Reader Question: My agent wants me to lower my price. The home has been on the market for less than a month for $349,900. She wants it to be $339,900. I cannot go any lower because I have a mortgage and a home equity loan of $260,000. What should I do?
Monty’s Answer: Pricing a home can be a challenging task. The hyper-local market is constantly changing. Every home is unique and worth different prices to different buyers. Review this article about valuing a home. It suggests that your agent’s opinion of value is just an opinion. Your motives may not align with your agents. Your critical task is to determine if her opinion makes sense.
Four helpful tips
1. Prospects and agents often don’t provide feedback. Leave a comment card urging customer feedback on the kitchen counter. What have actual home lookers said? How many people came through the house? How many people looked at it and bought a different home? If no one has looked, was it because prospects perceived the price is too high? Was it because there have been few prospects in your price range yet?
2. Who established the asking price? Did several agents provide an opinion? Do you have a written document containing competing and sold comparables? Examine the features of these homes to compare them with the features of your home. The features (including the neighborhood) are crucial to determining accurate comparables.
3. Real estate agents often lump all houses of similar size together and do not consider the style of the home when comparing properties. Many platform algorithms today lump different styles together to determine an average cost per square-foot. This writer believes per square-foot evaluations are misplaced. This article about challenging appraisers explains the key features, the importance of using the same style of home, and how to calculate the differences in the value of the features. Here is a companion article with additional information.
4. Knowing the number of similar homes for sale or coming for sale and the number that sell annually will allow a calculation to learn the sales rate. For example, if there are ten similar homes for sale or expected to come on your hyper-local market during the year and history shows that ten will sell during the year, this data suggests the supply and demand are equal. While the hyper-local market is a moving target with each transaction, the example indicates a balanced market.
Your bottom line
If you have not seen this information to justify a price reduction, you are entitled to more than a verbal request to make a $10,000 decision. Your agent has this information at her fingertips. Expect solid answers from your agent. Accepting a recommendation to reduce a home’s price without accurate data is risky. You commented, “I cannot go any lower.” While your finances are what they are, the marketplace is cruel in that it does not consider your situation. This article, “Timing your real estate move,” provides additional information. Sale prices today are still abnormally high in certain areas, but recent data suggests the market is changing to a balanced or seller’s market.
Some agents will recommend some incentive rather than a price reduction. There is no substitute for a price reduction.
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