Ask Phyllis!

Selling Off Market

Dear Phyllis,
I must get three or four letters from Realtors® each week. They are pretty much the same. They have a buyer for my home and I can save on the commission. I am retiring next year and will be selling. If I opt to sell to one of these buyers and save a substantial sum on the commission, how do I know what is the right price? Should I get an appraisal? Joan

Dear Joan,
An appraiser won’t know what price a buyer will pay for your home. An appraiser simply assesses value for the bank’s collateral.

Without exposing your home in the multiple listing service (MLS) you won’t know the highest price a buyer will pay. In today’s heated seller’s market, it’s difficult for a Realtor® to predict at which price your home will sell. There are so many unknowns that come into play. The majority of offers on most of my listings are written by buyers who have written offers on other homes and lost the bidding war. Most of these buyers become more aggressive with each offer they make.

A popular real estate pricing strategy is to underprice a home in order to obtain multiple offers and a bidding war. Pricing your home below market value typically results in the home selling at a higher price than if originally priced at fair market value.  In today’s market, buyers are more confident about their home purchase when someone else desires the same home.  Pricing your property on the lower end of the value range stimulates interest among buyers and creates a herd mentality. Herd mentality, describes how people are influenced by their peers to adopt certain behaviors, follow trends, and/or purchase items.

You might consider listing your home for sale with a provision that in the event you sell to a specific buyer no commission is due to the listing agent. For example you have what you think is a great offer from John Smith. You can still list the home with that agent or another real estate agent, excluding buyer John Smith. In the event John Smith buys the home no commission is owed to the listing agent. Or the listing agent may want to be reimbursed for their marketing expense (photos, brochures, etc.). You may learn that by exposing your home to the MLS you will more than make up for the additional commission paid.

Congratulations on your upcoming retirement.

  Phyllis Harb