Although some believe the real estate market is on the way up again, in Marin County it is hard to believe that it ever went anywhere. If you have browsed through our earlier posts you may see that $800,000 for a single-family home in Marin County is just below average asking price. It is much more common to see price points above the million dollar mark. Currently boasting a sellers market, Marin is a hot spot for cash buyers. Yet, as an article in the LA Times points out “sellers in the mid-to-upper price brackets are exuberant that we are finally out of the recession and are tempted to disregard agents’ more sobering recommendations on pricing.” This leads to what are now being referred to as “set-up” homes. These “set-ups” are overpriced homes used by agents as negative examples in order to sell similar homes in the area that carry a lower asking price. Buyers are scared off of these properties and persuaded into houses that may be over their price range but much more reasonable than the “set-up”. This is particularly bad news for sellers. As a seller it is very important to not only trust your agent’s expertise, but also to know the market you are selling your home in. A lot of times these overpriced homes are a result of zealous sellers who, encouraged by reports of rising sales and low mortgage rates, insist on extremely aggressive asking prices. With listings like these, they tend to acquire plenty of foot traffic and showings, yet never sell. These homeowners risk having their home eventually not shown unless they agree to a lower more sensible number. Also, sellers with a “set-up” like agenda put their listing agents in quite a predicament ethically. As one homeowner and broker elaborates, “listing a property at a price you know it will not sell at not only misleads the seller, but it also dismisses an agent’s fiduciary duty to educate their clients”. If an agent agrees to an overpriced listing they are disregarding their job to fully inform their clients and garner their trust. Other agents will happily exploit the overpricing to facilitate sales. It is a listing agent’s job to negotiate a compromise solution with their clients so that their home does not become a “set-up”. One good way for an agent avoid this moral dilemma but still take the listing is to require the seller to sign a contractual agreements requiring an automatic price reduction to a specified level if the house doesn’t sell in the first two to three weeks. Bottom line for owners looking to sell in modestly improving markets: Get as much information on sale prices as you can about comparable homes on market in your area and to talk to multiple realty agents before listing.
So what are the main points to take away from this article?
- Overpricing is never just the realtor’s doing.
- There are advantages to foiling a “set-up” with a more reasonable listing
- It is very important to price your home correctly, especially when looking for the quick sell.