Of all the mistakes home sellers make when choosing a real estate agent to sell their home, this is probably the biggest.
As most home sellers know, when working with a real estate agent to sell their home, one of the first things the agent does is to assemble a Comparative Market Analysis (CMA) for the home seller. The CMA includes the prices of recently sold homes in the area, prices of currently for sale homes in the area, and maybe even prices of homes that failed to sell recently in the neighborhood. The idea is to use this information to come up with an asking price for the seller’s home. But who determines that price…and how?
Deciphering a CMA is a lot like reading tea leaves. Because pricing a home is not an exact science, you can pretty much see any number you want in it (and justify it). When employed correctly, the CMA is used by the seller and agent together to strategize about an asking price for the home. When employed incorrectly, it is used by the real estate agent to get the listing. The agent “gets” the listing by reading the tea leaves and promising the seller that they can sell their home for more than any other agent. And that is the worst reason for choosing one agent over another.
The reality is that agents have no idea what you home will sell for. All the can do is help you enact strategies to ensure you get the highest price possible, within a certain time frame, given the current market conditions. So, choosing an agent who promises you the highest sale price based on the CMA is choosing the agent who is the biggest liar. But do not blame the agents for this. There are two parties that encourage this behavior.
First, the real estate industry is complicit in this behavior. It has established, as standard operating procedure, that the CMA be done before the agent has secured the listing. This only encourages the agent to use your CMA as their marketing tool. A better way to operate would be to first choose the agent and then, after the seller has “hired” them, conduct a now-unbiased interpretation of the tea leaves. But it is not just the industry that is at fault.
Sellers themselves are just as much to blame for this behavior. They either do not know any better, or just want to believe the lie. I liken to those who lose money in a Ponzi scheme. Deep down they know it is not true, but they want so much to make that money that the suspend judgment and common sense.
If you really want to know what you home will fetch, I suggest you pay for a professional appraisal. That is the number the bank lending the money to the buyer is going to use, and you will have a hard time getting much more than that unless you can get a bidding war for you home between cash buyers.
Next time you are interviewing a real estate agent to list your home, don’t ask them what they think your home is worth. Ask them how they will go about getting you the highest possible price for your home. The realtor that answers that question the best is the one who should get the listing.