Thursday, May 11, 2006

Do Agents really know value?

Within 60 seconds of walking into a home, I know about what the home is worth. After seeing thousands upon thousands of homes in our market, you just know. Condition, square footage, neighborhood, economic obsolence, and floor plan all contribute to the real value of a home. As an experienced agent, you just know. I always do a tremendous amount of data research in advance to make sure the logic is sound, but I just know.

For some reason in our DNA, real estate agents just "don't know" when it comes to the home they are buying and or selling. Odd really, when this is all I do is focus on homes.

Six months ago I went into a home that was owned by the listing agent and as soon as I was in the entry I thought "this agent has no idea what is happening in our market." Actually, the agent is a good agent, but way, way off on value in listing their own home! I went in the home again yesterday (yes, it has been on the market for over 6 months now!) to take another look at the home since it has now been reduced by $50,000, and well, in my opinion, it is still listed too high. So why does this agent/owner not realize this?

The answer is pretty easy. He is way too close to the situation. He wants all of the money and sweat equity that has been put into the home plus profit. It just doesn't always work like that. But even more importantly, he is not acting like an agent, rather like a typical seller. It is very difficult for an agent to approach a seller when we know they want way more for a home that the market will bear, but we must be forthright in our thinking or we are not being the professional that we are hired to be. An agent can be that third party that can look at your home objectively and give a straightforward answer.

The point here is that we all view our home as more valuable that it probably is. Rarely do I go on a listing appointment where the seller thinks his or her home is worth less than real market value. We all need another opinion other than our own to get it right, just make sure that the opinion is based on factual data not just on "gut opinion". If in doubt, get several opinions in writing and compare the data. Be open to the data. If estimates are within 5% of each other, you have probably found your value range.

We will talk more about pricing in the next several blogs.

Paul Dizmang

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