I’ve often heard it from the so-called “industry experts” and media commentators telling you that the best way to choose an agent is to simply obtain three “market appraisals” (3 quotes) with the aim of employing the agency that offers you the middle price!
The theory is that the agent who suggests the ‘middle price’ is supposedly more on the mark than the other two agents. This is because, according to their thinking, the agent who quoted the highest is “buying your listing”; and the lowest priced quote is given by someone who simply doesn’t know what they’re doing!
In other words, the agent with the highest quote has told you that your property is worth a price they hope you’ll find irresistible. (Of course, on the face of it, if one agent said you should list at ten thousand dollars more than the next agent, it’d be a pretty attractive proposition, wouldn’t it?) Well, perhaps, but like everything in life, there’s more to it than meets the eye, and we’ll look at this more in a minute.
What about the agent who quoted the lowest figure? Well, the theory goes that they simply don’t know what they’re talking about and won’t try hard enough for you! You see, this strategy assumes all three agencies offer a comparable service and are similarly placed in the crucial areas of marketing and negotiation skills.
Nothing could be further from the truth! Choosing an agency using this strategy is potentially fatal. It could easily lead to the “under selling” or “over selling” of your property and the loss of thousands of dollars.
“If you were to blindly go with this you stand the chance of losing out – big time”
Under Selling is clearly dangerous. You could stand to lose thousands of dollars in the negotiating process, particularly if your agent isn’t a highly skilled negotiator – and after all, only a poor negotiator would list a property under its true value, to begin with.
Over Selling is where the listed price is higher than what the market will bear. (The genuine market price) This is also dangerous, as it can severely limit interest in your property and lead to an increased time on the market, impacting negatively on its perceived value and eventual selling price. Not pretty. For more on ‘Over Selling’ or ‘Over Pricing’, see Premium Strategy #4.
The Middle Ground appraisal may in fact be still under selling or over selling the property! How will you know if you are in this situation and failing to achieve a premium market sale price for your property? You won’t unless you have a thoroughly prepared CMA to go by?
Don’t automatically assume the middle quote is correct. Ask for a Comparative Market Analysis (commonly referred to as a ‘CMA’). To assist in obtaining a premium market sale price for your property.
Choosing an agent purely on the basis of obtaining three quotes and then going with the ‘middle ground’ quote can cost you dearly – in both time and money. There are other, more important criteria to consider when choosing an agent, which brings us to the second fatal mistake…
Do you know? That under QLD law the “Property Occupations Act”, Agents or Auctioneers over or under quoting on prices and auction reserves may be fined. These changes to the laws were a direct result of agents putting unrealistic prices on properties. Under this new law, a CMA (“Comparative Market Analysis”) is defined as three (3) properties of similar style and standard and sold within a 5km radius within the past 6 months. Any prices or quotes given to either a seller or buyer will have to be supported by a CMA. Vague price range ‘list’ prices (e.g. $500,000 to $560,000) may be regarded as misleading by the laws and the ACCC.
*Look out for new related posts