When it comes to buying or selling a home, both parties want to get the best deal possible. The buyer wants to pay less money for the home, while the seller wants the highest price. In order to get the highest possible price for their home, many sellers make a huge mistake by choosing a real estate agent with the highest listing price.
Many agents will give you a price way above their competitors in the hope that you will be impressed by their confidence and give them the mandate to sell your property. However, do not be misled, buyers shop around and they will know if your price is too high.
If you price your house out of the market you will eventually become tired and frustrated and be forced to lower your price. Buyers may start thinking that there is something wrong with your house if it stays on the market over a prolonged period of time
As they say, perception drives the market and you could end up getting offers way below market value if most buyers have a negative view of your property. Always keep in mind that real estate agents are salespeople. Their objective is to get the mandate to sell your property even if it means inflating the price.
By convincing you to lower your price, they know that their chances of making a quick sale are better. Ultimately, that is what real estate agents want, a quick sale in order for them to get their commission faster. Even if the estate agent compromises by lowering his commission a little, his ‘loss’ is pale in comparison with what the seller will lose.
For example: let’s assume that the market value of your property is $400,000 and you owe $200,000 to the bank, which leaves you with $200,000 in equity. Your agent, in order to get the mandate, convinces you that he or she can list the house at $440,000.
If the agent can persuade you to sell your house for $380,000 after a few weeks of not getting any repsonse, the agent is better off by cutting his or her commission with a few dollars and saving themselves a lot of hard work in the process. However, such a deal will cost you $20,000 in equity and you still have to pay the estate agent’s commission.
You end up selling your house for much less than what you anticipated for and lose a lot of money in the process, but the agent still gets his commission.