In 2002, Massachusetts 4 Sale By Owner first introduced Western Mass consumers to the idea of for-sale-by-owner (FSBO) real estate and have since helped hundreds of buyers and sellers each year learn how to navigate the world of real estate without agent representation.
Although most serious home sellers come to us first for advice, occasionally we get frantic calls from well intentioned sellers who felt confident to test the water without us. We understand the DIY mentality and it's absolutely OK. Unfortunately, by the time they call us, their efforts are faltering and are about to throw in the towel. In order to know if we can help them, I need to know where the marketing efforts have failed, so I begin asking questions.
One of the first questions I ask, even before I've seen a picture of the home is
"How did you determine your asking price?" The answer I am often given is . . ."I had an appraisal." I press harder, "What kind of an appraisal did you have?", I ask. The seller answers, "I had not one, but two real estate agent appraisals."
Aha, we now know the problem . . .
A real estate agent
does not provide an
appraisal. An agent offers a Comparable Market Analysis (CMA), which is a sales tool. It can be helpful, but not definitive in your quest to set a competitive asking price. The analysis can be flawed by the agent's experience (or lack of), thedesire to obtain a listing, the worry over other agent competition, and other factors.
A Uniform Standard Appraisal, as performed by a licensed residential real estate appraiser, contains all the information that an agent supplies, and more. Bear in mind that an agent ONLY includes MLS data, so every report is flawed. An appraiser looks at ALL data (MLS, for sale by owner, foreclosures, etc). The appraiser also measures the property accurately. An agent uses data supplied by public information which is often inaccurate and outdated. An appraiser utilizes a standard "credit/debit" formula to more accurately compare properties side by side. An agent's "opinion of value" is never used by a mortgage lender to determine whether a buyer can obtain a loan for your property. They rely on the independent appraiser's report only. Finally, an appraiser ONLY uses properties that have actually SOLD as true comparables. An agent often sprinkles several properties that are currently on the market (often with their own agency) to inflate the seller's opinion of their property's worth. Until the property sells, the asking price is only wishful thinking on the seller's part.
Ask yourself this. . . .
If real estate agents are so good at what they do and understand how to price your house for the current market better than you, why are there so many overpriced homes for sale with agent signs in their front yard? Perhaps, the answer is that the agent is more concerned about gaining a listing at YOUR expense.
Our recommendations . . . .
If you want to have an agent give you a market analysis, that's fine. Just make sure that the agent leaves ALL the paperwork with you for you to examine closely without being under pressure. Never sign a listing agreement on the spot without weighing this information carefully and looking at your other options. Be realistic about your competition and don't overprice in a buyer's market.
