How Homes Are Priced
How do homes become overpriced?
Sellers often have an unrealistic idea of what their home is worth, often because they paid too much when they bought it.
When most sellers decide to list their homes for sale they call the agent who sold the home to them. It is very unlikely that this agent will tell the seller they paid too much for the house when they purchased it, so again the house remains overpriced.
New agents need listings to get exposure (yard signs, television shows, newspaper advertisements, etc.) They do what they can to get listings because they lack experience, new agents frequently accept listings that are unrealistically overpriced.
The home may have been refinanced recently and now the seller owes the maximum amount of the market value. To list the home for sale with a selling agent the seller must then add 5-6% to the asking price to pay their selling agent. In this case the seller may not be able to afford to accept a fair market price for the home.
Can I get a better price on homes that are “for sale by owner”?
Not necessarily. Although some homes for sale by owner may be good values, there are 7 primary reasons home sellers offer their homes “for sale by owner.” Each of these reasons cause these properties to be overpriced.
The house has declined in value and the seller does not have the extra money to hire a real estate firm to sell it.
1. The seller has a second mortgage on the home and owes more than it is worth.
2. The seller is not motivated to sell the home and figures it does not cost anything to advertise it for sale by putting a sign in the yard. Someone might pay the seller’s asking price.
3. The home has a major problem with the structural condition or defects and no agent is willing to list it.
4. The seller will not keep the home clean and in good repair.
5. The seller refuses to make the home available to be shown during reasonable hours.
6. The seller is unreasonable about the listing price.
If I hire a traditional real estate agent, will this protect me from overpaying?
If the agent has listed the home for sale, in most states, including Tennessee, that agent must work to obtain the seller’s asking price for the home - even if it is overpriced.
If the agent reserves the right to act as a “dual agent,” “designated agent,” “non-agent,” or “transaction broker,” then that agent may not be able to work completely in your best interests. Also, that agent might not be able to tell you if the home is overpriced.
How can I be sure I do not overpay for my new home?
Call The buyer’s Agent of Nashville & Middle Tennessee before you start looking! Since we represent you and never the seller, we always work in your best interest.
We do everything we can to provide you with the most complete and current information. We will give you the purchase price of all comparable homes in the area, not just the ones that justify a higher selling price.
People do not lose money when they sell their homes. They lose money when they buy them.
To make sure someone is working on your behalf, insist on expert buyer representation from The Buyer’s Agent of Nashville & Middle Tennessee.
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