It seems simple doesn’t it? You’re thinking of selling, and you decide to get a couple of agents out to give you a “quote”.
But real estate agents aren’t tradesmen, the so-called “quote” of the value of your house is merely an opinion, rather than something you should reliably base your selection of agent on. Just because an agent tells you a price, doesn’t mean it sells for that price – but they still get paid regardless. Sellers should choose their agent based on skill – not on opinions – opinions which often get deceptively inflated in order to win the business.
Andrew Trim, author and one of Australia’s leading Real Estate agents and educators, explains the dangers in establishing a market price for your property as follows. For a free copy of Andrew Trim’s new book – Real Estate Dangers and how to avoid them – contact our office any time.
Establishing a realistic market price can be fraught with danger.
The intentionally inflated price quoted by an agent is the most common. It is the improbable lie or the lie by omission.
Other dangers that are not so obvious include well-meaning neighbours and friends, and the auto valuations provided by a myriad of websites.
Neighbours will naturally have a valuation higher than market value in mind for their own home and may become concerned when a neighbouring property is advertised at a price that does not match their expectations. This concern often manifests as advice to the neighbour about underselling.
Family and friends will also have their ideas on value, often based merely on personal opinion or gut instinct which can occasionally manifest into advice on an asking price.
Finally, a plethora of websites and home valuing apps have trickled into the market. The automatic algorithm and real estate agent referrals are the typical types of online valuations. Some even combine both.
All major and many smaller real estate websites use an algorithm to initially price a property. You simply enter an address into the appropriate search tool and a valuation will appear within seconds. Researching your property value this way is fraught with significant dangers.
The initial danger involves the variance that occurs in the quoted prices.
Looking past the complexities of these computing algorithms, these valuations treat property as a commodity by using simple numbers: how many bedrooms, bathrooms and living areas along with house and land size.
Algorithmic valuations overlook one of the most important factors when setting an estimated price: the emotional aspect. A property’s layout, location, views, schools zone, whether it is in a cul-de-sac or on the higher side of the street are just a few variables affecting the price a buyer will pay.
Pricing a property correctly is a combination of simple science mixed with complex art. An understanding of what constitutes value in a buyer’s eye takes skill and experience.