First, some assert that Realtors inflate your home's value to win your listing, making you dream of cash while signing the papers. This might seem like a shrewd tactic, yet it rarely succeeds in practice. If a home doesn’t sell, lowering the price becomes necessary. But listing too high won't benefit anyone. A home priced beyond its value doesn't sell, leaving the Realtor with no commission. Ultimately, either the home sells for less than the listed price, or it doesn’t sell at all, leaving the client dissatisfied.
Realtors thrive on referrals?"about 95% of Realtors who fail do so because they lack this support. Take a hairstylist as an analogy: no woman would visit one without a trusted referral. Similarly, real estate relies on personal recommendations. A Realtor who misleads clients about a home’s value risks losing future business. Inflated prices don’t build loyalty, don't sell homes, and can harm the Realtor’s reputation.
Another group of so-called experts argues that Realtors undervalue homes for quick sales. But logically, would you list your home for less than its worth? Highly unlikely. Such a strategy would deter homeowners from listing with that Realtor. Underpricing homes doesn’t make sense as a business strategy and fails to attract clients.
So, what do Realtors actually do? They conduct a Comparable Market Analysis, seeking similar homes in the area to inform a fair market price. Realtors aim for a price that's neither too high nor too low. Although they're not appraisers and often recommend professional appraisals for unique properties, they draw on their training to determine fair value closely.
Why would a Realtor price a home accurately? Here’s where the facts from the National Association of Realtors (NAR) become important. Homes initially priced far above or below market value tend to sell below market value eventually. Why? Enter the concept of Days on Market (DOM). The longer a house sits unsold, the more suspicions arise from potential buyers about why it hasn't sold. If overpriced, buyers hesitate, suspecting something is wrong. Over time, accumulated DOM creates a stigma, forcing a sale often below market value or leading to withdrawal from the market.
Conversely, if priced below market value, it unsurprisingly sells below market value. But who would voluntarily list their home at such a low price? Except in cases of financial distress or high motivation, it’s rare.
Critics of Realtors often miss the mark. To succeed, Realtors build a loyal client base. Overpricing tarnishes reputations, blocks sales, and eliminates referrals. Underpricing, without the seller's consent, might even breach ethical obligations legally. Realtors must prioritize the seller's needs, and pricing below fair value without full transparency could violate these principles. For legal validation, consult an attorney.
I recently read about a study suggesting Realtors sell their own homes for higher prices than their clients' homes. The authors inferred unethical pricing advantages. However, in my experience, clients often want to list at the highest justifiable price, seldom heeding my advice. The NAR data shows this strategy often leads to sales below market value.
Realtors do have expertise in pricing. By listing homes close to market value, they achieve higher prices. The study inadvertently confirms that listening to a professional often leads to better outcomes. Ultimately, pricing near market value is the way to achieve top dollar, and following a Realtor’s guidance can help clients reach that goal.
In summary, Realtors understand how to optimize home sales by pricing accurately. Trusting their expertise can be the key to success.
You can find the original non-AI version of this article here: The Misguided Non-cents of Real Estate Experts .
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