Bait and Switch Pricing?

Have you ever wondered about agents who claim that they can sell your house for more money than other homes that have sold in the community during the past few months? Every seller wants to get as much money as possible for their home, however, a home is only worth what a buyer is willing to pay for it. Buyers are not dumb, and Realtors who represent buyers are aware of what houses are listed for and what houses are selling for in the area. In the end, buyers determine the value of a home by the offers that they make and price that other buyers are paying for houses that have already sold and closed.

I often see houses listed on the market for well above the current market value and then after 2-3 months or more the price begins to fall. Very often the price will end up dropping below what should have been a fair selling price, if the seller had actually listed the house at fair market value in the beginning. Because a house can become "tainted" in the eyes of buyers after it has been on the market for more than 90 days (or longer than the average number of days for a house to sell), buyers begin to naturally think that something is wrong with the house. At that point, buyers begin to "boycott" the house, or make it a very low priority to see. Then, when a buyer does see a house that has been on the market for a very long period of time and likes it, their first question is typically "What is wrong with this house that it has been on the market for so long?" The next statement and assumption from this buyer is usually "This seller must be desperate to sell. We will make a low-ball offer...".

Well, all of this could have been prevented for the seller if the Listing Agent had really done a better job in the beginning of telling the seller how much homes are selling for in the area during recent months. Buyers are not dumb. I have yet to see a real buyer say "Well, paying more than any home that has sold in this community during the recent past is perfectly ok with me! I really don't care." It just does not happen.

So, sellers and buyers have similar objectives. To get a fair price. Pricing a home above market value or coming up with inflated justifications for listing a house at a higher price does not help the seller, and will not ultimately bring a higher priced buyer to pay more than a house is worth. And all Realtors have access to the same sold data from the MLS. Listing higher is not a statement of confidence that one listing agent is better than another. It is something quite different. Something that some seller are forced to learn the hard way and there is always a price to pay for such mistakes.