Some agents are much better at pricing properties than other agents. Case in point: The asking price suggested by a CHR agent (let’s call her Agent A) surprised a seller recently. At $1,060,000, it was $65,000 higher than the $995,000 sale price suggested by another agent (we’ll call her Agent B).
In and of itself, this situation is not unusual. Agents frequently have differing opinions of the price a house will bring on the open market. What made this case extraordinary was that Agent B was the “neighborhood expert” … an agent that had spent years helping buyers and sellers in this particular development. Wouldn’t she know best what the price should be?
Let’s say it right now: You should never pick an agent based solely on his or her opinion of the value of your house. While unethical, agents sometimes over-estimate a home’s value to win the seller’s business and then convince the seller to lower the price later on in the process.
In addition, agents can be mistaken about the value of a property. Pricing a home is part art and part science and frequently involves making subjective estimates of the value of certain key features of a property.
In this case, the sellers had good reason to believe that Agent A was right. She had extensive research to back up her price opinion while Agent B was taking a more “seat of the pants” approach based on general experience in the area.
Agent A agent has a detailed process for analyzing the value of a home. She uses it on all properties – even in areas where she is the neighborhood expert.
She begins by searching out nearby homes that have recently sold, similar to the home she’ll be selling. She studies them in detail on paper to identify ways that these other properties were either better or worse than the home she’ll be selling.
Next, she pulls up the other properties on Google Earth to see what was going on around them. Were any of them backing to a busy street? Did any have great mountain views? Positive and negative locational factors can make a big difference in the value of a given property.
Another part of the process is to look at all available photos of the recently sold properties. It helps Agent A understand if these properties have been upgraded or remodeled and to assess the overall cosmetic appeal of those homes.
Agent A then assigns a dollar value to each difference she’s discovered for the recently sold properties, whether that is a difference in features, location or condition. It helps her understand what those other houses would have sold for if they had been just like the house she is going to be selling.
This whole process is repeated for any properties that are currently under contract and currently for sale in the neighborhood. As you can imagine, this effort takes time and patience and skill.
Agent A, however, does more than just “office” research. She gets in her car and drives by every home that recently sold and/or that is currently under contract. She is looking at the neighboring properties. Were any of the immediately surrounding houses looking distressed? Having neighbors with peeling paint and poor landscaping can drag down the market value of a property.
Finally, Agent A previews houses currently on the market. They will be her competition when she puts her seller’s home on the market and she wants to understand the competitive advantages and disadvantages of the property she will be selling.
Armed with all this information, Agent A was confident the home was worth $1.06 million.
The property went on the market and quickly had a full price offer. At the closing, the sellers walked away with a 6.53% increase over what they would have received by using Agent B. The hours Agent A invested in research provided a tremendous return on investment for her client.