Succumbing to the siren song of manipulated sales stats

Here’s a scenario that you might have found yourself in when you decided to finally sell your Beach home.

You had investigated the possibility of selling, and decided that you’d sell your home before purchasing another one, simply because you wanted to know exactly how much money you’d have to spend on a new home. You’re not the risk-taker type, so selling first fit your comfort level.

You kept a close eye on the Beach real estate market, and media reports seemed to be in your favour. You’d popped by open houses around the Beach, always trying not to be the ‘nosey neighbour,’ doing your best to leave a barely legible name and phone number in the guest registry.

You decided the next logical step was to invite several local sales representatives to your house to see what they thought your property would sell for. It was all very exciting!

You booked appointments with three local agents, and asked them to give you an evaluation of your home’s probable sale price. You’d met one of the agents at an open house, another had been recommended by a friend, and the third often had flyers delivered to your house claiming a record of selling homes in the area with an average of “100% of List Price in Just 10 Days.” Hmm, that was interesting, so you called that agent too.

All three sales representatives were polite, professional, and courteous. They proceeded with routine inspections of your house, pointing out favourable attributes of the property. They brought lots of marketing material regarding their personal sales, and other MLS listings for homes that had sold around the Beach over the past few months. These past sales were what they believed were comparable to your home. Based on these sales, they gave you their opinion of your home’s value, then their sales and marketing plan to achieve the highest possible price.

The first two agents had similar comparable sold listings, and both ended up with fairly similar listing prices and final ranges for the sale price of your home. These first two evaluations were around the value you had already considered as appropriate based on your own reconnaissance and research into the Beach market.

The third sales rep was the agent with the flyer, and that agent’s comparable sale listings were mostly for higher valued homes than what you’d been shown by the other two agents. This agent’s listing price and opinion of final sale price range was quite a bit higher than the other two. You were skeptical at first, until this agent produced a sheet of paper with a few personal sales statistics that proved, without a doubt, that this was the agent with the right price. You marvelled at this agent’s personal sales stats that illustrated in easy terms that this agent sold houses quickly, with the lowest total days on market, and with the highest listing price to sale price ratio in the neighbourhood.

In fact, you placed so much confidence in this agent’s personal statistics and implied past success based on those stats, you decided to change your initial ‘sell first’ plan, and buy that house around the corner that just came on the market (at a higher price than you had previously considered). You out-bid several other buyers to get it by giving the seller a preferred quick closing.

No problem though, because you had hired an agent who could sell your home quickly and for more money than other agents – based on that agent’s claims of previous successes, clearly documented by official personal sales statistics.

Fast forward to a few weeks ago. You moved into the new house, but it wasn’t as easy as your agent’s statistics had led you to believe.

After a couple of price reductions, by way of signing new listing agreements with a lower list price each time, numerous weekend public open houses that really became a nuisance, and a costly bridge financing arrangement in order to complete the sale of the new house because you hadn’t sold by the time your new house closed, you finally sold. You had cancelled the old listing agreement and signed a new listing agreement at a lower price yet again, and this time attracted a couple of offers. Your house sold for exactly the new list price. The sale price was much lower than you had initially been led to believe by that agent with the boastful stats.

Finally, though, you can enjoy that new house with the fabulous front porch. Of course, you might have been bothered when you checked your mail and saw the flyer from that same agent, claiming to have sold your old house “For 100% of List Price in Just 10 Days!”

Oh well, you sighed, live and learn.

Take care and welcome (finally) to spring!

 

Thomas Neal is a well-known and respected Beach real estate agent
tneal@trebnet.com   ~   416-690-5100
email

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2 comments

Ultimately it’s the market that is going to decide what your home is “worth”. While reasonable comparable sales can give you a good guideline they must indeed be reasonable and they are no guarantee of the end result but rather a great way to establish a list price that along with a strong marketing plan, strategy and implementation of that plan will achieve the best possible selling price given current market conditions. Honesty and trust are utmost, if something seems too good to be true it probably is. Always trust your instinct, that means at times not necessarily going with the agent who gives you the highest anticipated selling price…

Most agents are trustworthy professionals who act in the best interests of their clients. This article unfortunately sheds light on the very small minority of a large group.

The “trick” that all sellers should remember when assessing the skills of competing real estate agents is to ask them to provide details of comparable homes to their own which include not only each sale price but also its percentage to the home’s ORIGINAL asking price, plus how many days it took to sell from the ORIGINAL listing date. Agents who exclude information about earlier price reductions or re-listings of a home are simply not giving prospective clients the full picture.

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