Pricing a Home is, in Many Ways, an Art Form

I Have a Story to Tell You…

Recently, an agent in my office was shown a house that, by his own estimation, was a bit over-priced. His clients loved it, but they were about $50K apart on the price. The listing agent was quite adamant about the price and said that the owner had no interest in negotiating. In response, our clients were prepared to play the waiting game. After all, in a month, the price was sure to get reduced.
But than it sold at a price closer to where our agent’s clients were thinking! The listing agent had double-ended the deal by representing both the seller and the buyer. In our minds, we thought that maybe, just maybe, an agent would give a price that was on the higher side of the CMA scale in order to get the listing.

The Overpricing Strategy

That’s certainly well within the realm of possibilities. If you bring in three agents to price your house, and one gives you a price $50K more than the others, wouldn’t you at least consider going with the higher number? It’s called buying the listing; and while it’s probably not the best marketing strategy, it does put your face on a sign.
Of course, the other side of the story is that the owner has unrealistic expectations, but an agent takes the listing anyway. There are enough stories out there about walking away from overpriced homes, but that’s a discussion for another day.

Then the Penny Dropped

What if the intent was to eliminate all other buyer agents and then just wait for the call? You know, from the person who saw it on Realtor.ca and is planning on working with the listing agent to score a better deal? Again, I’m thinking to myself, “No, it can’t be. That’s way to risky.”
But there are lots of people out there who believe that working with the listing agent is the best way to win a listing in multiple offers and get the home at the best price. I suppose it is conceivable because sometimes agents agree to drop the commission if they double-end (bring in their own buyer), but it is a dangerous tactic for any realtor. So many things can go wrong. At the end of the day, representing two people – a buyer and a seller – is double the work.
I still believe that pricing a home is an art from. It’s not just looking at what the neighbour’s house sold for. There are hundreds of minute details that determine price and they can’t be learned in a day.