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Agent’s Estimate Was Low |
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Dear Edith: You suggested someone get a local real estate broker to give them a Competitive Market Analysis to estimate listing price, when they are considering selling their house. We arranged to have one and we were very unhappy with the results.
We contacted what we thought was a highly reputable real estate firm. First thing, the agent didn’t even want to see the house before writing up the CMA. I explained this was an unusual house, designed by a famous architect, with marble, mahogany, stained glass etc.
The agent came a few days later. His CMA analysis was a very low price. When he saw the look of disbelief on our faces, he began to make excuses that he couldn’t find any sales of houses like ours (he said “comparables”). But if there are no comparables on the same street, doesn’t the agent search further? He explained the area of the city where the house is located is what’s important. Finally he said now that he’d seen the house he would raise the asking price by 40 percent. How could he just do that in his head so fast?
I think he was trying to dupe us. We recently read a book in which the authors reveal that real estate agents might price homes lower than they are worth just to get them sold quickly because they are just interested in getting their commissions. |
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You can find other books telling you just the opposite: to watch out for agents who agree to any inflated listing price just to get you signed up, figuring you’ll have to drop the price later.
Neither is true. Forget that part.
In the end, it doesn't matter what a real estate broker, or even a highly-qualified certified appraiser, estimates as market value. It doesn't even matter what you folks think. The only thing that counts is the judgment of the buying public.
In the case of a unique property like yours the only way to find out what it's really worth is to test it on the open market and see what the reaction is.
It does sound like a particularly fine landmark home, but the agent was right to base his estimate on what buyers have shown they’re willing to pay to live in your neighborhood. A given street will support only a given price level. After that, no matter how fine the property, buyers with more money to spend usually prefer to live elsewhere. While they may offer somewhat more for an unusual home, it won’t be what they’d pay for the same house in some other part of town.
Because it is indeed difficult to find comparable recent nearby sales for a house as unusual as yours, I would suggest you price it as high as you like, to test the market. Plan to drop the price regularly, every few weeks, until you find a level that attracts buyers. The definition of market value boils down to "what someone will pay" and you may need to experiment to find out just what that is. |
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Edith
Originally published on November 6, 2006 |
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