The observer influences the thing observed.
–Heisenberg uncertainty principle
It seems self-explanatory, but as a principle, I don’t price other Realtors’ listings.
The issue usually comes up when I do a listing presentation — essentially, a job interview for Realtors.
In the course of interviewing Realtors, homeowners (and prospective Sellers) naturally want to know how you’ll market their home; your qualifications; and what their home is worth.
While I always come to listing presentations armed with the latest, nearby market activity (and am happy to offer a ballpark range), I decline to name a specific price until the homeowner commits to using me as their Realtor.
There are four reasons why I take that stance.
Carefully pricing a home (vs. haphazardly) takes a great deal of due diligence.
At least for me, the steps include: identifying and analyzing the Comp’s (Comparable Sold Properties); learning the history and condition of the client’s home (vs. taking the 10 minute tour after first arriving); previewing the Active listings that the client’s home will be competing against; identifying any Pending homes similar to the client’s home and estimating what their likely Sold price is; and pouring all the foregoing into a CMA, or Comparative Market Analysis, then crunching the related numbers.
All of the foregoing takes . . . time. Done properly and well, lots of time.
As a Realtor, the two things I ultimately have to sell are my time and expertise.
If I spent undue amounts of time working for non-clients, my actual clients will suffer.
That hardly seems fair to them.
And spending the requisite 6-8 hours carefully pricing a home that another Realtor is ultimately going to list isn’t fair . . . to me!
So, I don’t invest that time . . until I’m hired.
Two. My price for any given home isn’t a fixed number.
Rather, it depends not a little bit on the homeowner themselves.
So, do they need/want to sell quickly, or can they be patient waiting for an offer?
Can the home benefit from staging, strategic updating, etc. , and if so, is the client willing and able to do it?
Does the client want to price aggressively — and take the risk that goes along with that — or do they want to price more conservatively?
And so on, and so on.
Three. My price may not be the same as another Realtor’s (call this phenomenon “Real Estate’s Heisenberg Uncertainly Principle”).
Whereas homeowners tend to think of their home as having a fixed, objective value, Realtors (and anyone who knows marketing) understand that the actual price is a range — a fluid range that is influenced by the skill of the professional(s) involved in the sale.
A home that is optimally staged and photographed, then aggressively and expertly marketed by an excellent Realtor at a top-flight Broker is likely to sell for one price; a home where a less-talented and motivated Realtor simply shows up, gets the requisite signatures, then puts a “For Sale” sign in the front lawn, is likely to fetch . . . another price altogether.
Four. “Buying the Listing.”
The last reason I won’t casually price a home is because I don’t want to get caught up in what Realtors call “buying a listing.”
Pretty much what it sounds like, the practice consists of appealing to a homeowner’s vanity (or ignorance) by throwing out an unrealistically high price for their home, and thereby beating other Realtors’ “bids.”
With the listing secured, the Realtor then focuses on getting a price reduction — or several of them — when the home proves unsaleable at the quoted price.
Bidding wars are great for Sellers, but not so great for Buyers.
That’s true for Realtors, too.
As a prospective listing agent in an already tough market, the last thing I want to do is get into a Realtor bidding war to list what is certain to be an overpriced home.
P.S.: For the record, when prospective home Sellers interview both me and another Realtor . . . they hire me the vast majority of the time.