As real estate agents, our most important job is to help you navigate the market. It isn’t hyperbole to say that there’s a minefield out there of often-conflicting information. A recent road trip to Northern California with a long-time Eugene client really drove this home for me.
(Thinking about buying a Eugene or Bend home rather then selling? We’ve got some good advice for you too.)
My client owns a home near the beach that has been in her family for several generations. Now that her children and grandchildren live across the country and around the globe, she’s decided it’s time to sell.
Selling a home can be a nerve-wracking process for almost anyone, but trying to do so in a different state presents special challenges. You don’t know the market and don’t know the agents. Price too high, and you could be losing out on rental income while your house just sits on the market. Price too low, and you’re losing out on money that could be going right into your bank account.
After talking things through with my client, my first job was to research real estate firms in the area. I set up meetings with a few of the most promising agents, and then we loaded up our bags and hit the road, visiting mutual friends in the Bay Area on the way.
There wasn’t much time to see the sights, however. We were there to meet agents, and we set out early the next morning for our first appointment at 10 a.m.
What to Look For in An Agent
It has always been one of my pet peeves that often, neither home buyers nor sellers take the time to interview their prospective real estate agent, opting instead to rely on a referral from a friend or family member.
Well, imagine trying to hire an agent in another state with no recommendations from a friend, and knowing nothing about real estate or the local market. I was determined to put these agents through the paces. It was up to each agent to demonstrate that she or he had the knowledge, skills, attitude, and ethics to meet my client’s needs and represent her best interests.
In a job interview situation, the employer is typically the one with the knowledge about what the job is and what skills are needed to do it. But when it comes to a real estate transaction, this often isn’t the case. You, the hirer, generally have less knowledge than the people you’re hiring.
This would have been especially true for my out-of-state client. By guiding her through the process, I hoped I could level the playing field.
The fact of the matter is that I don’t know the South Bay Area market like I know Bend and Eugene. However, after 25 years in the business, I definitely do know how to separate the packaging from the real substance when it comes to agents.
Interviewing a Prospective Real Estate Agent
When faced with actually having to compete for a listing, many agents come armed with a marketing presentation extolling the virtues of their company and why their brand beats the other brands. Then they move onto why they as a representative of this brand are the best agent in the area. Finally, they explain their opinion of value.
As predicted, the first interviewees presented a lengthy, obviously rehearsed pitch, even after I’d strongly hinted that we’d rather go straight to a more nuts-and-bolts discussion of my client’s property. This is understandable: self-presentation matters, and the way an agent presents herself or himself tells you something about the level of professionalism being brought to the table.
When it came time for these agents to present their opinion of value for my client’s property, it was obvious to me that they hadn’t really done their homework. Pressing for details about how they came up with their numbers, I couldn’t get a solid response.
Despite very different approaches to value (or perhaps the lack of an approach), the first two agents had very similar opinions of value. Even though I was discouraged by these agents’ approach to value, I do understand that agents who have been in the business a long time and know their market well have a gut feeling on it. This can carry the day, even if the homework is really not done well.
With two down and one to go, the final agent we interviewed rolled in. I let her know that she could skip to the good stuff of her presentation, and she was on board.
When it came time for her opinion on value, her figure was significantly lower than those of the other two agents; I mean, it was a long way off. I felt compelled to tell her this up front to see what her reaction would be.
At first, she seemed discouraged, and I could see that she perhaps felt she had lost the listing, but then she carefully backed up her opinion with a thoughtful analysis of comparable sales and a detailed view of the current market. After touring the property, she recognized that the condition was better than she’d assumed, and added some value to her original estimate.
Her estimate was still much lower than her competitors’. However, I felt her number was much more trustworthy, and that my client would benefit the most from following her advice.
The Importance of a Realistic Appraisal
It’s very difficult, of course, to pass up what looks like extra money in your pocket. If two people are telling you your house is worth a higher amount, and another is telling you it’s worth less, you’re going to want to believe that it’s worth more.
Agents know this, and some may want to convince you that they’re uniquely poised to deliver an impressive sale. However, unless you’re willing to sit on your property for months or even years hoping to hit the jackpot of a perfect buyer, it’s much better to price to sell.
I’ve been telling people this throughout my career, but it bears repeating: the “start high and meet ‘em in the middle” strategy most often doesn’t work out in the seller’s favor.
Part of it is psychological: if you’re convinced that your house should sell for a certain amount and then it doesn’t, it’s easy to feel demoralized. Let’s say that you do drop the price, but buyers still aren’t lining up. The tendency from here is to drop the price even more, until pretty soon, it’s much lower than you wanted it to be.
Outside circumstances, of course, also have a way of intervening. It may seem at first like there’s no hurry to sell, but it may not be long before you’re feeling the financial squeeze of sitting on an empty home.
Price a home to sell from the get-go, however, and there’s no need to second-guess yourself. If your property doesn’t sell right away, it doesn’t sell right away. However, at least you can rest assured that if the right buyer comes along, they aren’t going to pass because the price tag doesn’t match up with the property that they’re seeing.
Even in a hot market, buyers are looking for homes that meet their needs without stretching their budget too much. An overpriced home likely won’t meet the needs of people looking for houses in that price range, so there’s one group of people who won’t be making an offer on it.
Then, of course, there’s the other group who just plain won’t be able to afford your property. In a market like Eugene or Bend where houses are often on the market for a matter of weeks or even days, buyers are actually less likely to make longshot offers. They’re going to focus on making offers they think will be competitive.
Make Sure Your Agent is Working for You
After our trip, I reflected: if my client had been on her own, and trusted the agents who were giving her much higher estimates, what kind of situation would she be in?
First of all, she’d be losing rental income while her house sat on the market. Lacking the perspective of a neutral party, she wouldn’t have any way to know that her property had been listed at an unreasonable price. Also, with this being a difficult decision for her whole family, second-guessing might have come in from multiple directions.
There are, of course, individual situations and properties where pricing a home at the high end of the market might make sense. This is why the input of a professional who understands the market and understands your unique situation is so important.
There is no one-size-fits-all prescription for a successful real estate transaction. I could understand the unique needs of my client because of the length of our relationship, and because of the focus that I offer to my clients.
Beware of agents who seem more focused on giving you their pitch than asking questions about your situation. Don’t hold back any of your own questions or concerns, and trust your individual discernment. Know your agent, and know that they’re working for you. Once again, because I believe it bears repeating: please take the time to interview at least a few agents!
I’d be remiss not to mention that we at Lohr Real estate offer a free comprehensive property valuation, created in much the same way professional appraisers do their appraisals. Give it a try, even if for now you’re just curious and would like a more reliable figure than the ones provided by the big national sites.
We think you should also put some thought into marketing your home toward millennial home buyers and have written an article with some helpful tips. Keep on checking our Bend and Eugene Real Estate Blog: the market is changing, and we’re doing our best to keep you up to speed on it.