Quite often when home sellers ask an agent to give them a price estimate on their home, the expectations they have are usually higher than the price the agent is thinking.
Some real estate agents, unlike valuers who are objective, may be tempted to raise their estimate price in order to get the listing.
So how does, or better still, how should a real estate agent determine the estimated sale price of your home? Real Estate agents should be familiar with recent sales of homes in your area that are similar to yours. This is the best guide an agent can use to determine the estimate of what a home is worth, by looking at what buyers are paying for similar properties. The agent will generally give you a range, which by law should be within ten percent. This is not a valuation, simply an estimate, so how accurate is it? And can you trust it?
Despite the introduction of new legislation there are still some agents that over-quote the price of the home and then, when marketing the home, they are misleading buyers with bait pricing. To comply with the Fair Trading Act 1999 (FTA) one must not engage in conduct which may be misleading or deceptive. Yet it’s common to see agents advertising properties for far less than the vendor is willing to accept. For example, you may see a home advertised for $450,000 plus, then passed in at auction for $475,000 with a reserve price of $500,000. So shouldn’t this be advertised as $500,000 plus since that is the vendors minimum?
So how do you know whether an agent is telling you the truth or just telling you the price you want to hear? Some agents will go along with whatever you think your home is worth in order to get your business. Once you have signed up and committed to an advertising budget they will then start to give you market feedback which will inevitably condition you down on your price. One way to prevent this from happening is to ask the agent to support their price estimate with recent comparable sales. Look at these examples closely and objectively and make sure you really are comparing similar properties. To be able to identify which agent is being honest with you it would be a good idea to be prepared by doing a little research of your own so that you are better informed and less likely to be fooled.
For most homes, there are many comparable properties an agent can use, however occasionally there are some very unusual and unique properties in our area which can be a little more difficult to put a price estimate on, but a good agent should nevertheless be able to price your home.
Most importantly the market price of a home will not be determined by what price the agent gives you or by what you want. It will be determined by the ones paying for it, the buyers. So the market will determine the selling price of a property provided you have selected the agent who has the negotiation skills to get the best price from the buyers.